ELECTRONIC COMMERCE IN BRITISH VIRGIN ISLANDS
“A KEY TO ECONOMIC GROWTH”
TABLE OF CONTENTS
INTRODUCTION: What is Electronic
Commerce?
E-COMMERCE AND
ECONOMIC GROWTH IN BVI
CONNECTIVITY
WITH THE REST OF THE WORLD
CONDUCTING
BUSINESSES THROUGH E-COMMERCE
INFRASTRUCTURE,
THE KEY TO E-COMMERCE DEVELOPMENT
THE
HUMAN RESOURCES COMPONENT IN E-COMMERCE
E-COMMERCE AND EDUCATION
REGULATION AND
CO-OPERATION
Competition:
Self-Regulation-Option
Security
and User Confidence
ELECTRONIC SIGNATURES
PRIVACY
CONSUMER PROTECTION
ILLEGALITY
Intellectual
Property
CONCLUSION
1. INTRODUCTION:
What is Electronic Commerce?
Electronic Commerce or in short “e-commerce” is any form of
business transaction in which the parties transact electronically rather
than by physical exchange or personal contact.
Through the revolution in telecommunications and information technology,
Electronic Commerce, aided by Globalization, is impacting business and
it is playing a key role as the digital economy rounds into shape. It is
rapidly becoming one of the principal means of conducting business and
financial transactions. E-commerce has the potential to provide small
economies with improved means and ease of communications business
contact, lower priced products, reduction of barriers to entry to world
markets, reduce transaction costs and improved potential for delivery of
service.
E-commerce is a direct result of the Information Age and it is likely to
be the principal means for transacting business in a short time to come.
While information technology was able to boost productivity, reduce
costs and cut inventories in a transcendent way, electronic commerce is
the vehicle by which enterprises will narrow the space between buyer and
seller. More importantly, e-commerce supported by worldwide
telecommunications presents the potential for rapid expansion into
global markets. Also, e-commerce presents a full range of opportunities
and threats for developing countries to get on a more level playing
field.
The essence of e-commerce is the capacity to enter into and delivery
upon the details of a binding contract between buyer and seller in
confidence and privacy. This means the ability to send payments over the
internet and to conduct legally binding business transactions in a
secure manner. However, this is not sufficient for the successful
establishment of a sustainable e-commerce industry. A legal framework
capable of instilling confidence that business transactions are private
and secure is one of the primary prerequisites. Further, there must be
the confidence that systems of contract dispute resolution are fair,
sure and clear. This suggests a legal system to accommodate
international trade and global commerce accepted by most countries in
the world to ensure a good range of markets.
2. E-COMMERCE AND
ECONOMIC GROWTH IN BVI.
The benefits of e-commerce will be readily apparent to the countries
that choose to embrace it. As noted by the Organisation for Economic
Co-operation and Development (OECD), the phenomenal expansion of
the Global Electronic Marketplace has led to remarkable growth and
productivity in the information and communication technology industry.
E-commerce encourages economic growth and increases employment in those
countries that are able to take advantage of the opportunities it
offers.2
In order to promote e-commerce in the British Virgin Islands, we need to
have a clear policy on e-commerce and to develop infrastructure that
will facilitate the growth of e-commerce. Such a policy requires a
coordinated approach between the government and private sector. Which
means, the development of a successful policy on this, requires a
coordinated approach, government, business and industry must work
together to build awareness, trust and infrastructure, which support the
seamless creation and operation of an e-commerce system.
3. CONNECTIVITY
WITH THE REST OF THE WORLD.
E-commerce success in the British Virgin Islands will depends on how we
are connected with the rest of the world. Economic globalization
requires connectivity with the rest of the world in terms
telecommunications and other technological links. This means that the
British Virgin Islands should ensure that it is properly connected to
the rest of the world in the most effective way, if at all we want to
compete in global economy with other countries. Because of connectivity
more nations are benefiting from global economy and have better greater
opportunities for business for their countries. It should be noted that,
the whole world is now our market. Companies in our offshore financial
services sector serve client from all over the world. Globalization and
New Age of Information have no age nor gender qualifications. Together
they constitutes an economic tidal wave of which we are unmistakably a
part, since most of our national income comes from abroad and is
generated substantially by Information Technology.
