E-commerce industry in Pakistan can attract ‘significant’ FDI: ADB

ISLAMABAD: Pakistan’s e-commerce industry is one of the few in the CAREC region to attract significant foreign direct investment, says the Asian Development Bank (ADB)

The bank in its latest report, “E-Commerce in CAREC countries infrastructure development” noted that Pakistan has both low online shopping penetration and a large online shopping market. The value of B2C e-commerce tripled between June 2017 and June 2020, driven by the pandemic-induced online shopping.

The report noted that Karachi’s Chamber of Commerce cites several problems hindering e-commerce in Pakistan, some of which have also limited foreign investment in the country’s online shopping sector including high taxes on a nascent industry, with provincial sales taxes of up to 16 percent, poverty, illiteracy, and a lack of adequate infrastructure and online content in regional languages, weak enforcement of consumer protection laws, combined with deception by online sellers, overpricing, and faulty products, late delivery times, difficulties in making returns, and poor customer service, inadequate data protection and a lack of public trust that personal data merchants require for online orders will be kept secure and not misused and inadequate start-up support.

Delivery and warehousing need to be integrated and third-party fulfillment providers encouraged. E-commerce companies have taken the lead in Pakistan and the PRC, but in most of the CAREC region online shops lack the size and funding necessary to invest in logistics.

Agriculture is significant in Afghanistan, Pakistan, Tajikistan, and Uzbekistan where it contributes about a fifth of their respective economies. E-commerce could help these countries export more agricultural products.

It offers the more industrialized CAREC economies the potential for expanding B2B transactions. Economies in which services play a large role can benefit in terms of e-commerce trade and logistics, financial services, telecommunications, and information services.

E-commerce can boost cross-border business in countries where international trade is particularly important.

The report further stated although Pakistan had the second-lowest account penetration, it ranked third on the internet banking list.

More recent official statistics on the penetration of internet banking are not available for most CAREC countries. Available data indicate take-up is growing, although not all those registered for internet banking are using it.

In Pakistan, the number of internet banking accounts rose 19 percent a year between 2017 and 2020.

Pakistan has committed to develop its national single-window by 2022.

Single windows electronically link customs, traders, government agencies, and other parties to allow them to submit and exchange electronic documents in a way that makes the trade process more efficient.

Traders can file standard documents through a portal where relevant information can be shared with customs and other government agencies, as well as certification authorities, banks, insurance companies, and logistics operators.

Copyright Business Recorder, 2022