Caybo Consulting E-Commerce - ASEAN Week September 21, 2015 - TEST VERSION

Viêtnam E-COMMERCE MAKES GREAT CONTRIBUTION TO VIETNAM'S GROWTH September 22, 2015

• E-commerce has contributed greatly to the Vietnam’s socio-economic growth during 5 years implementation of the “General Plan to Develop E-commerce 2011-2015”. "Policies for E-Commerce in Vietnam 2015" will be released by the Ministry of Trade as a new plan for the next five years in e-commerce market. “By 2020, e-commerce will strongly develop in all cities and provinces”, said Mr. Tran Huu Linh, head of the Ministry of Trade's E-Commerce and Information Technology Department. Linh also added: ""E-commerce will help enterprises develop both local and export markets, as well as join in the global supply chain. But e-commerce management policies must also protect consumer rights

as well as create the best conditions for enterprises." Also, a legal framework must be completed, and that online payments via B2C, B2B, G2C and G2B must be set up and be secure. Logistics systems must also be improved. [Read more in EN]

• It is also projected that by 2020, 30% of Vietnamese population will go shop online and the

turnover will increase 20% each year, reach 10 billion USD. Cross-border ecommerce is expected to develop and account for 15% of total export turnover by 2020. Meanwhile. Mobile ecommerce globally is expected to take one-fourth of global retail at 850 billion USD in 2018 and Vietnam e-commerce is expected to reach 300 million USD within the period. [Read more in EN]

Viêtnam VIETNAM ROLLING OUT DIGITAL ECONOMY September 24, 2015

Vietnam national strategy is being planned to push more citizens toward a digital economy. A draft prime ministerial decision sets targets for 2020, including an online presence for 60 percent of the country's businesses. In the next five years, 80 percent of companies should allow customers to order through mobile apps or internet sites, 30 percent of the population should be shopping online and electronic payments should be available for 70 percent of utilities and at all supermarkets.

The draft decision that outlined goals for 2020 makes clear these are priorities for the Southeast Asian nation. Online business, the draft says, is an important way for Vietnam to “increase its competitive capacity amid international integration; strengthen its ongoing industrialization; and modernize the country.” Vietnamese state has been funding $1 million to start-up companies this year. This enables them to apply for up to 70 percent of their capital needs from the government. In the last two years, the government has also spent a lot of effort to promote startup ecosystem and innovation in Vietnam, said Linh Han, project manager of Vietnam Silicon Valley. Meanwhile, Nguyen Tuan Minh Hien, head of marketing at Gamebank, an e-retailer for games, suggested that the government should introduce foreign investors and other venture capitalists to domestic firms. One of the greatest hindrance of web business is the “trust of customers.” Buyers doubt the safety of online shopping so more than 70 percent of e-retailers use cash-on-delivery in Vietnam, according to a survey by World Bank financing arm IFC. [Read more in EN]

Viêtnam SAFETY iN E-COMMERCE REQUESTED BY VIETNAMESE CONSUMERS September 24, 2015

• Recenty, there has been many unknown origins, low quality products being sold in Vietnamese market. These products are labeled as “portable goods” or “100% natural ingredients” confusing consumers. Using the services of reliable e-commerce websites is one of the choices to make sure that the goods are safe. Especially during peak seasons or holidays, instead of crowding into retail shops, many buyers choose to shop online on those websites. Clear information of the products including name, origin and quality standards will attract more buyers and gain their trust.  [Read more in VN]

• Online shopping has been becoming a habit of most people using internet. Even if there have been penalties for people violating online selling regulations, many e-commerce companies ignore these rules. According to Mr. Nguyen Ngoc Dung, Deputy General Secretary of Vietnam E-commerce Assosiation (VECOM), 40% of Vietnamese e-commerce websites vilolate transaction information. The provinces/cities authorities will tighten management on this problem and violated companies will be sacntioned up to 50 million VND and other additional penalties such as withdrawal of the national domain name ".vn" or suspending the operation of e-commerce up to 6-12 months. [Read more in VN]

40% of Vietnamese e-commerce websites violate

transaction information.  

