Developing e-Commerce in Pakistan- Improvements and Amendments

The Federal Cabinet has urged State Bank of Pakistan (SBP) to come up with a clear-cut policy on e-Commerce to facilitate interested foreign companies, sources revealed. These instructions were issued during a discussion on the e-Commerce policy of the Commerce Division and Developing e-Commerce in Pakistan.

Commerce Division, in its draft policy, submitted that e-Commerce refers to the production, distribution, marketing, sale or delivery of goods and services by electric means. Globally, e-Commerce has played an important role for the success of both large organizations as well as the Small and Medium Enterprises (SMEs), as it helps to reduce transaction costs, explore niche markets and avoid intermediaries.

Developing e-Commerce in Pakistan

Global e-Commerce has been growing exponentially since the last two decades and has recorded sales growth of 13 per cent in 2017 with the estimated sales of $ 29 trillion. In addition, the number of online shoppers grew by 12 per cent and reached 1.3 billion.

e-Commerce in Pakistan is at a nascent stage, with modest internet retail sales, despite 161 million cellular subscribers, 70 million 3G/4G subscribers, 72 million broadband subscribers and total teledensity of 76.56 per cent, as of July 2019. However, it is an emerging sector, with a noticeable surge in recent past in online vendors, local e-Commerce platforms and online payment facilities introduced by banks and large cellular companies.

According to State Bank of Pakistan (SBP) figures, excluding Cash-on-Delivery (CoD) sales, e-Commerce sales stood at Rs 18.7 billion by the end of June 2018 while the total size of Pakistan’s e-commerce market in 2018 was Rs 99.3 billion. The number of registered e-Commerce merchants has risen 2.6 times and e-Commerce payments have surged 2.3 times in a span of just 12 months.

Keeping in view the importance of e-Commerce, Prime Minister had assigned the Commerce Division to frame a comprehensive e-Commerce policy in consultation with the stakeholders. Accordingly, Commerce Division constituted the following four bodies to deliberate on the prospective policy framework: (i) National e-Commerce Advisory Council ;(ii) National e-Commerce Policy Board;(iii) National e-Commerce Policy Unit; and (iv) five working groups on taxation, payment infrastructure, regulatory framework, logistics and e-Commerce & WTO.

Commerce Division claims that it conducted extensive consultations with all the stakeholders, including the Federal Board of Revenue (FBR), State Bank of Pakistan, SECP, Ministry of IT and Telecom, Pakistan Post, Ministry of Communications, Provincial Revenue Authorities and private sector to prepare the draft.

Commerce Division, submitted the draft policy framework to the Cabinet on June 18, 2019, however, in compliance with the directions from the Prime Minister office, held a further round of consultations with the relevant stakeholders.

To address various issues, the recommendations given by the working groups and comments of all stakeholders have now been incorporated in the revised e-Commerce draft policy framework. Developing e-Commerce in Pakistan is very vital.

In pursuance of the Cabinet decision of July 16, 2019, Commerce Division held further consultations with the Ministries of Science & Technology and Communications before finalizing the draft e-Commerce policy framework. Both Ministries have indicated their concurrence to the draft e-Commerce policy framework.

The sources said, when the policy was tabled before the cabinet, members of the cabinet emphasised the importance of ‘payment gateway’ for the effective roll-out of e-Commerce in the country. It was pointed out that while some foreign companies are interested, the SBP needed to come up with a clear-cut policy.

Cabinet members felt that the SBP did not seem to possess the capability to find a solution to the payment gateway problem. It was also opined that payment mechanism gateway matter is essentially a market access issue and needed to be tackled diplomatically as well. It was also suggested that the format of the draft needed to be improved to make it a policy document which should not contain recommendations, but the definitive policy of the government.

It was also suggested that the policy may have linkage with the one-woman-one bank account’ initiative which complements the e-Commerce initiatives apart from promoting women empowerment. After discussion, the Cabinet directed the Commerce Division to incorporate the improvements suggested by the Cabinet members in the final policy document. It was also decided that the policy will develop linkages with the one-woman-one bank account’ initiative which complements the e-Commerce.