Amazon, PayPal, eBay: Pakistan’s intention to invite companies welcomed

Experts say step would boost e-commerce space, regulatory issues need to be addressed

KARACHI:

Pakistan’s intention to invite global tech companies would be a significant boost for the country’s e-commerce space and would open several avenues for the public as well as businesses, said experts, cautioning that the steps to complete the move needed to be resolved sooner than later. 

Their remarks came after Minister of State for Information Technology and Telecom Anusha Rahman expressed the intention to invite Amazon, eBay and Paypal to launch operations in Pakistan. Experts said the development is encouraging, but bringing those “big names” would require the government to complete a list of pending issues.

“Pakistan was on the grey-list of Financial Action Task Force (FATF) that discourages technology companies from coming to the country,” Rahman had said.

FATF is an inter-governmental body established to combat money laundering, terrorist financing and other threats to the integrity of the internal financial system.

“The country has now moved to the FATF’s white list,” Rahman added.

Though a positive development, majority experts say the change in FATF ranking is not enough to achieve the target. “The country first needs to have the supporting infrastructure in place,” they said.

“Theoretically, bringing Paypal, Amazon and eBay will significantly boost the e-commerce space,” said Karachi Institute of Technology and Entrepreneurship (KITE) Founder and President Afaque Riaz Ahmed. “But for that to happen, the government would need to have the necessary legal and financial regulatory framework in place.”

Ahmed, who spent 13 years in the Silicon Valley working for leading tech firms, said the overall business environment has plenty of roadblocks for technology companies.

“Youtube is banned in the country for more than three years, mobile phone services are frequently suspended while talks of banning Skype, WhatsApp and Viber have already started - the video-sharing website has not been restored despite negotiations with its parent company because of the same obstacles that exist today,” Ahmad added.

He said the country needed a comprehensive cybercrimes legislative framework. The draft has been under consideration and deliberations since 2012.

Furthermore, he said the government needed to address issues with respect to the withholding tax (WHT), corporate governance problems and alternative dispute resolution mechanisms. “I am not sure if the ministry alone has the power to solve these issues, as they span multiple domains and is not directly under their control.”

He said the strategy should be to give giant companies incentives for setting up a proper development centre as opposed to a sales office that doesn’t generate employment or attract investment.

“For example, Microsoft, Intel, Cisco and Dell don’t have many employees while Google has only one. These companies don’t have strong presence here because the underlying root-causes have not been addressed. On the contrary, Microsoft India has 2,000 employees, doing hard core research and development,” he added.

Meanwhile, Google’s former country representative in Pakistan (for eight years) Badar Khushnood said Pakistan lacked bilateral or multilateral ‘Mutual Legal Assistance Treaties’ (MLATs) for cybercrime-related cooperation.

He said the Intermediary Liability Protection (ILP) - the requisite legislation to solve long-standing content platform issues such as the Youtube ban - have been pending for years. “I am not sure how would we solve the complex policy and regulatory issues required for financial technology companies like PayPal if we could not solve simpler issues like that of Youtube in more than three years,” he added.

While experts are pressing for improvement in the regulatory framework, the ministry seems fully aware of what needs to be done.

“For successful establishment of an e-commerce gateway, a comprehensive e-commerce policy is a must,” Rahman said.

She further said that the commerce ministry was working on the regulatory framework while her ministry and the central bank were assisting in this regard and the task would be completed in the next few weeks.

Published in The Express Tribune, November 26^th, 2015.

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