E-commerce can become an important economic driver in Pakistan if the government devises investment-friendly policies and ensures intellectual property rights associated with operating businesses.
E-commerce can become an important economic driver in Pakistan if the government devises investment-friendly policies and ensures intellectual property rights associated with operating businesses. The government also needs a robust supply chain structure to increase the e-commerce potential in the country.
Muhammad Shahrukh Khan, a creative content strategist, told that Pakistan is currently the 37th largest e-commerce market in the world. “We have the potential to make it in the top 20 but it will need taking major steps,” he added. He said e-commerce in Pakistan experienced hypergrowth amid the pandemic. The revenue from e-commerce stood at $2.1 billion in 2019, $4 billion in 2020, and $7.3 billion in 2021. He said that regardless of any economic uncertainty, e-commerce revenue is projected to reach $9.1 billion in 2025. “We can exceed the target just by considering a few fundamental economic and strategic concerns,” he added.
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Pakistan faces a number of challenges when it comes to the e-commerce industry, including a lack of trust in online payment methods owing to leaks of personal information and credit card breaches; poor shopping experiences; shortage of awareness and adoption of technology and outdated distribution and logistics networks. “Pakistan ranks 122 among 160 countries on the logistic performance index,” said Shahrukh Khan. According to the latest report of Digital 2022, there were almost 82.90 million internet users in Pakistan in January 2022 as compared to 61.34 million in 2021. Shahrukh Khan said that the promising prospect to increase the growth of e-commerce is the increasing availability of the internet. The availability of the internet could help to get faster and provide unique selling and purchasing experience to e-commerce consumers and sellers.
He said that Pakistan is ranked 16th in the world with regard to smartphone users. Around 47.1 million people in the country were using smartphones in 2021. “We have business-to-business potential that would help to increase the export of textile products. We can learn from the experience of the USA and China, which are leading e-commerce players. China and the USA have a resilient competitive advantage in logistics and distribution networks. Pakistan lacks a strong supply chain management network,” he said. Shahrukh Khan said that the US logistic industry scale including wholesale, retail, and warehousing is around $900 billion, which accounts for 10% of its gross domestic product. China has a dominant logistics and distribution network. China began to scale its supply chain network after becoming part of the World Trade Organisation.
He said China and the USA have strong domestic and global payment network setups and policies. Pakistan lacks the infrastructure for online payments. PayPal is also not operational in Pakistan. “PayPal can accelerate e-commerce growth, but we lack trust in local online e-commerce payment systems. Regulatory and legal barriers are the main obstacles to e-commerce growth in developing nations,” he said. Shahrukh Khan said that e-commerce accessibility in Pakistan needs improvement. Internet penetration in Pakistan is 36.5% while it is 74.4% and 92% percent in China and the USA, respectively. Pakistan’s regulatory measures in the e-commerce sector need to be improved with minimal government intervention.
“There is a need to devise investment-friendly taxation policies and ensure intellectual property rights to operate the business. There is a need to develop a robust supply chain structure to increase the potential of e-commerce in Pakistan,” he said. He said that e-commerce activities would have a positive impact on per-capita income, employment generation and GDP growth. The promotion of the international brand through e-commerce would help to transform the trade deficit of Pakistan into a trade surplus. It would also have a positive impact on energy consumption and greenhouse gas emissions. “The government should focus on research and development do increase worldwide demand for Pakistani products,” Shahrukh Khan told.
Originally published at The Nation