Philippines’ and India’s E-commerce Circuit Breakers

Two countries stand out in Asia for their decision to ban e-commerce companies from selling or delivering “non-essentials” during Covid-19 lockdowns—India and the Philippines. Coincidentally, in both countries, the two leading e-commerce players are both foreign-owned.
E-commerce giants Lazada and Shopee, like their peers, have both seen a significant slowdown in traffic in most markets because of Covid-19 lockdowns.   This could be due to a number of reasons: concerns about the safety of receiving online orders, cutbacks in consumer spending amid job losses or lockdowns posing delivery delays, prompting shoppers to postpone purchases.   But in no country has Lazada’s and Shopee’s traffic fallen as precipitously as in the Philippines:
The Philippines stands out because it’s the only country in Southeast Asia that banned the delivery of non-essential goods and services. The policy is part of the country’s Enhanced Community Quarantine (ECQ), which aims to limit face-to-face transactions and the possibility of transmitting the virus in high-density communities, mainly metropolitan Manila.
With the ban, only establishments like grocery stores and pharmacies are allowed to operate. At first, it wasn’t even clear if e-commerce falls under essential services. “The government didn’t give it much thought initially, perhaps because the industry only accounts for 2% of total retail in the country,” an industry insider tells The Ken. “But a couple of days after the announcement, they clarified that e-commerce could continue to operate but limited to essential goods.”   Not just the ban, even its implementation seems like an afterthought. There appears to be no penalty for violating the ban, except for goods being barred from passing through quarantine checkpoints set up by the government, an industry source tells The Ken. This would increase the operational cost for e-commerce companies.   Weeks into the ECQ, however, monitoring seems to have eased up, which might lead to an opening even for non-essential deliveries. And what are Filipinos interested in?
Meanwhile, in India, the story is completely different. Flipkart (owned by Walmart) and Amazon have been brought to their knees because of strict rules from regulators and stricter enforcement by local authorities.
For nearly 50 days now, India has banned the sale and delivery of non-essentials. During this time, it has allowed, progressively, the following:
  Delivery of essentials via venture-funded tech platforms like Swiggy, Dunzo, and Zomato
  Delivery of groceries via platforms like Bigbasket and Grofers
  The opening up of standalone shops and businesses
  The opening up of larger offices, factories and travel
  It bears asking the question why are e-commerce non-essentials so dangerous, that they might be the last thing to be allowed in India? It could not be for safety reasons, as both Flipkart and Amazon will tell anyone who cares to listen.
Could it be, perhaps, to prevent this?
Online sales in the United States have surged in recent weeks, after shelter-in-place measures enacted in March shuttered brick-and-mortar stores throughout the country.
While the shutdowns immediately altered how people spent their money, the patterns have continued to shift as the weeks have gone on, new data shows, shaped by waves of panic buying and even payouts of government aid. The latest bump in online spending came after the government sent out stimulus payments to tens of millions of American households beginning on April 11.   Beyond what might be temporary shifts, consumer habits appear to be changing in ways that may well endure beyond the pandemic and determine who will become the most important online players. Americans Keep Clicking to Buy, Minting New Online Shopping Winners, The New York Times
Was India’s ban on non-essentials merely a “circuit-breaker” to prevent a massive shift towards online commerce? Most likely.   Did it work? Most probably
India’s Rs 10,25,000 crore package may make your wallet lighter   Savio   On Tuesday, Indian Prime Minister Narendra Modi announced a Rs 20,00,000 crore ($270 billion) economic stimulus program. Except it’s not exactly a Rs 20,00,000 crore package as it includes Finance Minister Nirmala Sitharaman’s Rs 1,70,000 crore package for the poor and elderly announced on March 27, and the Reserve Bank of India’s (RBI) multiple liquidity infusions since 6 February.
