Just to recap, the future of Myanmar E-Commerce series is now in episode 4. The first episode talked about the issues and potential within the e-commerce industry in Myanmar. The second described the actions the government has been taking, in the midst of a potential e-commerce boom. The third article took on the hot topic of an international nature, the issue of (one way) cross border data flows and dominance of international platforms. In this article here, we will examine the impediments to digitalization in Myanmar, despite incessant push by COVID to get onto online commerce.
In order for e-commerce and online shopping (and related digital infrastructure) to really explode, the holy grail is ‘Trust’ in the digital world. If we look at the factors required to go full gear into the digital economy, it is akin to addressing the trust issue in the digital arena. The removal of impediments require improvements in four areas of the physical world (vs digital); mitigation of frauds through education, effective cyber policing and law enforcement, changing the mindset of the people and growth of the economy.
First – fraud prevention through education. Online world is full of crooks! As soon as people assume false identities, the inclination to commit fraud increases. Every single Myanmar people, based on our informal surveys, has experienced themselves, or knew someone who has been a victim of an online fraud. According to cyber police statistics, the number of reported cases of cyber crime was 106 in 2019 and 148 in 2020, an increase of nearly 50%.
Online frauds fall into one of these categories: advance fees fraud, crappy or counterfeit products, fake pages, over pricing, pre-order payments and digital identity frauds. Advance fees fraud, a.k.a. Nigerian fraud is probably the most obvious of all. Claiming that you have won lottery or lucky draws, the fraudster asked the victim to pay the customs, clearance, or taxes, in advance in order to claim the winnings. And keep on asking to keep on paying, until the victim realizes he/she has been duped. A slight variation to this is the targeting of religious persons or spinsters, pretending themselves to be messengers of god or love. They will send (pictures of) presents of substantial values or a lump sum of money to the victims and claim these are stuck at the airport or customs and ask the victim to pay the clearing fees to receive such gifts. Obviously, there is no such handout. The victims typically were too shameful to admit they have been deceived and normally would not report such crimes. Even if the victim wishes to report, the fraudster has disappeared out of the digital world i.e., closed off all his/her accounts and almost all the times, the location of the swindler was not in Myanmar.
In a country of people with a GDP per capita of ~$1,500, Myanmar people have very high elasticity of demand. Here the adage ‘you got what you paid for’ is Q.E.D. Facebook is awash with cheap and counterfeit products, some of them being sold from neighboring countries or border towns. Even if the products are counterfeit, there is no clear statement from the seller on the fact that the product is not a genuine item. From golf clubs and balls, to fashion and electronics, the price point does not present a branded item. Consumers need to be fully aware of this. Even products of consumable nature, such as medicines and vitamins, which are not approved by FDA (Food and Drugs Administration of Myanmar) are being peddled and advertised, such as medicines that can increase your height.
Creating fake pages and extracting money through these has also been the regular modus operandi (M.O) of online fraudsters. Once a page or a person becomes popular, there would be many fake pages that would appear out of nowhere. E.g., top local online platform, rgo47 has on average 25 fake pages on facebook. Rgo47 has a blue tick of facebook recognition yet new fake pages are coming up faster than it can report to facebook and the cyber police. The scammer makes the fake page look like a real page by copying the photos and ads from the real one, only varying the phone number. When the customer orders through the fake page, the fraudster gives a variety of reasons to get the customer to pay in advance through digital wallets, shut off the phone and never deliver the goods. Then the customer reaches the hotline of the real site and realizes he has been cheated.
Over pricing has also been one of the tricks used to defraud the customers. Even regular advertisers and sellers on facebook use this trick. They mislead the customers into thinking that the shop is having sales with huge discounts, yet the discounted prices are even higher than the price of these items being sold in physical stores.
Asking people to pay in advance as a pre-order item, when the item has not even been purchased from the supplier – this is also one of the common tricks of the unscrupulous online traders. At best, the money is for the working capital of the shop, at worst, they will take the advance payment and disappear.
Most Myanmar people are honest and naive. At the same time, they have suddenly been thrown into the digital world. As such, most are not aware of the importance of keeping PIN numbers, passwords and IDs secret. They disclosed these readily and easily to friends and relatives. The digital payment frauds mostly arise out of this lack of awareness on security risks.
Most of the above frauds can be avoided by not paying in advance and using COD (Cash on Delivery) as settlement, especially relevant if the customer cannot validate the integrity of the seller and seller’s products through other means. Obviously, this impacts the growth of digital payment systems negatively. The solution lies in education. Once customers are educated they would be in a position to assess if the deal or seller is a fraud or a genuine merchant.
The second impediment is cyber policing and effective law enforcement. As stated above, the number of reported cyber crimes increased by 50% from 2019 to 2020. Unreported cases may be in thousands, due to shame, fear, lack of evidence or resources. As an example, police require the submission of the mobile phone as evidence of that cyber crime. So the victims end up requiring to buy a brand new phone, just to give to the police with accounts being logged in. There are instances where police do not recognize digital signatures of delivery apps, as evidence. The policing methods of evidence collection may have to be updated to make it easy for victims to report cyber crimes. Furthermore, speed of investigation, arrests and prosecution must be enhanced. E.g., fake pages are being created at a rate faster than the perpetrators being arrested and prosecuted.
The mindset of the population also requires changes. Every online shop is not fraudulent and by educating oneself and by taking appropriate precautions, we can all enjoy online benefits safely. Same goes with digital payments. Digital payments volume is in billions of dollars right now in Myanmar, mainly composed of transfer payments. Even the portion for e-commerce is not that large yet, only a small portion of these are fraudulent. Last but not least, the economic growth. The online growth engine requires Myanmar’s GDP growth. In 2019, the average shopping cart size was 20,000 Kyats among online shoppers. Only with continued economic growth, the ARPU (Average Revenue Per User) would grow due to having higher disposable incomes. This economic growth solely rests on the government’s ability and its policies. With COVID still in play, it would be wise to suggest the wait of a couple of years, before the e-commerce boom becomes a reality.
