POTENTIAL OF e-COMMERCE IN PAKISTAN

Inflation, circular debt, power crisis and the shrinking purchase-power of a common man are some of the serious issues to be addressed by the government at her earliest. Unfortunately, the government has exhibited her incapability of resolving these basic issues. Irony, we are living in the cyber-age, and not in the Stone-Age. The world is going ‘intelligent’ in every sphere. That is, people around us are using ICTs (Information and Communication Technologies) in order to provide intelligent solutions (ICTs-based solution) to whatever problem they come across. Pakistan is lagging behind.

This article has been written in perspective of the theme of this issue, i.e. economy. That is why this article discusses the use of ICTs particularly in economy/business sector in Pakistan. Switching over to e-commerce is the need of the hour.

Despite phenomenal increase in the internet penetration in Pakistan, the country is yet to experience the e-commerce boom. According to
Internet World Statistics (http://www.internetworldstate.com/aisa.htm), in December 2011, Pakistan’s internet population was about 29 million. We are amongst the top 20 countries with highest internet population. The number stood at 17.5 million in 2009, and if we go back in the year 2000, only at 133,000!

There are no official statistics on how many credit card users in Pakistan, but the fact is that almost every major local and international bank is offering credit card in collaboration with the Visa International. Additionally, debit card option is also gaining popularity in the country.

A recent report published by Deloitte confirms that the growth in the domestic retail sector in Pakistan is experiencing substantial growth. Over the last few years, major retailers and whole-sellers such as Metro, Makro and now Hyper Star have started successful businesses in the country. According to statistics given in Deloitte report, between 2007 and 2011, per capital consumer spending has increased from US$ 680 to US$ 883 and the size of retail sales in the same period have increased from 75,650 million US$ to 103, 389 million US$.

Keeping the above-stated statistics in view, logically speaking, e-commerce should have also geared up in the country. But, unfortunately, this is not the case. Let’s also not forget that when we talk about e-commerce, it is not focused at the domestic market only. According to latest statistics following are great online markets for Pakistani products:COUNTRY / REGIONINTERNET USERSChina513 millionUS245 millionEurope 200 millionIndia121 millionThis table shows the potential Web 2.0 global outreach that could benefit Pakistani companies in the e-commerce arena. Whereas other markets are opening up, China and the US are currently the biggest potential markets. In the US, about 54% sales are done online whereas in China about 14% online sales have been reported.

With the rapid development of mobile applications, increased use of social media websites and rapid growth in technology can increase the online markets to simply unpredictable numbers!

Conforming to the paradigm shift, just recently, European Union has shifted her focus at increasing the cross-border business opportunities by using the e-commerce tools. EU feels that by providing efficient payment solution, improved product delivery mechanism and ensuring consumer protection, EU will be able to unleash the tremendous potential of e-commerce.

So when we are fully poised to take the benefits of both domestic and international markets, why Pakistani e-commerce is missing over 1 trillion US$ online market?

Wire transfer services such as Western Union and MoneyGram are now operating in Pakistan. These services are being used for brining foreign exchange in the country. Also local services being used by EasyPaisa and UBL Omni are doing good but these are not providing any solutions for the online purchases and e-commerce.

One of the biggest issues is the non- availability of international payment gateway such as PayPal. The company which is considered the best payment platform facilitating e-commerce left Pakistan a couple of years ago due to the non-availability of International Bank Account Number (IBAN) which is required for processing every transaction and also Pakistan’s restriction of doing business with Israel. According to PayPal terms, the company operates in an environment which allows transactions from any global point.

Additionally, inefficient legislations for consumer protection, cumbersome custom regulations for exporting smaller quantities via the international courier services, almost non-existent cyber crime legislation, and the pending amendments in the electronic transaction ordinance are also the key factors in suppressing the growth of e-commerce in the country.

Recently, Pakistan Software Houses Association for IT and IT Enabled Services (P@SHA) spoke to a number of chambers and associations on the issue of brining payment gateway services in the country. These stakeholders agree that if payment gateway is available in the country, it will not only provide opportunity for increasing the Pakistani exports, but also domestic market will increase, which will result in the creation of a large number of technical and online marketing jobs in the country.

This is the age of internet, social media and online business. Pakistan cannot afford to lose the opportunity to take a joy ride on the online bandwagon. State Bank of Pakistan and all other relevant authorities must act soon and provide entrepreneurs conducive regulatory environment that helps explore Pakistan’s true e-commerce potential.