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Legal void stalling e-commerce: study

A girl surfs through MaioMall.com, a local e-commerce website, on her personal computer.
A girl surfs through MaioMall.com, a local e-commerce website, on her personal computer. Pha Lina

Legal void stalling e-commerce: study

Cambodia is on the verge of a rapid expansion in e-commerce – provided the government and private sector take adequate measures to support and promote online business activities, according to a study to be released today.

The eCommerce Readiness and Opportunities in Cambodia report, published by Cambodia-based marketing firm Mango Tango and sponsored by the Mekong Business Initiative (MBI), presents the findings of surveys conducted with 27 e-commerce experts in the Kingdom whose expertise spans several industries.

The respondents identified approval of the long-awaited e-commerce law and the creation of adequate consumer protection regulation as the main priorities in establishing a vibrant e-commerce sector.

“There are international businesses interested in entering Cambodia, but they expect a legal framework to be in place,” the report said.

A law on e-commerce, expected to regulate online agreements and online signatures, was drafted in 2008 but has not yet been submitted to the National Assembly. Cambodia is the only country in ASEAN without such legislation.

Those surveyed in the report expressed frustration in the lack of transparency of the regulatory process, stating that details of the law have never been made public.

Respondents also highlighted the technological difficulties of integrating online payment infrastructure, as well as the high fees charged by local banks for payment processing, as barriers to the wider use of online commerce.

“Merchants complain that the banks are difficult to work with, and that they are unwilling to work with even mid-sized companies,” the report said.

“What’s more, merchant fees for payment gateways available in Cambodia are significantly higher than in other regions, because of perceived risk by card associations.”

It added that the MasterCard Internet Gateway charges 4-5 percent for a merchant’s transactions in Cambodia, compared to just 1-2 percent in developed markets.

Chris McCarthy, CEO of Mango Tango and one of the authors of the report, said that several of those interviewed for the research spoke of the need to accelerate the changes to the legal system so that courts are able handle the types of disputes common for online activities. As claims often involve individual consumers and SMEs, the courts should operate similar to small claims courts in other countries.

“Right now, access to the courts is a very lengthy process and it would be expensive to deal with small matters,” he said.

“Having small and medium-sized merchants become part of a robust ecosystem that is what is going to drive e-commerce growth in Cambodia.”

He added that once a sufficient framework was in place, international companies such as Amazon.com would come to Cambodia and quicken the pace of e-commerce development, particularly as the presence of these large companies would increase consumer confidence in the sector.

However, Steven Path, president of the Cambodian ICT Federation and CEO of local software development firm Pathmazing, said the adoption of a legal framework could still be very far away.

“There is currently no sense of urgency by the government to finalise the e-commerce law and get it implemented,” he said.

“The private sector and the ICT Federation are going to accelerate e-commerce adoption this year with a number of e-commerce launches, and we will proceed with all this under the assumption that the e-commerce law will not be launched any time soon.”

Path’s company is set to launch a new online application called Tesjor for making payments at restaurants in the next few weeks. It will also launch an e-wallet solution called Khmer Wallet, which he says is currently the most effective way to bring payments online.

“At the moment, online payment with ATM or credit cards is a very tedious process, because the customer has to enter his card details every time he wants to conduct a transaction,” he said.

“Right now in Cambodia, the Visa and Mastercard requirements with the bank we are working with will not allow us to store any information on our local server, so it makes card payments impractical.”

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