15 Sep 2020

Social Media Advertising Ban in Nepal – Impact and Way out…..

Feb 01, Kathmandu

Yagyambar Shrestha

Nepal Rastra Bank Ltd. issued a notice on the 31st of January, banning all advertisements through social media as well as any online foreign transaction. However, the issue has been raised so many times in the past for the government to legalize online transactions through Nepal. The directive directly mentions this to be an illegal act, but has not given any proper way around. The directive simply bans sponsored ads in Social Media.

For more than 150 + IT Companies and Digital marketing agencies the directive seems to be a nightmare as there is no possible option to legalize this as of now according to Nepal Rastra Bank’s directive. A month ago, there was an informal information that the government is planning to assign a handful of companies or banks as a partner for validating and initiating transactions which seemed to be a quite positive move, but the notice that was issued yesterday does not mention any such move and simply bans advertising on Social Media as well as any online foreign transactions . But what we need to understand is this also will ban IT companies from buying international domains and hosting as well. However, there are a handful of IT companies providing this service in Nepal, to whom we can pay in Nepalese currency, but again the question is how will these companies manage to pay to their foreign counterparts.

Opening a USD account or trying to legalize social media advertising has not been an easy task in Nepal. Even if some company assigns a foreign company as a partner and tries to legalize the process for Social Media Advertising, the payment is to be sent taking approval each time from the Central Bank, which had been a hasty and lengthy process. The charges of the foreign partner as well as the taxes would add up extra burden to the end customers. Therefore, a proper system to channelize foreign online transaction is much needed, but assigning a handful of providers will drive monopoly, if this system is to be properly legalized then all banks should be given this facility so that we have a freedom to choose amongst. Moreover, if the government gives a proper solution about this IT companies, digital marketing agencies as well as the government and customers are all in a win-win situation, as the cost will be beneficial to all.

As for the revenue from Adsense, youtube, instant articles & affiliate marketing, if as per the government’s initiative is routed through banking channels, there is nothing to panic as the income would be legalized.

For digital marketing agencies this move of the government is positive as it would drive healthy competition and good companies will be competing in the arena. However, this directive seems to have been brought forward in a hurry without providing a proper alternative or way out. Lets be hopeful that the government brings out a proper alternative very soon, as the more sooner the more merrier for all.

(Article Published : Feb 01, 2020)