The onset of the Covid-19 pandemic has hastened the migration of client spending from brick-and-mortar buying malls to electronic-commerce (e-commerce) platforms, heralding a brand new period of progress for the digital financial system.
Motion restrictions are unlikely to be eliminated within the close to future, with most companies prone to be topic to extra stringent capability limitations and crowd management measures. These generate market situations – in Singapore and throughout the area – that enlarge the importance of e-commerce as a pillar of all affected economies.
In South-east Asia, there’s super potential for cross-border e-commerce to drive regional financial integration and financial progress. Asean customers are more and more turning to their smartphones and cellular apps to have interaction in digital transactions, whether or not it’s to get a private-hire automotive, get meals delivered, do e-payments or store on-line. Profitable e-commerce platforms working throughout Asean right now embody Tokopedia from Indonesia and Lazada from Singapore.
Whereas Asean has skilled optimistic developments, there’s nonetheless potential for larger e-commerce adoption within the area.
Corporations face many challenges right now, reminiscent of obstacles to overseas market entry, and the dearth of Asean-wide interoperable cost techniques and digital providers.
As well as, the event of e-commerce platforms has been affected by the emergence of interconnections between beforehand unrelated markets and industries. For instance, “tremendous apps” that make it simpler for customers to transact in numerous markets and industries by means of a standard platform have the potential to concurrently impede and facilitate cross-border e-commerce transactions.
Throughout this pandemic, as companies are compelled to close to scale back transmission dangers, many are turning to e-commerce. Companies that record their merchandise on a number of e-marketplaces to promote to customers abroad may be capable to make up for the lack of home gross sales. Even when the Covid-19 pandemic abates and restrictions are eased, the position of e-commerce in strengthening enterprise resilience and supporting financial restoration throughout Asean is prone to keep.
Tremendous apps first emerged in China with apps reminiscent of Meituan, Alipay and WeChat leveraging the excessive recurring utilization of their platforms to consolidate all kinds of completely different options onto a standard software platform. For instance, a social media chat app, sometimes used many occasions a day, can embody cost choices and e-commerce, which let customers store and pay by means of the app.
Comparable developments might be present in South-east Asia. Each Indonesia’s Gojek and Singapore-based Seize began as ride-hailing platforms however swiftly expanded to different providers together with their respective cost providers. Seize the truth is lately introduced its collaboration with Singtel to bid for a digital banking licence in Singapore.
With many Asean customers already acquainted with apps and their many makes use of, there’s super potential to develop interoperable Asean e-wallets that may considerably scale back cost friction associated to intra-Asean tourism. Such e-wallets can increase and improve cross-border e-commerce alternatives, particularly for the massive section of unbanked residents and small companies in Asean.
Whereas tremendous apps may appeal to us with the big range of options supplied, ought to we even be involved that they may ultimately dominate the e-commerce panorama to such an extent that they may impair competitors within the digital market?
For instance, an excellent app that has a dominant place in a single market may provide its customers bundled reductions – reductions for utilizing the identical app for multiple sort of service – in an effort to encourage its customers on this market to additionally use its app for different providers in numerous markets.
If the tremendous app efficiently attracts a big sufficient variety of such customers to make use of it for providers in different markets because of the bundled reductions, the resultant “community results” may compel companies in different markets to make use of that tremendous app to entry their customers. If different apps with out the market energy are unable to duplicate such methods, would companies finally be compelled to record on these dominant platforms or to make use of their cost providers completely? Tremendous apps that utilise such exclusionary conduct to maintain their dominance after driving out opponents may, subsequently, be capable to cost increased charges from companies and customers that transact on their platforms, elevating the prices of cross-border commerce for everybody.
With out going through sturdy competitors, builders of tremendous apps may not be incentivised to have interaction in steady product innovation until the authorized and regulatory atmosphere ensures the market stays contestable, techniques stay open and interoperable, and pricing practices stay clear.
This is able to counsel that tremendous apps want cautious monitoring by the competitors authorities.
ROLE OF COMPETITION LAW AND POLICY
That is the place competitors regulation and coverage can play a job to facilitate e-commerce progress.
In 2018, the acquisition of American ride-hailing platform Uber’s South-east Asian operations by Seize confirmed how rapidly a merger of on-line gamers may very well be accomplished and made irreversible.
