Changes take place almost daily, especially in the business arena. The FinTechs are placed at the helm of the banks, carpooling takes the place of hotels, carpooling destroys jobs for taxi drivers. It is indeed a system. Joseph Schumpeter called the change “creative destruction”.

The Internet makes it possible to develop virtual stores through an e-commerce site accessible by customers – a simple interactive web portal. People visit the sites, place orders and receive home delivery of goods. The online payment ecosystem makes it easy to pay for purchases. The beginnings of e-commerce begin with the store owners themselves selling their products according to the business-to-consumer (B2C) model. Later, technology companies take their place. Now they are e-commerce operators by creating virtual marketplaces / platforms. There are two types of business models in the ecommerce world: one is an inventory-based virtual marketplace and the other is not inventory-based. Under a non-inventory-based model, virtual market platforms function as facilitators to execute transactions between sellers and buyers. Our neighboring country officially bans tech companies from operating as inventory-based e-commerce traders. This policy allows traders to sell commodities directly to buyers through orders executed on virtual market platforms provided by technology companies. On the other hand, sellers provide goods to marketplaces which make payments after the goods have been purchased by customers through inventory-based e-commerce. There are global giants operating in both frameworks, depending on the regulations of the countries concerned.

The B2C e-commerce business model is operational for local transactions. But e-commerce for export trade under this model is not feasible since global consumers place orders in major virtual markets. In this market model, inventory and non-inventory are operational. In the latter case, transactions are executed under the B2C model. In the inventory-based system, cross-border e-commerce is performed according to the business-to-business-to-consumer (B2B2C) model whereby exporters ship goods to overseas markets. It’s B2B. When the goods are sold, they become B2C. Broadly speaking, this is called B2B2C.

With respect to export trade under the foreign exchange regulatory regime, exporters must make a declaration that they will arrange for the repatriation of export payments within the stipulated timeframe from the date of filing. shipping. Transport documents must be issued to banks of exporters unless advance payment is received. In this context, exporters must make a declaration on a regulatory form known as the EXP form in accordance with the country’s foreign exchange regulations. Exporters can report online without a physical visit to banks.

It is reported that the central bank has a policy regarding the export of e-commerce under the B2C model which requires the goods to be hosted on an e-commerce website accessible via the Internet by foreign buyers. Banks can provide procurement services to eligible exporters for repatriation of export earnings against exportable goods sales orders received on the e-commerce website for small value export up to USD 5,000 per transaction under cost and freight (CFR). It is known that the central bank has granted a regulatory exemption to issue transport documents by transport companies on behalf of foreign buyers for shipments of goods having form EXP. Declaration formalities have been simplified. Exporters are allowed to keep a portion of export earnings in a foreign currency retention quota account, commonly known as ERQ accounts. Funds held in the accounts can be used by exporters to cover legitimate current expenses abroad. It can work as a facility to promote exports abroad.

The B2B2C model is not available in the country’s foreign exchange regulatory regime. The central bank can easily integrate the model by issuing policy guidelines to exporters and banks regarding the process of repatriation of export earnings, expenditures to be allowed in markets, etc. But there are some challenges for export trade under the B2B2C model. It is like a consignment type export – exporters will be paid once the goods are sold to customers by the consignees (importers). The model guarantees a longer occupation period to achieve export earnings. The legal time frame of four months from the date of shipments for achieving export earnings may not be achievable. It is not possible to discount export invoices on consignment sales before actual sales through marketplaces. This may need to be remedied for unsold goods which may be sold to different buyers at reduced rates or returned to Bangladesh.

In case of return, no regulatory problem will arise. But exporters will face problems in the event that shipments have to be dropped to destinations due to non-sale. Non-repatriation of export earnings is subject to punitive measures in accordance with foreign exchange regulations, unless the exporters themselves prove that they have no choice but to forfeit the earnings from export. This can be taken into consideration by the central bank when establishing bonsfides. But there is another problem in the case of shipments made from imported inputs with bond facilities. Whether the content of inputs should be taxed with duties and taxes for proportional unsold quantities is a question.

In this model, exporters will face working capital issues at both stages – before and after shipment. Banks may not be comfortable with extending preshipment financing. They will also not finance export invoices until the export payments are made. However, banks can finance working capital on the basis of adequate collateral, but this method of financing at regular costs does not allow transactions to be executed as needed.

The B2B2C business model must be adapted to export trade. In this situation, the regulatory framework should be win-win between exporters and markets. The model must have a longer period, at least 180 days, for the realization of export earnings. The period of use of imported inputs should be allowed for at least 270 days. Low-cost working capital financing facilities should be set up either in foreign currency or in local currency for utilities and the payment of salaries. Shipping to virtual markets should be treated as normal exports other than consignment sales for the safety of exporters.

But without consignment-type shipments, the model will not be feasible. And if it is not adopted, the export trade may face the plight of traders, taxis, hotels, cinemas and many others. So what would be the solution to tackle the situation is a serious problem. In short, no solution can focus on this. It requires stakeholder consultation, in addition to traditional research. However, alternative windows can be explored. One of the alternatives is for exporters to be allowed to store the goods abroad at their disposal and to make the delivery of the goods according to the orders received from the markets. Shipments from Bangladesh to overseas warehouses according to the template will be treated as consignment sales and not as exports. Deliveries from warehouses to final buyers will be treated as exports. As a result, the repatriation of export earnings will be based on warehouse deliveries. It is a proposal that requires detailed consideration. The authorities concerned should work on this in order to find a mechanism to keep the export trade afloat in the wake of the development of the situation.

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