Analysis of T&T’s National E-Commerce Strategy 2017-2021

The Ministry of Trade and Industry of Trinidad & Tobago (MTI) formally announced their “National E-Commerce Strategy 2017-2021” on Wednesday 6th Dec 2017. You know, me, mention ‘E-Commerce’ and my antennas fly out and then some. But truth be told, it was of no surprise as I was consulted for my input given my extensive on the ground experience and knowledge of the subject.

Full disclosure right now, I’m not a fan of this government or ANY government before them. It’s so ironic that we have this strategy when the exact words from Finance Minister Colm Imbert in November 2016: “Online shopping is not a good thing for a developing country…” then he slapped us with the 7% online tax.

However since I was consulted as a ‘stakeholder’ I felt duty bound to do my part for my country AND to preserve my right to bitch and moan about it after.

Though some of my insights and recommendations did make it into the policy, this article is a thorough and objective review of this document. Here is the link to it. Everything that follows is a result of what you see there…

First off, did you notice the title of the document? “National e-Commerce Strategy “. They used a lower case ‘e’ instead of uppercase which clearly indicates the low priority of E-Commerce. I mean, what a Freudian slip of very telling proportions if I ever did see one, so right away they’ve started out on the wrong foot!

Yes, that was a joke, I’m not going to pick apart the title, nor am I going to pick apart each section. My approach is going to focus on the main segments.

My main concern is what this strategy is designed to achieve. I’ll still analyze the terms of reference they used to come up with these stated objectives and let you know if I think they’re optimal and if any have been left out.

I have no problems with any of these objectives. With regard to regulatory environment for e-commerce in T&T, the Electronic Transactions Act (2011) is still languishing waiting to be fully proclaimed to make the remaining sections enforceable law. However, a little birdie told me a while ago that the reason for the delay was that the Act was still full of holes. I see no reason to not fully proclaim and then amend as necessary. I’m positive the entire Act was copied wholesale from some other country’s with the only edits being via ‘Find and replace’ in Word to replace with ‘Trinidad & Tobago’

Mind you, this Act is in NO WAY impeding E-Commerce in Trinidad & Tobago even remotely. No business is holding back their online store citing it as a reason. It is an inherent weakness in the system though and absolutely necessary cog in the wheel. While the document specifically addressed this, it was only generally stated in the SWOT Analysis.

The implementation of an Electronic Funds Transfer (EFT) Framework needs clarification as EFT in is already standard in our banking system. Later in the document the Action Plan referred to the EFT Framework implementation as enabling e-Payments across all government services. If that’s all this objective is referring to, then the wording is misleading as there is no framework to implement, the system just has to be applied.

I hope such e-Payments on government websites will include both EFT and credit card.

Ahh, my pet peeve! But I am seeing some stirring and the private sector is more than ready to participate. What’s stopping them is not lack of capital but lack of knowledge. I’m not expecting the Ministry to educate them to increase participation, that;s not their job, their job I think is to provide the incentives to do so.

I did see that the Implementation Plan included “Develop programmes and incentives to promote domestic firms to have a presence and conduct business online.” It did specify action through its agencies such as exporTT and EXIMBANK and in collaboration with other Ministries.

I get the impression that the focus is on actual online stores and the actual buying and selling elements and not so much the other moving parts of E-Commerce, for example payment gateways and technical elements such as coders, programmers etc. resources which are in short supply locally. For example, integration of offline inventory systems to online stores is a major headache.

We’ll have to wait and see what other forms that would take, but I have some recommendations here:

• Tax incentives for online stores generally
• Tax incentives for online stores that exclusively or primarily sell locally produced goods
• Coordinated programs to foster locally produced goods for online sales
• Make online sales of locally produced goods non-VAT
• Encourage export for USD sales
• Encourage web development programs by working with training schools.

Tax incentives will not provide the immediate boost though. Many businesses in T&T avoid taxes with impunity anyway. I would advise the Ministry to focus on programs that hit the pocket directly via coordinated programs say with NEDCO for SMEs to get off the ground through loans and grants. For larger businesses, programs for locally produced goods for exclusive online sales in the local and export market would fare better than with tax incentives alone.

