Focus on e-commerce

The new policy encourages a shift from cash-based transactions to digital payments

The federal cabinet has rolled out a new e-commerce policy framework which hopes to empower women entrepreneurs, encourage smaller businesses, and eventually create export drivers. There are no official numbers available for the size of the local e-commerce industry because almost two-thirds of transactions are still cash-based. However, e-commerce sales in 2017 were estimated at Rs20.7 billion, which almost doubled to Rs40.1 billion ($260 million) in 2018, according to some reports. In terms of online spending per capita, it comes out to just over one dollar per capita for Pakistan as compared to around $25 in India and around $1,100 in China. This illustrates the extremely high growth potential in this sector.

The new policy would encourage a shift from cash-based transactions to digital payments, with a requirement for all payments over Rs10,000 to be digital-only by September 2022. The government also hopes to eliminate cash payments for e-commerce entirely by 2029, which, while ambitious, is very much doable. For this, the Ministry of Information Technology is expected to collaborate with the State Bank of Pakistan to approach various international online payment gateways to ensure the availability of more options for consumers and vendors.

Among the hurdles for e-commerce growth in Pakistan has been mistrust of vendors vis-a-vis quality and delivery efficiency. The new policy aims to bring in insurance liability regulations and dispute resolution mechanisms which may address this. While some aspects of e-commerce are already dealt with under existing legislation, a new body will be working on legalese relating to e-signatures and e-contracts, which are both now commonplace in developed economies. Another significant goal is to formulate international standard tax policies for such transactions. It will also be compulsory for online businesses with sales of over Rs1million per annum to register with the Securities and Exchange Commission of Pakistan and to maintain a physical address in Pakistan, which may affect global e-commerce players which ship from overseas but have no physical presence here.

Overall, the policy seems to be effectively implementable, and if done properly, could be one of the brighter spots in the government’s economic planning thus far.

Published in The Express Tribune, October 4^th, 2019.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.