*ISLAMABAD:* The Pakistan Tehreek-e-Insaf (PTI) government has prepared adraft e-commerce policy framework to pave way for holistic growth ofe-commerce in the country through creating an enabling environment wheresmall and large enterprises would have equal opportunity to grow steadily.
It is hoped that Pakistan’s e-commerce sector grows exponentially to claima substantial share in global trade, which in turn will create employmentopportunities and generate more revenues.
The overall share of the services sector in real Gross Domestic Product(GDP) is around 60 per cent at end of the fiscal year 2018, and around 56per cent in nominal GDP, the latter is higher than South Asia’s average.
The service sector has been witnessing a shift towards the digitisation asgrowing internet penetration is revolutionising the way consumers andbusinesses gain and share information, executes transactions, and managestheir day to day operations.
As per the draft policy framework document prepared by the CommerceDivision, improving digital connectivity is reshaping consumer behaviour,which is increasingly tilted in favour of convenience, cost savings, andcustomised retail experiences.
Businesses are also capitalising on opportunities enraging from thedigitisation, such as supply chain efficiency, lower transaction cost andenhanced flexibility in addressing consumer needs.
Pakistan is among economies where digitisation is triggering changes insome components of the service sector. The shift is most prominent in areaslike e-commerce, fintech and e-government, where new ventures andapproaches to deliver services are picking.
Specifically, the market size of e-commerce has grown significantly inPakistan over last few years, transforming the way consumers interact with,and especially pay businesses.
The other objective of this initiative is to transform Pakistan into asignificant player in a regional and global digital economy.
Listing the goals, the document further revealed that it would increasee-commerce industry’s growth to make this area one of the key drivers ofPakistan’s economy.
Another goal is to streamline regulatory framework for e-commercebusinesses in Pakistan, to contribute achieving higher export growththrough enhanced activities from e-commerce platforms, to promote smalle-businesses and create employment opportunities through digitalconnectivity for empowering youth, especially in remote areas.
As per details, in 2017-18, the number of registered e-commerce merchantswas 496 which reached 1,094 by year-end and was around 1,242 by firstquarter of 2018-19. E-commerce transactions processed by these merchantsare also increasing proportionately.
Pakistan’s e-commerce industry is emerging rapidly and has the potential tostrengthen the country’s economy by creating more job opportunities,linking remote areas to the mainstream, development of small and mediumenterprises and finally enhancing exports through online platforms.
For this, it is crucial to develop a policy framework for consumerprotection, the role of the financial sector in optimising its growth andits revenue-generating potential in the medium and long run.
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This policy framework provides a glimpse of the current status ofPakistan’s e-commerce as country’s basic laws concerning InformationTechnology (IT) extend legal recognition to transactions carried out indigital environment and electronic payments.
However, generally, e-commerce is regulated under statutes concerningtraditional commerce. This gives rise to various concerns for industry andthe concerned authorities. For addressing these issues, it is necessary totake measures for allowing re-export/re-shipment of goods, launch NationalSingle Window (NSW) for speedy processing, especially for export of largevolume of low-cost goods/items.
Moreover, in order to cater for possible impact of import of digital goodsin Pakistan, infrastructure and technical capacity should be developed toenable the government to impose customs duties on such products on theirimport.
At present, there is no mechanism/registry for e-commerce businesses. Thispolicy framework proposes registration of e-commerce businesses with theSecurities & Exchange Commission of Pakistan (SECP) and making it mandatoryfor them to maintain a physical address in Pakistan.
In addition, for enhancing consumers’ trust, measures for protectionagainst counterfeit goods and a code of conduct are proposed under thisPolicy Framework.
Moreover, with e-commerce enterprises making their presence felt, laws andregulations have been introduced to enable existing financial institutionsto cater to electronic transactions and encourage new private sectorintermediaries to enter the field.
However, a lot more is required to be done to address needs of a largesegment of population, which the e-commerce industry shall target as itsconsumer base in the future.
In relation to this, it is essential to enable Card-Not-Present (CNP)transactions and explore the possibility of co-badging with internationalcard payment schemes. Moreover, it is proposed that banking services shouldbe improved for promoting use of local online merchant accounts by onlinebusinesses and exploring the possibility of establishing an internationalpayment gateway in Pakistan.
Regarding consumer protection, the existing laws in the country do notcontain specific provisions for addressing concerns of consumerstransacting in digital environment. In relation to this, recommendationshave been made for introducing specific amendments in these laws. Animportant aspect of consumer protection is ‘dispute resolution mechanism’.
This Policy Framework proposes that it should be mandatory for all onlinebusinesses to provide for an efficient customer support and disputeresolution mechanisms and federal and provincial governments should makearrangements for establishing independent alternate dispute resolutioncentres for expeditious settlement of disputes.
Taxation is another major issue for stakeholders of online marketplaces.The primary concerns relating to taxation are imposition of minimum incometax, withholding tax and provincial sales tax. This policy frameworkproposes that for purposes of provincial sales tax, online businessesshould be treated at par with other businesses and parallel to that,provincial sales tax regimes should be harmonized to address concerns ofonline marketplaces.
Meanwhile, logistics play a pivotal role in the B2C model. The main area ofconcern to be addressed is system automation of B2C players andthird-party-logistics (3PL) businesses.