FIXING SYSTEMIC HOLES that are the government’s responsibility would also increase participation. In addition to the Electronic Transaction Act, the Postal Code system, recently invented by TT Post needs to be rolled out. This has to be a government operation that a country the size of a single postal code cannot implement such a simple thing.

As I write this I am aware that many areas have been notified of their new official addresses with postal code. I got mine and it’s 840508 here in my area of Princes Town. Postal codes would significantly streamline the delivery process as all shopping carts use them to set up shipping zones. It would make integrating delivery modules much easier to allow more shipping options at checkout, for example, having overnight, 2-day, standard shipping. This will be particularly useful for Tobago (remember them?).

The only way this can be addressed if the root causes are known. I’m not sure if the Ministry knows or properly researched the reasons why. Their strategy is in the right direction though via full proclamation of the Electronic Transaction Act; enactment of new Consumer Protection Act; the on-line Consumer Affairs Portal, managed by the Consumer Affairs Division; the proposed National Consumer Policy to ensure consumers of services and digital content receive similar protection as consumers of goods by enshrining equitable rights.

Full marks for the above and hopefully they can execute. Trinis are still wary of local merchants as I maintain that if your business sucks offline, it will suck online. Trini merchants have an inane trait of treating customers like parasites. It’s no secret that customer service is not high on the agenda of local business.

No reservations about this either, all the better for the Infrastructure program in Public Sector and free public WiFi coverage at locations throughout Trinidad and in Tobago. I won’t hold my breath for online payments across the board for public services, I’ve seen the government’s websites— no planning and organization whatsoever. Case in point, a full week after the official launch of this same strategy I’m reviewing, there is no PDF link anywhere of the MTI’s website.

Some items overlap from above as you’d notice in the document that the Implementation section is in line with the Goals (Section 8) and I couldn’t resist but treat and refer between them as we Trini’s say ‘one time’. I’m not savvy with what constitutes ‘policy’ regarding how much detail goes onto one at a governmental level, and I do know a ‘strategy’ is also broad, but I still felt that this document was too general in scope.

In addition to relevant consumer protection elements I was happy to see mention of enactment of Cybercrime Legislation and the Data Protection Act, all part and parcel of a comprehensive E-Commerce policy. I was more interested in Action 3: Promoting private-sector participation in e-commerce and I reiterate my earlier observation that the activities mentioned herein seems to focus only on the merchant side.

I would have liked to see more action on the mechanics of E-commerce which needs to be in place and working well before we can foster anything. At the moment we have only one payment gateway in First Atlantic Commerce (FAC) offered by three (3) banks which is out of reach for the most part for the majority of SME’s and out of the question for an entrepreneur without an existing banking relationship.

The local PayPal ‘equivalent’ WIPAY has definitely made online payment options accessible and affordable to those with little or no budgets but they are still developing and their platform isn’t that sophisticated yet and their are some limitations they have to overcome.

I had to laugh at the mention of collaboration with the private sector via the various Chambers of Commerce. I’m still waiting for Chaguanas to become a tech-savvy’ city by 2015 which was the grand vision of the President of the Chaguanas Chamber of Commerce Rishi Sookhai. He also had plans for free WiFi all over Chaguanas. The San Fernando Business Association had something similar in mind, but these jokers seem to only do luncheons and cocktails well. The only route is directly with businesses but I’m sure they’ve been included just for completeness.

The rest of action items are par for the course for such a strategy so I won’t rehash.

The strategy’s background research upon which the actions are framed had some glaring omissions which I believe would have made for some additional actionable items.

This is no small thing. The entire strategy would have been predicated on this fact and should have been mentioned in the Rationale. Trini’s are shopping online outside T&T so much as a new tax had to be brought to curb it. In my opinion the Rationale is very superficial and missed mentioning harnessing the huge E-Commerce activity already going on for years and redirecting locally.

Apparently no other government agency/division/department bothered to gather any intelligence from the $500M in 2014 to $1B in 2016 in overseas online sales for this strategy to cite. What are Trini’s buying online that have local merchants bawling and crying— Electronics? Computers? Clothing? Furniture? Household items? Tools? Equipment?