The British Virgin Islands Government should facilitate and enhance
connectivity with the rest of the world. This can be done by identifying
BVI’s connectivity requirements, and by allocating adequate resources
to facilitate this exercise. Therefore the government should make
necessary investment in Information Technology sub-sector. Also the
focus should be on the formulation of National Information Policy and
establishment of appropriate information infrastructure to link the
British Virgin Islands with the rest of the world. In this case it is
necessary for the government to facilitate the participation of private
sector by building a conducive environment for private investors.
4. CONDUCTING
BUSINESSES THROUGH E-COMMERCE.
The combination of e-commerce and low tax rates, offered by countries
such as the British Virgin Islands, is irresistible to many businesses.
Conducting e-commerce through an offshore tax location can improve tax
performance at all stages of the value chain. By having web sites in
offshore jurisdictions carrying out the functions previously performed
in countries with higher tax rates, business can pay tax at lower rates
for significant portions of their business operations. Some companies
may be able to replace all of their operations with e-commerce
facilities in tax havens, significantly reducing their operating
overhead. Accordingly, companies that are able to take advantage of this
technology can reach more customers and offer more selection at better
prices, thereby increasing their profits, while at the same time
reducing their tax liability by locating their e-commerce business in a
offshore tax haven. However the traditional security of investment and
readily access to returns still hold.
If the territory is able to develop and improve infrastructures and
policies that facilitate the growth of e-commerce, the country will
enjoy an influx of new businesses. Businesses that can operate over the
internet without needing to establish a physical presence in a country
with higher tax rates will naturally gravitate to lower tax
jurisdictions, such as the British Virgin Islands. As there are numerous
tax havens throughout the world, what is needed to set the British
Virgin Islands apart is the existence of an environment, both
technological and legal, that makes it easier, and hence more
profitable, for business to locate in the British Virgin Islands than in
another country with comparable tax laws. But it must be an environment
that is built on the principles of jurisprudence and market economy.
5.
INFRASTRUCTURE, THE KEY TO E-COMMERCE DEVELOPMENT.
The growth and the development of e-commerce in the British Virgin
Islands will depend on the existence of and affordable access to a legal
and technological infrastructure. This means that, the British Virgin
Islands must develop a high-quality global telecommunication network (Refer
paragraph 3 above) if it is to attract e-commerce clients. Issues of
bandwidth, service, fault tolerance and security must be considered. The
British Virgin Island's e-commerce infrastructure must be globally
interoperable, in other words, they must be able to work with the
infrastructures of other countries. Interoperability will allow
interconnection, increase market acceptance of e-commerce, and reduce
costs. This highlights the importance of a good telecommunications.
The basic requirements for a viable e-commerce industry must be the
existence of Internet Service Providers (ISPs) and local Network Access
Providers (NAPs) in the British Virgin Islands. Bermuda, for example,
already has two ISPs, with the promise of more to come.3 If the British
Virgin Islands wants to compete with tax havens such as Bermuda, it must
ensure that it has similar or superior resources.
It should be noted that, the mere existence of ISPs in the British
Virgin Islands will not be decisive. It is not enough to just have the
necessary infrastructure, services must be available at reasonable cost.
BVI’s technological infrastructure must therefore be cost-effective
and competitive. To this end, public and private partnerships, joint
ventures and other similar arrangements with high-tech companies should
be examined. If the British Virgin Islands is able to conclude such
arrangements, it may be able to gain an edge over other Caribbean tax
havens, such as Bermuda, where services are still very expensive.
Restrictions on the amount of foreign investment in BVI’s
telecommunications services and infrastructure should also be reduced.
Such restrictions may impede the growth of the e-commerce industry and
are counterproductive.
6. THE
HUMAN RESOURCES COMPONENT IN E-COMMERCE.
There is also a human component to e-commerce infrastructure. The
British Virgin Island’s success is also dependent on having a
workforce that possesses the necessary digital literacy and business
skills. The government should encourage educational institutions in the
territory to develop and offer courses to provide the skills needed for
e-commerce. From a governmental point of view the labour market will
have to produce the managerial skills for the policy development,
administration and regulatory segments for the e-commerce industry. On
the private sector side, the demand for high technology and services
management skills for enterprises will be a critical layer of labour
needed for e-commerce. The skills required here are multi-disciplined
and multi-dimensional.