The monetary value of all these announcements (Sitharaman plus RBI) comes at around Rs 9.75 lakh crore.   The rest, that is, Rs 10.25 lakh crore is likely to be the actual announcement made by PM Modi on Tuesday evening. Standalone, this is little over 5 percent of India’s GDP Explained: PM Modi’s is not a Rs 20 lakh crore Covid-19 package but can stimulate economy, India Today
The stock market was far from enthused after Sitharaman, on Wednesday evening, unveiled the first tranche of the stimulus, which mainly aims at encouraging banks to begin lending. But a few measures seem to miss the forest for the trees, at least as far as the tax-paying individual is concerned.   2% in, 2% out
The government has reduced both employer’s and employee’s contribution to the Employees’ Provident Fund account from 12% of salary to 10% for the next three months. The lower employee contribution will mean a bigger take-home pay packet. (emphasis added below)
However, going by the information currently available in public domain, employers may or may not add this saving to the employees’ salaries. While the reduction in employees’ contribution will be added to their take home salaries, it is not clear whether employers will have to add their saving to the employees’ take home pay. If the employers’ saving on PF contribution is not added to the employees’ salary, it would mean a net loss for the employee to that extent. Cut in employer’s EPF contribution may mean net loss for the employees, Economic Times
In addition, a higher take-home income could raise one’s tax liability at the end of the year.   Chill now, tax later
The government reduced tax deducted at source (TDS) and tax collected at source (TCS) rates for 23 specified payments like interest, dividend, and rent payments by 25% from 14 May to 31 March, 2021. Again, this is aimed at increasing the liquidity in the hands of the recipients such as fixed deposit holders and landlords. (emphasis added below)
What does this mean?   According to the income tax department, if somebody hires a professional P who is to receive Rs 1 Crore as fee, then a TDS of Rs. 10 lakh is required to be deducted at the existing rate of 10% before payment is made to P. As a result, P would have received Rs 90 lakh only.   But since the TDS rates have been reduced from 10% to 7.5%, P will receive Rs 92.5 lakh. Thus, P will get an extra money of Rs 2.5 lakh due to lower TDS rate.   […]   Does this reduce my income tax liability?   Not really. The individual shall eventually have to pay the tax at the applicable rate, depending on the income. Those who are liable for advance tax will have to make the payment every quarter. Others will have to pay when filing income tax returns. TDS, TCS reduced by 25%. Here is how it will work in 7 FAQs, Hindustan Times
Homesick
The government has given real estate developers, a struggling lot, the option to extend the deadline for registration and completion of projects by six months. But that means a homebuyer will have to continue servicing their home loans and pay rent for this extended period.
“The government has basically legitimised the delay even if the delay may not have been necessary on the account of covid-19. There is no clarity whether the homebuyers will be able to correspondingly delay their payments to developers. The homebuyers will have to continue paying EMIs and rent during this period,” said Gaurav Gupta, CEO, MyLoanCare.in, an online loan market place. Govt relief to developers: Homebuyers may end up paying additional interest, Livemint
A match made in quarantine   Olina   In late 2019, The Ken wrote a detailed, data-rich story about casual, online dating in India. India’s single population was keeping matrimonial apps at bay. Dating and hook-ups, not always an intrinsic part of India’s social fabric, were catching on. And online, to boot.
Then came Covid-19—a disease that specifically hinges on staying apart physically. So, how do you date in the middle of a once-in-a-lifetime pandemic?   Turns out, much the same way you’re attending office. Virtually.
The pandemic has also made singletons more willing to show their faces…Just 6% of American singles said they were likely to have used video to meet people before the pandemic…Some 70% of American singles surveyed by Match said they would now use video. Bumble, which introduced video chat last July, reported an 84% increase in the number of video calls between the third and fourth weeks of March. Hinge, the League and Match added video last month. Facebook Dating and Tinder plan to do so, too. Casual sex is out, companionship is in, The Economist
Instead of breaking up with their apps, users are spending more time on them. In April, the number of messages sent across the whole host of dating website Match’s products was up 27%; during the worst pandemic week in China, the average user spent 30% more time on TanTan, a Chinese dating app.   That’s not all.   Video-dates have also temporarily altered the fast-moving, “casual” nature of dating. On Tinder, the length of conversations has shot up 25%. The isolation, ironically, has improved the “emotional lives” of people.