Was even a cursory analysis done on the effect of imported goods that bypass the inland economic system?
Because online purchases on US sites are generally the same imported goods that local merchants don’t get to import themselves, i.e. foreign exchange is NOT LEAKED but goes out via a different door. Removing merchants from the equation results in removing money from our economic cycle which directly impedes the ‘multiplier’ effect we’ve all learnt in Economics, and it’s THIS VALUE that’s the true cost of online shopping.

Worldwide E-Commerce figures were thrown about to indicate the sheer potential of E-Commerce locally but there were absolutely no figures mentioned for Trinidad & Tobago. Granted that there is no local E-Commerce worth mentioning (but even that should have been mentioned), Another glaring omission was the absence of any estimate of credit card penetration and size of local online market.

Regardless of the size of the local online market, which can easily be estimated, the number of issued credit cards is a key figure. From my sources Republic Bank would be the largest issuer with anywhere between 60K-75K and the other banks not topping 45K each. There’ll also e a sizable overlap as a single household may have multiple cards from different banks.

I think an opportunity was missed to promote a local TTD eco-system either via LINX or a similar system and eliminate the need for Visa/MC for local E-Commerce. While on the surface this may appear to be insular it is in fact not as we’ve been doing it offline ever since LINX came on the scene roughly over twenty years ago in 1995. I’m advocating LINX be extended to facilitate online transactions as well.

Bear in mind I’m referring to the concept, not the vehicle; I’ve used LINX as a reference as obviously the logistics of it has to be possible, it’s not a switch to just turn on. WIPAY is actually in a position to do so as soon as they can enable funding WIPAY accounts via ACH.

Opening up markets and earning foreign exchange was not touched on enough in my opinion especially given the outcry about foreign exchange ‘leakage’. There’s no inquiry from my clients about E-Commerce that doesn’t also figure the Caribbean market in the long term. The stated weakness in the SWOT Analysis of “Expensive logistics costs throughout the Caribbean” is ironic because the logistics costs between Trinidad & Tobago is also expensive as goods in Tobago cost more than in Trinidad.

Yes I’ve been hard on the strategy for most of this article and I’ll empathize with the crafters who probably would have done the best they can given their limited knowledge of E-Commerce. There aren’t many experts either in T&T but even with the best technical information it will be hard for those without a working knowledge to use properly.

Here are some positive activities I hope will be executed to move E-Commerce in Trinidad & Tobago forward in 2018.

I’m hopeful that these programs will be developed AND implemented. I gave a few suggestions of incentives in the form of tax breaks etc. Programs can include using NEDCO for small business loans or grants for entrepreneurs with LOCALLY-MADE products. I absolutely don’t recommend any program that supports the business of reselling imported goods.

I’d like to see a coordinated approach with whatever Ministry or department that deals with promoting local production of goods including agriculture.

There are many important indicators that need to be monitored in order to track the growth and progress of our E-Commerce market:

1. Number of online stores in general
2. Size of catalogs, e.g. <1,000 products, 1,000 - 5,000 etc.
3. Online store type- service or product oriented
4. Industry category- Apparel, Technology, Industrial, etc.
5. Type of payment gateway used- FAC or WIPAY, other
6. Number of transactions per month
7. Average transaction value

Such information will require the participation of the online stores. But I’m sure most should be happy to submit accurate info once they are confident that the data will be used to promote the industry. Value of E-Commerce business can be obtained just by obtaining reports of aggregated settlements via FAC and WIPAY at our local banks.

This is something I’d really love to see implemented. I believe the physical human outreach would signal the Ministry’s seriousness about promoting E-commerce in Trinidad & Tobago. And I also believe that human connections can yield more results in the normally faceless and impersonal way we interact these days.

Overall I give the strategy good marks generally as it’s a positive step in the right direction. Like the rest of the T&T population, I’m never excited about government ventures, especially strategies and policies. I am hopeful that there some good and well-intentioned individuals inside this Ministry with the resolve to implement this strategy, and also hopeful that the politicians will cooperate.