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E-commerce slowed by government: report

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A woman surfs an e-commerce website on her laptop in a Phnom Penh office. Pha Lina

E-commerce slowed by government: report

The key ingredients for e-commerce adoption are in place in Cambodia but many specific measures need to be addressed by both the private and public sector before the Kingdom can tap into the huge opportunities offered by a digital economy, according to a new report released by a UN agency yesterday.

Since Tuesday, the United Nations Conference on Trade and Development (UNCTAD) is hosting the annual E-commerce Week in Geneva. Minister of Commerce Pan Sorasak and a Cambodian delegation travelled to the summit to present the findings from the Cambodia Rapid eTrade Readiness Assessment report commissioned by UNCTAD.

One of the major areas for improvement according to the report is the regulatory environment, with several important laws still stuck in the drafting process after years of no progress. The much awaited e-commerce law was first drafted in 2008 but was never submitted to the National Assembly for approval.

“Cambodia’s e-commerce currently operates under a law passed in 1996 that mainly deals with postal services,” the report said.

Poor logistics in Cambodia also remain a large barrier for e-commerce, including issues related “to last mile” deliveries, which make it difficult for logistics players to deliver directly to individual homes. Other challenges include an ineffective and antiquated national postal system and a lack of a systemised address system, adding costs and time to delivering e-commerce products, the report said.

“It can take weeks for an item to arrive from abroad and without a computerized system, recipients often must look up their package [at the post office] by country of origin in handwritten notebooks,” it noted. “Finding an address and ‘last mile’ delivery of purchased goods, present significant costs and challenges – especially for smaller merchants.”

Another important aspect of e-commerce is the ability to make financial transactions digitally, eliminating the costs and risks of paying with cash. Cambodia remains a mostly cash-based society, the report notes, though banking services are spreading, with figures from the National Bank of Cambodia’s latest supervisory report showing that by the end of 2016, the number of depositors in the country had increased by 12.9 percent to almost 3 million.

“Banks do not have the resources to assist merchants in gaining access to their payment gateways,” the UNCTAD report added, limiting access to point of sale platforms.

Sven Callebaut, UNCTAD lead consultant for the e-readiness assessment, said the government in Cambodia had fallen behind in terms of leading the adoption of e-commerce. Instead, the effort was lead by the private sector itself.

“In Cambodia, the e-commerce ecosystem has been developing with minimal government intervention,” he said. “The government has been trying to catch up, especially in the Ministry of Posts and Telecommunications and at the Ministry of Commerce, but the private sector has taken the lead in all aspects.”

Callebaut added that fostering greater trust in the country’s financial institutions was now one of the priorities for a digital push.

“The issue of [greater] trust in a large unbanked population is paramount for SMEs to develop innovative platforms, for consumers to use cashless payments solutions and for banks to invest in payment gateways,” he said. “This can be tackled through dedicated programs, which could be developed in partnerships by the government and private sector and with funding from donors.”

Yesterday, UNCTAD released its new e-trade for all platform, providing a single window where policymakers in developing countries can gain a better understanding of how to promote e-commerce as well as connect with UNCTAD partners, that include major firms like Google and eBay.

Steven Path, president of the ICT Federation Cambodia, said that the e-trade initiative would greatly benefit Cambodia by offering access to a wide network of e-commerce stakeholders and donors such as Chinese e-commerce giant Alibaba.

He also reiterated the urgent need for the government to approve the e-commerce law so that major international players can begin to look at Cambodia and help develop the sector.

However, he noted that the e-commerce scene is already seeing significant growth through local players who have created digital platforms for payments despite the existing challenges.

“Many local payment options already exist. Right now, nothing stops you from conducting business online,” he said. “What is really important right now to really increase the adoption of e-commerce is to provide products that customers really need.”

Path added that 2017 could be the year when e-commerce in Cambodia “really takes off”.

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