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Minimal govt intervention in e-business called for

Eric Fredell, officer, E-Commerce Task Force, International Trade Agency, US, delivered a lecture on 'Creating an environment for e-business'.

He believes that minimal government intervention and a responsible self-regulatory private sector are the only answers for creating an environment conducive for e-business.

He explained that the problem with the Net economy is its 'virtuality'. The lack of face-to-face interaction hinders the growth of business on the Net. The most important factor that is impacting the growth of e-commerce is the lack of trusted interaction.

The Net is impersonal and based on an unwritten common principle and understanding. "And it is this trust that the companies venturing into e-business should build if they are serious about e-business," Fredell said.

It is high time that corporations realise that the Internet changes business strategies for ever and that this economy knows no boundaries.

For instance, in the United States alone business-to-business e-commerce has risen from $43.3 billion in 1998 to $109.3 billion in 1999 and is estimated to touch $1.3 billion in 2003.

On the online retailing front, the figures are likely to touch $80 million from $7.5 million in 1998. "This is the kind of growth that is happening around the world. And India too is on the threshold of a boom. But for that to happen it is important to harness this power in the right direction," Fredell said.

But to have an environment that encourages such growth, government involvement should kept to the minimum level possible while the lead should be taken by the private sector.

At the same time, there should be no discriminatory laws with regard to business transactions on the Net. To begin with, there is need for deregulation that will increase competition in turn, lowering the cost of e-commerce.

As more number of people enter the Net economy, the stronger it becomes. Costs can be reduced by implementing a flat-rate pricing for local calls and Internet access like in the UK, Fredell said.

On taxation, the policy should be clear, consistent and non-discriminatory. The government should not impose a different tax structures for similar kinds of transaction on the Net and physical world. For instance, a bookshop on the Net and bookshop across the street should have the same taxation.

Besides, there should be close cooperation between trading partners to ensure effective tax administration and suppression of illegal activities.

"More importantly, the global nature of e-commerce requires global approach towards a duty-free cyberspace for any other policy would be impractical," Fredell said, adding that India's involvement with the WTO will ensure that its cyber market moves in this direction.

Besides taxation and tariff imbalances, the factors affecting the growth of the e-commerce are authentication and privacy concerns.

Fredell said this could be taken care of by promoting innovation and experimentation in e-authentication methods. But the government should not discriminate between technologies for authentication and should give legal recognition to electronic evidence.

The privacy concerns should also be addressed because corporations are in the danger of losing millions in business just because consumers are wary of conducting business on the Net for fear of privacy problems.

And most importantly, consumer confidence needs to be built by putting in place a jurisdiction on this. The private sector can play an important role in this by adopting a self-regulatory attitude.

For instance, IBM does not advertise on any site that does not have a privacy policy. These are the moves that are required to build an environment for building e-commerce.

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