App users surveyed in March by the Kinsey Institute at the University of Indiana “were more likely to say that they found other users to be friendlier than usual, more willing to have video chats, and more willing to have deep conversations” than before the pandemic, says Justin Lehmiller, one of the study’s authors. Casual sex is out, companionship is in, The Economist
This is going to sound boring to people who still want to play the field. After all, casual fun is a key attraction for a large part of the demographic that’s on these dating apps. Which begs the question: Is this an opportunity for Tinder to mimic a matrimonial site like Shaadi.com in India? It could mean that dating apps focused on the Indian market can now attract a different, possibly older, demographic that’s looking for companionship over casual dating.   Does online dating still sound fun?
Would you like some beer with that?
Jaideep   India is on the cusp of a new dawn in terms of liquor retail. Just over a week after the central government allowed liquor shops to reopen following a 40-day shutdown, several states are mulling the online sale and home delivery of alcohol. The Supreme Court also suggested it.   West Bengal and Chhattisgarh have already launched online portals. Delhi has issued e-tokens. Maharashtra has allowed home delivery. Foodtech platforms Zomato and Swiggy are trying to get the required licences from various states to deliver alcohol.   All it took was a pandemic.   Before liquor stores were forced to shut down in late March, online retail and home delivery of alcohol was problematic, to say the least. Several startups, like Dunzo and HipBar, have previously dabbled in it, only to be eventually hauled up by state governments, which regulate the industry.   There are several reasons why online delivery of liquor has been a taboo concept in India.   Retail outlets, which pay high licence fees, felt their sales would be affected by online vendors
  Indian states, which collected about Rs 15,000 crore per month from excise on liquor in the year ended March 2020, did not want to give up control
  The possibility of delivering alcohol to people under the legal drinking age
  State-wise limits on the amount of alcohol you can store at home
  The various types of licences needed to store, manufacture, sell, and buy alcohol
  Online scams concerning liquor sales
But when states started losing Rs 50 crore a day after liquor stores were shut, and social distancing norms were flouted across the country when they reopened, all the stakeholders were compelled to find a way out. For the first time, everyone involved—liquor stores, governments, delivery companies, and, of course, consumers—are aligned. All previous problems are either being solved, or they aren’t problems anymore.   States are now setting their own guidelines to enable online sales and delivery. Punjab, for example, has only allowed home delivery of up to two litres of Indian-made foreign liquor (IMFL). It has set time slots for home delivery; asked licence-holders to designate two people for delivery, who will have to carry cash memos; the vehicle used for delivery will have to be notified to discourage liquor smuggling.   Chhattisgarh, which started online sales, has put a cap of buying five litres of liquor at a time, along with a Rs 120 delivery charge. As for the possibility of selling liquor to minors, HipBar founder Prasanna Natarajan has suggested Aadhaar-based age verification.   As they say, where there’s a will …
Social distancing in the skies   Savio   As planes groan out of their hangars and onto runways, both carriers and passengers are gearing up for changes. We wrote about some of them in Thursday’s edition of the BFO.   One of the most heated debates has been around the vacant middle seat to maintain social distancing. Carriers are dead against it. India’s civil aviation ministry came out with a draft plan to restart plane services recently but was conspicuously silent on the topic.   Still, one aviation seat designer has come up with a design to make flying more appealing for concerned and conscientious passengers.
Source: Earth-bay
But this might not suit airlines. For them, Italian designers Aviointeriors has another design.
Source: Aviointeriors
But this is the design that might just turn out be a win-win for both airlines and passengers.
Source: Aviointeriors
Correction: In yesterday’s edition, we incorrectly identified DoorDash as a ride-hailing company. We also incorrectly stated that Uber had picked up a stake in GrubHub, whereas the news has not been confirmed by either company as of yet. We regret the error.

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