Policy reforms urged to aid $1.2b gig economy

LUMS study shows potential for growth, calls for flexible labour laws, digital upgrades, and SME-friendly regulation

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KARACHI:

A study by the Lahore University of Management Sciences (LUMS) has called for urgent policy reforms to unlock the full potential of Pakistan's gig and digital economy, using foodpanda as a case study. The report, titled "Economic Impact Assessment of foodpanda in Pakistan", not only quantifies the platform's substantial economic contribution – estimated at $1.2 billion for 2023-2024 – but also underscores the need for a more supportive regulatory environment.

The report highlights the platform's expansive role in job creation, SME enablement, and digital inclusion through its network of over 50,000 registered riders and partnerships with 13,000+ restaurants, many of which operate in the informal sector.

While the findings underline foodpanda's growing influence on Pakistan's gig and digital economy, the study emphasises the urgent need for regulatory reforms to maintain and expand the impact of such platforms. LUMS recommends that the government preserve flexibility in labour laws to support gig and freelance workers who value autonomy and flexible hours. The study cautions that imposing rigid structures could reduce employment opportunities, particularly for youth and low-income groups.

The report also stresses that informal food vendors should not be excluded from the digital economy, urging the government instead to collaborate with food delivery platforms to gradually formalise these businesses without disrupting their operations or incomes.

Internet infrastructure was highlighted as another major concern. Since digital platforms rely on reliable and fast connectivity, service disruptions lead to order delays, customer dissatisfaction, and financial losses. The report urges the government to invest in broadband access, infrastructure upgrades, and incentives for private sector investment, especially in underserved areas.

LUMS also flagged concerns over the proposed Personal Data Protection Bill. Provisions for local data storage, strict consent rules, and cross-border data restrictions could raise costs for digital platforms that use global cloud services. The report warns these rules may deter global investors and hinder scalability.

The study also proposes a one-window licensing system for delivery riders. This would cover ID verification, vehicle checks, and licensing under one platform to streamline compliance, reduce administrative burdens, and enhance safety and accountability in the sector.

To support the wider e-commerce ecosystem, LUMS recommends reducing import tariffs on technology and providing targeted incentives to local digital startups.

The study found strong ripple effects across food, hospitality, manufacturing, transport, and retail. In FY 2023-24, foodpanda enabled Rs75 billion in restaurant revenue, created jobs, contributed Rs9.76 billion in taxes, and empowered 50,000+ riders and entrepreneurs through fintech.