Viêtnam VECITA COOPERATES WITH INTEL VIETNAM TO DEVELOP VIETNAMESE E-COMMERCE September 25, 2015

The program named “One million smart devices” (Vietnamese: “"Một triệu thiết bị thông minh") between Vietnam E-commerce and Information Technology Agency (VECITA) and Intel coporation will mainly support Vietnamese SMEs, retailers, medical services, hospitals, educational services....  Both parties will build and deploy solutions for intelligence sales management to support SMEs to approach e-commerce. Deputy Minister, Mr. Tran Tuan Anh said VECITA and Intel will serve as

a focal point attracting more major partners. "Both parties are experienced in implementing projects of hardware and applications to support businesses and individuals to access the ecosystem of e-commerce at lowest cost," he said. [Read more in VN]      

Singapore BIG THING IN SINGAPORE’S ECOMMERCE LANDSCAPE: CASHBACK SHOPPING September 24, 2015

Singapore will experience the next big shift: the rise of online cashback shopping. The concept is that cashback websites partner with established merchants and secure a percentage of commission from driving web traffic and sales to these online merchants. The cashback websites then shares the ‘commission’ with consumers, allowing them to earn cashback with their online purchases. Cashback websites can help online shoppers accumulate substantial savings, especially for those who online shop frequently.

The concept of online cashback shopping started in the States but is becoming increasingly popular with this region and particularly Singapore online shoppers as they gain understanding of how cashback websites work. Similar to how consumers choose credit cards based on the benefits and value that the cards bring, shoppers can compare which cashback websites provide the best cashback value as well as the network of merchants they are partnering with. The only difference? There is no limit on the cashback you can earn through online cashback providers like Ebates. [Read more in EN]

Singapore MORE POPSTATIONS AS SINGPOST EYES RISE IN E-COMMERCE September 25, 2015

SingPost intends to double the number of "POPStation" parcel-holding facilities over the next few years from 100 to 200, as demand for e-commerce delivery services picks up. The facilities, averaging 80 separate lockers a station, are open at all hours - allowing online shoppers to pick up parcels whenever they like. Online shoppers receive a notification and PIN for their secure locker via a smartphone when their parcel has been delivered. They can return parcels and make payments onsite as well. Retailers with a

partnership with SingPost may deliver to these lockers. SingPost does not impose additional charges for delivery to the POPStation. Customers also have the option to make payment to some e-merchants at the POPStations only upon parcel delivery. This is to cater to customers who are not comfortable giving their card details online to make payment, or would like to be sure the parcel has been delivered before paying. They can also return purchased goods to certain retailers by placing these parcels back in the POPStations. Also, they can make personal shipments by placing their own parcels in the lockers after making payment online. [Read more in EN]

Thailand THRIVING E-COMMERCE MARKET DEFIES ECONOMIC WOES September 21, 2015  

     

• One of the biggest trends in Thailand this year has been the rapid penetration of digital commerce as more and more traditional companies utilise digital channels to offer products and services directly to consumers or via third-party online retailers. It is no longer just young consumers shopping online. The older generation is also embracing the digital storm. [Read more in EN]

• Given changing urban lifestyles and the need for shopping convenience at home, aggressive promotional campaigns and new online store openings, and the proliferation of internet users and mobile devices, the e-commerce market is thriving in Thailand. Riccardo Basile,

chief executive of Lazada Thailand, says the country's sluggish economy won't have a long-term effect on the local online shopping market. Working people still want the option of an effortless shopping experience and purchases delivered to their doorstep -without having to go out and get stuck in traffic. [Read more in EN]

Philippines GROUPON SHUP DOWN PHILIPPINES OPERATIONS September 23, 2015

E-commerce platform Groupon has shut down operations in the Philippines as part of a global streamlining program that will cut 1,100 jobs across various markets. Groupon chief operating officer Rich Williams announced in a blog post dated Sept. 22 that the company had decided to cease operations in seven countries following its recent exit from Greece and Turkey. Aside from the Philippines, the company is folding up operations in Morocco, Panama, Puerto

Rico, Taiwan, Thailand and Uruguay. “We saw that the investment required to bring our technology, tools and marketplace to every one of our 40+ countries isn’t commensurate with the return at this point. We believe that in order for our geographic footprint to be an even bigger advantage, we need to focus our energy and dollars on fewer countries. So, we decided to exit a number of countries where the required investment and market potential don’t align,” Williams said. [Read more in EN]

Indonesia HOW FOREIGN VENTURE CAPITALS ARE SNEAKING PAST INDONESIA’S ECOMMERCE LAWS September 22, 2015

Indonesian law doesn’t allow foreign direct investment in local retail ecommerce companies. This concerns online sellers who hold their own inventory and have a direct touchpoint with Indonesian customers.

