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New Act to Strengthen Internet Transaction Reliability in the Philippines

The Philippine House of Representatives approved the final reading of the proposed Internet Transactions Act and sought to create an electronic commerce (e-commerce) bureau. The bill aims to regulate all business-to-business and business-to-consumer commercial transactions over the internet, including those related to internet retail, online travel services, digital media providers, ride-hailing services, and digital financial services.

The e-commerce bureau’s role is to protect consumers and merchants engaged in internet transactions. The bureau will also act as the “central authority” tasked with regulating online trade and serve as a virtual one-stop shop for consumer complaints regarding internet transactions. The idea was advanced during the plenary session, with 245 lawmakers voting in favour of House Bill 4. No legislator voted against the bill or abstained from voting.

“Our Chief Executive underscored the need to enact a law to establish an effective regulation of commercial activities through the internet or electronic means. The law regulates to ensure that consumer rights and data privacy are protected, innovation is encouraged, fair advertising practices and competition are promoted, online transactions are secured, intellectual property rights are protected, and product standards and safety are observed,” Batangas Rep. Mario Vittorio Mariño said.

The Internet Transactions Act applies to any entity, foreign or domestic. The bill also intentionally and voluntarily directs its activities to the Philippine market, which is deemed to be doing business in the Philippines and thus subject to applicable Philippine laws. The proposed legislation also ensures parity and respects competition between online merchants and those selling goods and services in physical stores.

Furthermore, the e-commerce bureau will lead in developing online dispute resolution platforms that will serve as a single point of contact for consumers and online merchants seeking out-of-court dispute resolution.

The bureau is tasked with creating, managing and maintaining an online business registry that will allow consumers to access data and information from registered online business entities to verify the validity, existence, and other relevant information on business entities.

The Department of Trade and Industry will take the lead in developing an industry-led e-commerce trust mark to ensure the safety and security of internet transactions. It establishes penalties for online merchants, e-commerce platforms, ride-hailing service providers, and consumers who violate the proposed law’s provisions.

The Philippines’ e-commerce future

Mario stated that online retail and other e-commerce services are a “mainstay” in the lives of Filipinos, citing a recent e-Conomy Southeast Asia report that showed the Philippines had the fastest growth in digital investments in the region, with a 63 % increase from 2021 to 2022.

Per the report, the country’s digital economy is predicted to hit USD20 billion in gross merchandise value by the end of this year after expanding by 22% in the previous year. The Philippines’ local digital economy is projected to reach USD35 billion by 2025, with a compound annual growth rate of 20%, and to reach USD 100 billion to USD 150 billion by 2030.

Despite the partial return of in-store shopping, e-commerce accounted for 70% of the Philippine digital economy. E-commerce, food delivery, and video on demand are the three most extensive digital activities among digital urban users, with adoption rates of 88%, 69%, and 58%, respectively.

The Philippines is also expected to become a popular investment destination in various sectors and digital financial services. However, given the actual and expected growth in e-commerce transactions, government policies must be in place to protect consumers’ rights and interests and to provide them with recourse in the event of a complaint.

The Act will serve as a guideline for small and medium-sized businesses operating in the digital market. As a result, the government hopes that SME businesses will be able to scale up, expand markets, build their reputation, and establish a verifiable track record of performance and trustworthiness.

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