Mohammad Sharaf during an interview at his office in DP World. A legal solution to concerns about e-commerce, according to Sharaf, would be to frame any new regulations on e-commerce within the ambit of the broader Agency Law. Image Credit: Clint Egbert/Gulf News

Dubai: There is a need to bring in specific laws to govern e-commerce transactions taking place in the UAE, especially given the volumes being shipped into this country from online vendors abroad, according to a senior government official.

The issue has already been flagged with the Dubai Department of Economic Development, who, it is believed, could then scale it up to the attention of regulatory authorities at the Dubai and federal levels, the official added.

The UAE is on the fast track in taking to e-commerce within the region. While the ranks of locally-based online vendors continue to grow, a significant portion of the transactions are still being done with overseas sites.

“Quite often, merchandise bought by a shopper here from an e-commerce portal outside of the country do not even get charged the customs duty here [only deliveries of a certain value and above made to do so] — it only invites a documentation charge and that’s marginal,” Mohammad Sharaf, Group CEO at DP World and chairman of Tejuri.com, the “virtual mall” which is marking its first year of operations this month, said.

“Whenever such a transaction takes place, this represents a loss of income for the local retail sector and, by extension, for the local economy as a whole. At the same time, the overseas vendor will have to abide by all the duties in his home market.

No protectionism

“By requesting for some form of regulatory oversight, we are certainly not asking for protectionism. But even within a free market economy, there have to be rules to govern any sector or enterprise. In the area of internet commerce, we believe regulations are needed to protect the economy.”

Such concerns have been shared with the Department of Economic Development, the nodal agency for the local business sector.

A legal solution, according to Sharaf, would be to frame any new regulations on e-commerce within the ambit of the broader Agency Law, (Among other things, this law requires that an overseas business has to have a local partner to offer those goods or services in the UAE marketplace.)

“There is now a situation where a principal based abroad can sell merchandise directly to a buyer here bypassing his local partner and at a lower cost to the retail price here,” Sharaf said. “Again, having e-commerce specific laws would level the playing field and at the same time in a way that won’t hurt the principal.”

For local online vendors, the provisos of the Agency Law apply in full. A site selling a Samsung smartphone will have to source it from the official dealership, Eros Electronics, before selling on.

By and large, e-commerce legislation is still an untested space for most global marketplaces. While some have a completely hands-off perspective on allowing web commerce, in France, the authorities have in place mechanisms that skew in favour of domestic players.

— The writer is a UAE-based journalist.