Many other Indonesian ecommerce companies do fall into the retail category. Just think of Muslim fashion estore Hijup, or Ralali, an online

shop for tools and industrial equipment. Both have raised venture capital from abroad this year. How was this possible? It’s a question frequently raised by Tech in Asia readers.

Parallel debt and equity round: In the case of an investment in an Indonesian niche fashion ecommerce startup, both foreign and local investors were involved. The investment had to be finalized fast, because the startup was approaching the end of its runway. According to one VC, “The simple answer on how to address this problem is to raise an equity and debt round simultaneously.” “Local investors invest into the equity round. Foreign investors invest into the debt round [in the form of a] convertible note. By investing into a debt round, we are able to fund companies without actually being shareholders, so we are not affected by Negative Investment List regulations. But during liquidation events we can sell our note as if we had equity ownership in the firm.”

Create multiple entities: In cases when there is more time to finalize an investment, the preferred way is to split the companies into multiple entities. “Some investors are more comfortable to hold equity”. “[We create] one holding company [that] sits outside of Indonesia, and investors will invest directly to that.”

Direct investment through a local entity: A third way to circumvent the ban on foreign direct investment in retail ecommerce is to work with a third-party local entity. This entity acts as nominee – meaning on paper, this entity holds the shares. Investing through nominees is a common practice in Indonesia, especially in land title ownership, which is also excluded from foreign investment. Foreigners purchasing land in Bali through a nominee arrangement have learned the hard way that it’s risky. The solution is simple, but due to its risk, it’s not the preferred option for VCs seeking to invest in Indonesian ecommerce ventures.

[Read more in EN]

Malaysia GUIDELINES ON TAXATION OF ECOMMERCE September 28, 2015

The Malaysian tax authority has recently issued guidelines on the taxation of electronic commerce in Malaysia. The document provides guidance on the tax treatment of e-commerce transactions, including scope of the tax liability, treatment of servers and websites in determining the location of the ecommerce income, issues on withholding tax and double taxation and examples of the various

business models with relevant explanations. The key definitions from the guidance:

Where income from e-commerce of a non-resident is deemed not to be business income derived from Malaysia because the business operations is not carried on in Malaysia, payments to the non -resident in the nature of royalty and deemed to be derived from Malaysia is subject to withholding tax. The term ‘royalty’ includes payments for the use of or the right to use copyrights, know-how or information concerning technical, industrial, commercial or scientific knowledge, experience or skill. 7.2.1 Payment for the use of, or the right to use copyrights of intangible products such as: (a) Downloading of a digital product to a customer’s hard disk or similar media. (b) Licensing arrangements to reproduce, modify and adapt, the absence of which would constitute an infringement of copyright. In the above example, if the payment is for the use of, or the right to use copy rights, the income constitutes royalty. On the other hand if the payment is for the purchase of the product, the transaction would not result in royalty income. 7.2.2 Payment for the use of, or the right to use know-how (intangible products). Any form of electronic supply of know-how (i.e. undivulged technical knowledge, information, experience or technique that is necessary for the industrial reproduction of a product or process) which take the form of technical data, samples or patterns, or details of processing or production methods for which payment is made constitutes “royalty”. 7.2.3 Payment for the use of, or the right to use information concerning technical, industrial, commercial or scientific knowledge, experience or skill. Any electronic use or the right to use the above information which may include access to unpublished knowledge or information gained through scientific, technical etc. experience. This may include supply of information on markets or fashion trends, information concerning future technological advances or access to unpublished information contained in a database. Payment for these constitutes royalty. Royalty is deemed to be derived from Malaysia if the payer is a resident, the government, a state government or a local authority. If the royalty payment is charged as an outgoing or as an expense against any business in Malaysia, it is also deemed derived from Malaysia.

[Read more in EN]

Myanmar ONLINE RETAILER ‘SHOP.COM.MM’ BECOMES FIRST E-COMMERCE FIRM IN MYANMAR TO HAVE WECHAT OFFICIAL ACCOUNT August 24, 2015

Local e-commerce company shop.com.mm has launched its “official account” on Chinese app WeChat to reach out to its customer base. The move made shop.com.mm the first firm in Myanmar to have an “official account” on the messaging and calling app. Elin Torstensson, managing director, shop.com.mm, said, “WeChat is a very powerful tool for us to connect with the people of Myanmar. The app … includes many features that are ideal for a growing e-commerce

company like us. “… by using new mediums, such as WeChat, we not only reach out more directly to our customers, but also learn about their likes, needs and the trends that are influencing them.” [Read more in EN]