ADB warns Pakistan lags in digital trade reforms

Pakistan continues to lag behind its regional peers in tapping digital trade opportunities, as fragmented regulations, weak infrastructure, and lack of policy coordination undermine its competitiveness, the Asian Development Bank (ADB) cautioned in a report released on September 19.

The study, "Digitally Connected Central Asia Regional Economic Cooperation (CAREC): Digital Trade, Emerging Regulatory Challenges, and Solutions," underlined that despite Pakistan's strategic position at the crossroads of South and Central Asia, the country has been slow to introduce reforms necessary to support cross-border e-commerce and digitally delivered services.

"Several CAREC member countries, including Georgia, Kazakhstan, and Pakistan, have yet to ratify the UNESCAP (United Nations Economic and Social Commission for Asia and the Pacific) Framework Agreement on Facilitation of Cross-Border Paperless Trade in Asia and the Pacific, which aims to enable and accelerate the implementation of digital trade facilitation measures," the report stated.

According to ADB estimates, Pakistan's digitally delivered trade in 2024 stood at just $7.93 billion, far behind ASEAN economies such as Malaysia ($39.04 billion), the Philippines ($38.57 billion), and Thailand ($50.57 billion). The report also noted that intra-CAREC trade, excluding China, accounts for only 7% of total trade, compared to ASEAN's 24%, reflecting deep structural challenges and lack of integration within the CAREC bloc.

Speaking to the Express Tribune, Ibrahim Amin, a banking and financial services analyst said, "Almost every government and private organisation in Pakistan lacks consolidated data structures." He added that except for one or two, there isn't a single institution where data is consolidated. Each organisation has 15–20 departments and each department maintains its own separate file. "None of them is synced with one another," he noted.

The ADB highlighted several barriers that prevent Pakistan from achieving digital trade growth. Among the most pressing issues are underdeveloped digital infrastructure, including poor internet connectivity, limited data centres, and a lack of payment interoperability. Pakistan also suffers from regulatory misalignment, with delays in ratifying the UNESCAP framework on cross-border paperless trade and the absence of a unified digital regulatory structure.

Additionally, weak consumer protection and enforcement leave the country behind ASEAN counterparts that have enacted comprehensive data privacy and cybercrime laws. Trade facilitation, though improved with the establishment of a single-window system, remains fragmented and inconsistent with regional standards, further limiting efficiency.

ADB experts warned that unless Pakistan addresses these gaps, it risks being sidelined from global digital supply chains, where harmonised frameworks, strong data protection, and seamless cross-border flows are increasingly vital. The report contrasted Pakistan's slow progress with ASEAN's success, which stems from regulatory alignment, robust e-commerce legislation, and heavy investment in smart infrastructure. The ADB observed that "digital transformation is no longer optional" and said aligning regulations, upgrading infrastructure, and integrating with regional agreements are critical to secure a share of the $500 billion-plus digital trade opportunity ASEAN economies are already capturing.

Looking ahead, the report recommended a long-term policy framework supported by coordinated implementation, the creation of a regional digital single window, and investment in smart ports and digital trade corridors. It also emphasised the need for training programmes to enhance digital skills, particularly among women and youth, to ensure inclusive growth.

Amin argued that Pakistan must "fix its own house first" before expecting to compete in digital exports or advanced technologies. "Until we consolidate our own systems, we will not stand anywhere at all," he said.

He called for sector-wide consolidation efforts, starting internally within organisations, then expanding across industries. He cited examples such as medical technology, artificial intelligence, cybersecurity, banking, and insurance. "Take banking: Habib Bank alone has 22 departments that are not even synced with each other. If companies don't integrate internally, how can industries collaborate?"

According to Amin, without synchronised systems and data sharing, research and development (R&D) will remain weak, preventing the creation of new talent and innovation. "Consolidation of data is the baby step. Until you know yourself, what is inside your own system, you cannot create anything new," he emphasised.