The next major grouping of skills will be the ones, which are to provide
for and maintain the digital infrastructure. Essentially these would be
engineering skills in the areas of computer hardware,
telecommunications, computer software and Internet Service providers.
Clearly this group of workers is highly digital, very knowledge based
and must be kept up to date with the rapid changes in digital technology
globally. For this group of skills, worldwide connectivity and
connectedness is critical; hence, language skills become critical to
permit world communications capability.
The next large skills group will be needed to design, develop and manage
the legal framework around which the e-commerce sector will be oriented.
There will be the need for legal knowledge in international commerce,
commerce in the major markets from which we are trying to attract
business and in countries, which have political control over our
development policies. There will also be demand for legal skills in the
area of e-commerce and intellectual property. Legal skills in demand
will be for the development and articulation of a competition policy,
which keeps the confidence of the markets we aspire to serve. The
e-commerce industry will also demand legal skills in contract management
and resolution related to sales. These skills will be especially
critical since sales whether be they business-to-business or business to
consumer, will be the fundamental activity in e-commerce. In sales
contracts quite naturally there will be disputes and disagreements,
which will have to be resolved by courts, arbitrators or adjudicators.
Therefore, there will be demand for a set of skills in commercial law.
In the millions of transactions, which will take place daily, there is
bound to be issue of security and illegality. Transactions will of
necessity involve the handling of highly confidential and personal
financial information. In these activities the opportunity for theft,
misallocation and misuse of resources or information will be present. In
this connection, therefore, the skills to mitigate against, identify,
capture and eradication illegality in financial matters will be in high
demand. These skills will be very integrated with those of software
design, hardware selection, legal management and business management.
The business skills required will also include ordinary behind the sales
counter support skills, administrators, and high volume data handlers.
The government group must of necessity include skills in the areas of
international relations, international business and international
business monitoring and analysis. Electronic commerce will impact
significantly on almost every labour market segment existing either in
terms of upgrading, extending its volume or adding to its flexibility.
The skills set required for e-commerce is an integration of business,
international business relations, commerce, computers,
telecommunications, electronic security, finance and illegality. The
skills set requires workers to be high knowledge, trained in and kept
abreast in the areas of digital technology. The workers and management
personnel must be able to communicate easily and effectively worldwide
in addition to being knowledgeable of the history and culture of the
world, which we are aspiring to serve. The key here is to workers
empowered through knowledge and skills.
It is obvious that the skills indicated above are not normally developed
in the short-term and they are presently not available in the British
Virgin Islands without disruptions to existing sectors. This suggests
importation of a substantial portion of labour based on the speed of the
development of the industry. Further, it implies that an accommodating
and proactive labour and immigration policies must be the
centerpiece of the public sector effort to facilitate the development of
the e-commerce sector in the British Virgin Islands.
If the British Virgin Islands is able to offer excellent service at
competitive rates, combined with a highly-skilled labour-force, it
should be able to attract e-commerce clients. Such an approach will help
e-commerce in the British Virgin Islands to grow, as more businesses
means more money that can be spent on services, increasing their quality
while lowering their costs.
7. E-COMMERCE AND EDUCATION.
Like in any other development strategy aimed at international trade,
education has a most vital role to play in the long-term development and
support of electronic commerce in the British Virgin Islands. However,
there are some specific and urgent issues, which the education sector as
a whole must address if we are to establish e-commerce. First, education
must understand that its product must be world class, that is highly
competitive, diverse, efficient and bench marked against the best.
Secondly, there must be a concentration on digital disciplines, cultural
history and commercial knowledge in its product. In addition, the
product must be consistent and sustained in order that the confidence of
the business community worldwide will be maintained.
Fundamentally the education and training sector must educate the BVI
community about the benefits, costs, opportunities and threats
associated with electronic commerce. However, the immediate objective
for education should also be to train the present workforce and those
who will soon enter the workforce to satisfy that anticipated demand of
e-commerce. As an objective for the longer term, the education sector
must prepare the resident workforce for the wide range of integrated
skills essential for the e-commerce industry.