The Competitors and Client Fee of Singapore (CCCS) was fast to behave on the merger, imposing fines on the merger events for the irreversible hurt to competitors between ride-hailing platforms. It additionally imposed instructions on the events to revive market contestability and encourage new entry.
The market noticed the entry of Gojek a number of months later.
In an earlier case involving interoperability, the CCCS labored with a cost service supplier to take away restrictions that prevented retailers from accepting different cost playing cards on widespread cost terminals.
There are different dangerous behaviours in e-commerce by companies that advantage the competitors authority’s consideration.
One instance is on-line price comparability platforms, in addition to buyer opinions and score techniques. These improve customers’ potential to make knowledgeable selections and intensify price competitors between on-line sellers.
Sadly, deceptive pricing practices are widespread, reminiscent of drip pricing (including extras on the finish of the transaction, usually in a not very clear method – for instance, including the price of journey insurance coverage to a flight ticket). One other instance is fake time-limited reductions, giving customers the impression a proposal is about to run out in a couple of minutes.
Such practices thwart customers’ potential and efforts to make knowledgeable buying choices, and in flip impede the power of sincere companies to compete on a degree taking part in discipline. The CCCS is creating a set of pointers on price transparency to deal with this difficulty.
COOPERATION AMONG ASEAN COMPETITION AUTHORITIES
The cross-border nature of e-commerce platforms may pose enforcement challenges to the competitors authorities as some e-commerce web sites may goal home customers however have restricted bodily presence domestically.
This highlights the significance of regional cooperation among the many competitors authorities to attain efficient competitors enforcement. The competitors authorities in Asean have already begun to work collectively on widespread challenges.
For instance, the CCCS cooperated with Malaysia, the Philippines and Vietnam on the Seize-Uber merger, sharing non-confidential info.
Memorandums of understanding (MOUs) between Asean competitors authorities might help to facilitate enforcement cooperation. The CCCS has signed an MOU with the Indonesian Competitors Fee to encourage notification of enforcement actions that probably have an effect on one another’s pursuits, facilitate the exchange of knowledge between the companies, and help enforcement coordination in circumstances of mutual curiosity.
Asean member states are additionally taking vital steps to bridge digital divides by means of the Asean Digital Integration Framework, to facilitate digital commerce and innovation, whereas enabling seamless digital funds.
As competitors may also be affected by authorities insurance policies and rules, the authorities want to grasp how their actions may have an effect on competitors and market entry. The competitors authorities can play the position of advising different authorities companies on their insurance policies on e-commerce markets to keep away from any unintended anti-competitive results.
For instance, in creating the bodily infrastructure essential to help e-commerce in Singapore, the government-initiated Locker Alliance adopted an open entry supply community comprising parcel lockers and assortment factors to allow customers to gather parcels at their comfort. An open and interoperable system helps to stop any participant from profiting from their market positions to exclude their rivals from utilizing this nationwide infrastructure.
One other difficulty the place authorities choices have an effect on competitors in e-commerce is knowledge portability.
Empowering customers with larger management over their knowledge can help the expansion of the digital financial system and commerce, because it permits customers to get and reuse their private info for various providers. For instance, they will not should create a brand new account for each on-line buying expertise from a special web site, however can use one.
Recognising this, the CCCS collaborated with the Private Knowledge Safety Fee to review knowledge portability and the way it may be launched to help a digital financial system.
These ongoing discussions with completely different regulators make sure that numerous points that would have an effect on e-commerce improvement are concurrently monitored and, hopefully, addressed.
E-commerce will play an more and more vital position in the way in which Asean nationals eat items and providers, and can proceed to be a key entrance for Asean financial integration.
For Asean to fulfil its e-commerce progress potential, competitors regulation and coverage might be deployed as a regulatory instrument to facilitate the event of a vibrant digital ecosystem for the advantage of each companies and customers throughout the area.
Whether or not regulating tremendous apps, on-line buying practices, or vetting inner authorities guidelines, the competitors authorities can play a major position in guaranteeing that the digital financial system is open to competitors and conducive to boosting Asean’s progress.
• Affiliate Professor Burton Ong is head of Competitors Regulation Analysis on the EW Barker Centre for Regulation and Enterprise, Nationwide College of Singapore. Tan Hello Lin is director of the Coverage and Markets division of the Competitors and Client Fee of Singapore. Celestine Track, assistant director on the identical division, additionally contributed to this text.