“While there is no doubt that e-commerce will be a key pillar of our economic recovery, there must be fair competition and a well-balanced enabling policy environment that will instill discipline in the online marketplace”
According to 2021 data from the Department of Trade and Industry, e-commerce generated US$22.6 billion or P1.1 trillion to the country’s gross domestic product (GDP).
This year the target in e-commerce revenues is US24.2 billion or P1.2 trillion which would be 5.5 percent of GDP.
The DTI is anticipating exponential growth in the number of e-commerce businesses from 750,000 in 2021 to 1 million by 2022 with the last year’s launching of the government’s E-commerce Roadmap.
Its goal is to drive industry development, create quality job opportunities, and a sustained and inclusive growth. By 2025, the gross merchandise value is seen to reach US$15 billion.
This e-commerce explosion — when the global pandemic forced everyone in lockdowns to be offsite, and really gave no choice but to shift to online platforms to stay connected, continue work and sustain business – is now an indispensable economic pillar of the new normal.
The exponential growth of e-commerce transactions and how Filipino consumers were able to adapt almost overnight to online transactions demonstrates our potential to thrive in a global digital economy.
I am myself a regular online shopper – one should be familiar with the convenience, health safety factors and the much-improved services of the e-commerce and e-payment platforms and the red flags up in online transactions – and have developed a confidence as a consumer at a comfortable level.
However, the rise of any technological innovation that creates new opportunities always brings with it disruptions that require policy reforms that have become obsolete or even a hindrance to progress.
The fast growth of e-commerce platforms carries new challenges to existing domestic industries that have prospered and positively contributed to our society for generations.
An example is a loophole in the de minimis threshold which was increased in the Bureau of Customs Administrative Order 2-2016 to P10,000 from the decades old level of only P10.
This allows recipients of imported goods and parcels not classified as prohibited with value not exceeding the de minimis limit to not undergo the regular importation procedures facilitating its fast release and not be subject to duties and taxes.
This privilege has been allowed to supposedly benefit micro, small, and medium (MSMEs) “as it will accelerate delivery of goods, reduce business costs, and improve business trade efficiency.”
Online sellers, in the leading shopping platforms, which are dominated by foreign products from China, are now exploiting this policy.
Apparently, foreign exporters are bi-passing tariff duties by simply breaking shipments down into small packages instead of consolidating in 40-foot containers.
If you trace your delivery tracking after ordering from the shopping platforms like Shoppee and Lazada, you can see how your order makes its way from the packing of the seller, the customs inspection of the country of origin and destination, the local sorting centers, then finally delivered to your doorstep in about a week or sometimes just days.
For consumers the big benefit is convenient access to low costs products thru e-payment platforms or even via cash-on-delivery.
But the big risk is, since these are long distance deals from sellers using virtual identities and locations, becoming a victim of fraud and receiving poor standard or fake products is common.
I’ve had my share of these “budol” or scam transactions that were too small to exert efforts on to rectify. Being at the receiving end of the wrong product, sub-standard, damaged, fake, and even products with poisonous substances is a reality of dealings thru the internet.
The penetration of cheap foreign products via these virtual shopping stores has affected the viability of many local brick and mortar enterprises that for decades or even generations, supported the livelihood of millions of Filipinos.
Just look around malls and commercial areas and you’ll see how many shops have closed.
The de minimis loophole is not unique to the Philippines.
There are big debates in the United States raising the same issue of de minimis depriving government of tariff revenues with the growing influx foreign products slipping thru because of their US$800 threshold. Minimal customs inspection also made the entry of illegal items easier.
The rush to e-commerce as a preferred platform for retail and even wholesale transactions is putting pressure on policy makers to urgently act on updating government policies to be more dynamic and anticipatory of more change and disruptive innovations that digital technologies will surely bring.
While there is no doubt that e-commerce will be a key pillar of our economic recovery, there must be fair competition and the same time a well-balanced enabling policy environment that will instill discipline in the online marketplace.
Sellers must ensure that goods delivered are correct, of best quality and free of toxic chemicals.
Consumers must be protected from fraud, identity theft, and access to rectifying measures when rights have been violated.