Education has a key role to play in the development of a national
e-commerce attitude with its concomitant commitment to serving people
outside our border in essentially faceless transactions. Education must
teach our population about electronic commerce and its potential
economic, social, political, spatial and environment impact on the
British Virgin Islands. Electronic commerce in our context means a
further globalization of the British Virgin Islands in terms of
immigration, culture, commerce and economy. The opening up of our people
to the rest of the world increases vulnerability and by necessity forces
us to development wider and more effective ways and means of coping.
In terms of preparing the present and potential labour force, education
must consider the needs of workers who want to extend their range of
skills to enhance their flexibility and marketability for electronic
commerce and related occupations. The present school population needs to
be grounded in the fundamentals of electronic commerce such as commerce,
law, computerization and telecommunications in order to prepare them to
satisfy the potential labour market demand as it arises. Education
programmes must focus on related e-commerce occupational flexibility and
cross training of workers to allow easy cross over. The education
curricula may have to re-arrange priorities and focus on areas that
prepare for globalization of the British Virgin Islands society at a
much faster pace.
To train the future labour force for electronic commerce, education has
a tremendous challenge in terms of its product range, its worldwide
focus on language communications, international business skills,
international legal skills, country specific commercial skills,
electronic security and illegality and worldwide cultures. The focus of
education must be on a product benchmarked against the best in the work,
highly competitive and consistent, extremely digital and very knowledge
about the area of the world in which we have a commercial interest.
World-class language skills and computer training programmes are
fundamental to the e-commerce industry. A business and commercial
attitude in our service programmes must be the fundamental orientation.
While it is understood that our capacity to deliver total education and
training for e-commerce locally might not be economical or possible, we
must develop strategy which lays the foundation of an integrated
digital, commercial, business, legal and international framework under
which an e-commerce worker may be developed. Of course it is a
tremendous to challenge for such a small and recently developed
education sector to develop another related set of skills for another
workforce to satisfy the demands of another industry in a country
already involved in two other highly competitive, international trade
areas such as tourism and financial services. But, in what is a cloud,
there is always a silver lining. The range of skills required for
e-commerce, tourism and financial services are similar.
For education, recruitment of teachers and instructors in the areas
above-mentioned is a priority. There is no time to train the teachers
needed. The strategy must be a combination of upgrading or re-training
the present instructors and add-up other skills via importation of
persons from countries where these skills are world class. In this
connection the Education Review is timely in terms of development an
overall strategy to recruit current teachers and instructors.
8. REGULATION AND
CO-OPERATION.
Regulation and co-operation is an essential element for the success of
e-commerce. The British Virgin Islands must have practical and clear
rules to assist both businesses and consumers. Such rules should provide
both clear options and guidance in this area of telecommunications.
Effective regulation requires the development of self-regulatory codes,
which can provide important protections and assurances to businesses and
consumers in the areas of competition, security and intellectual
property. These assurances will increase the confidence the
international telecommunications community will have in doing business
in the British Virgin Islands.
i. Competition:
Excessive government regulation of e-commerce may not be a desirable
policy for the British Virgin Islands to pursue. Potential clients are
likely to view such a policy as placing them in a difficult position,
creating excessive red tape and circumscribing their ability to do
business. Excessive regulation may also inhibit the ability of companies
to be competitive, which will increase the cost of doing business in the
British Virgin Islands. Rather than dealing with what may be perceived
as unnecessary hassles, businesses may choose another country in which
to do business.
ii. Self-Regulation- Option.
As an alternative to excessive regulation, the government of the British
Virgin Islands should consider encouraging private sector
self-regulation. By working to remove barriers and to establish
e-commerce “ground rules”, including, market entry rules, code of
conduct, best practice guidelines, model contracts and enforcement
mechanisms.
BVI’s e-commerce industry should be able to regulate it self.
Consideration should be given to limiting the role of the government to
encourage self-regulation, either through policy statements in favour of
it, or through making legislative changes that simplify the procedure.
iii. Security and User
Confidence
Clients and consumers must have confidence in the BVI’s e-commerce
system if they are to do business here. The system should be both
transparent and effective and should provide measures to ensure the
security, reliability and safety of network services. Specifically,
steps must be taken to ensure the reliability of electronic signatures,
to maintain user privacy, and to protect consumers.
