Bangladesh’s e-commerce sector has received a major boost after the central bank opened up an opportunity for them to make payment to social media giants for online marketing.
The move will make all international bill payments for online campaigns transparent and boost earnings for the country as local companies would transfer the money through legal channels instead of exploring other routes, entrepreneurs said.
This is the first of its kind initiative aimed at paying the bills for digital marketing on social media platforms such as Facebook and Google to their accounts from Bangladesh, Syed Almas Kabir, president of the Bangladesh Association of Software and Information Services (BASIS), told The Daily Star.
“For the first time, we have got a legal channel to pay for digital marketing platforms,” said AKM Fahim Masroor, managing director of e-commerce company ajkerdeal.com.
“This will definitely help our industry by making all the transactions on social media transparent,” said Masroor, also a former president of the BASIS.
The BB issued a circular on Monday where it incorporated digital marketing and remitting foreign currency abroad by information technology or software firms.
Before the move, BASIS members could only remit foreign currency abroad under a special permission using banking channel to bear the expenses of importing licenced software, payment bills for hosting service and domain hosting. On Monday, the central bank also raised the annual ceiling to $40,000 from $30,000 to meet the actual expenses of IT and IT-enabled services.
The Foreign Exchange Policy Department of the central bank issued the circular to this effect, allowing authorised dealers to remit the amount through international cards on behalf of IT or software firms who are members of the BASIS. According to the circular, business houses can top-up $8,000 instead of $6,000 on their international payment cards at one go. The decision came into effect immediately, the circular said.
Members of the BASIS can get the two cards from Brac Bank and EBL. The central bank first issued the cards in 2012 with a limit of $10,000 a year. Later, the limit has increased four times.
“$40,000 is not a small amount, but for big companies like us this amount is not huge,” Masroor said.
Every year, according to market sources, social media giants like Facebook, Google, Imo, Viber, WhatsApp and Skype earn about Tk 2,000 crore from Bangladesh and most of the funds are channeled through illegal ways.
“In my view, the new circular will make the process easier and bring most of the payments to the banking channel,” Masroor added.
The BASIS had proposed the central bank increase the limit to $55,000, but the BB has raised it to $40,000, said Syed Mohammad Kamal, chairman of the standing committee on digital commerce at the BASIS.
“Still, this is not a very small amount.”
“Now companies will be able to go easily for their campaigns on digital platforms and the government’s revenue generation will be ensured from digital campaigns,” said Kamal, also the country manager of MasterCard.
Currently, the BASIS has about 1,327 members and only a few of them used the facility because of its limited features. The number of cards will definitely go up after the inclusion of digital marketing spending, insiders said.
Entrepreneurs who are engaged in e-commerce or other digital activities but not affiliated with the BASIS say they also need the facilities.
“We have yet to formulate any process, we are also thinking about it to find out a way to bring the non-members under the facility,” Almas Kabir said.
A procedure can be introduced to verify the authenticity of a company and the companies can get the special payment card with some limitations, he said.
The e-Commerce Association of Bangladesh (e-CAB) has recommended the Prime Minister’s Office launch similar facilities for its members.
“As a bigger organisation, the BASIS can make a process to verify non-members. However, we also want special cards for our members,” said Abdul Wahed Tomal, general secretary of the e-CAB.
The e-CAB has about 1,000 members. There are about 20,000 e-commerce and Facebook-based entities that are running digital businesses and need to run digital marketing.