ELECTRONIC SIGNATURES.
The successful development of e-commerce depends on the development of
technologies and regulations enabling cross border transactions in both
the private and public sectors. The British Virgin Islands should
participate in or be party to the development of a global framework that
supports the recognition of electronic transactions, signature
authentication methods and certification practices. To this end, it
should respect the UNICTRAL Model Law on Electronic Commerce
The Government should consider allowing the parties to e-commerce
transactions to determine the procedures they wish to use to
authenticate signatures and other elements of the transaction. This
deference to the wishes of the parties ties in with the hands-off
approach to regulation noted earlier. Finally, the British Virgin
Islands should be willing to accept the authentication procedures
adopted by other countries, thereby ensuring seamless transactions
wherever possible.
PRIVACY.
Consumers want to have control over the collection and use of their
personal data. The British Virgin Islands must ensure that all steps are
taken to protect the privacy of personal data processed through
e-commerce. Government and businesses must be sensitive to the concerns
of individual consumers and take steps to meet them. To this end, the
Government should encourage businesses to develop effective standards
for consumer and data privacy protection. Legislation should also be
formulated to ensure that any misuses of confidential information will
be dealt with.
CONSUMER PROTECTION.
Consumers must be assured that they will have the benefit of the same
consumer protections if they do business with the e-commerce businesses
based in the British Virgin Islands, as they would in a traditional
transaction. Accordingly, the British Virgin Islands should consider
extending legislation limiting fraudulent, misleading and unfair conduct
to cover electronic transactions and should educate both businesses and
consumers about the protections available. Policies should also be
developed to cover electronic money, payment systems and the
trans-border movement of goods purchased through e-commerce. The
establishment of effective e-commerce consumer protection will do much
to increase consumer confidence.
ILLEGALITY.
In order to ensure that businesses and individuals use BVI’s Internet
facilities responsibly, an acceptable uses policy should be developed.
This policy should contain provisions relating to illegal uses, such as
the unauthorized distribution of copyrighted software, net abuses, such
as spamming and mail-bombing, tortuous conduct, such as posting
defamatory information about individuals, and misuses of system
resources, such as the resale of access to CGI scripts installed on
servers.
iv. Intellectual Property.
The protection of intellectual property is essential if creativity,
investments are to be encouraged, leading to the availability of what
the OECD refers to as “a critical mass of content necessary to enable
electronic commerce.” Chief among intellectual property concerns in
e-commerce are the issues of domain names and copyright protection of
materials and information. The British Virgin Islands should consider
encouraging the establishment of a private sector regulatory body to
ensure that the global Domain Name System (DNS) is managed in an
equitable fashion. This body must work with the World Intellectual
Property Organisation (WIPO) and the World Trade Organisation (WTO) to
address the issues of domain names and trademarks, to ensure the
development of a system that is responsive to both national and
international needs in this regard.
9. CONCLUSION.
From the overview of this paper, no doubt if the British Virgin Islands
wants to develop e-commerce industry, there should be a clear policy on
e-commerce and develop infrastructure that will facilitate the growth of
the industry. In this regard the British Virgin Islands has a lot of
work to do if it is to become involved in the e-commerce business.
Immediate action is crucial. The British Virgin Islands must act now, or
risk missing the first wave of industry expansion, leaving it to play
“ catch-up” to countries with established telecommunications
industries. The prospect of developing e-commerce in the British Virgin
Islands is not as daunting as it appears, however, owing to the
country’s relatively small size. As it was pointed by the Minister of
Public Enterprise in Ireland, a country which has begun a comprehensive
campaign to attract e-commerce business,
“Because we’re a small country, we can move quickly. A large country
wouldn’t be able to provide the rapid response time that’s needed in
a high-tech world.”
The British Virgin Island’s size therefore gives it an important edge
over other, larger countries. However, it must still move rapidly if it
is to keep pace with other tax havens, such as Ireland and Bermuda, in
the pursuit of e-commerce business. If the British Virgin Islands as a
whole, its government, business community, and workforce, are equal to
the challenge, it is possible for the country to become a major force in
the e-commerce industry and reap all the economic rewards that this
entails.
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