E-commerce in Pakistan expected to boost to $1 billion by 2020: report

Entrepreneurs in the private sector have launched numerous e-commerce initiatives that have, over time, become success stories

The logo of the web service Amazon is pictured in this June 8, 2017 illustration photo. Photo: Reuters/Illustration

ISLAMABAD: The size of Pakistan's e-commerce market — one of the most important drivers of the digital sector — is expected to grow up to $1 billion by 2020, a report reveals, citing current trends as the basis for the calculations.

The annual report — published by the Pakistan Telecommunication Authority (PTA) for 2017 — revealed that the Ministry of Commerce has formulated an "e-commerce policy board" on Prime Minister Shahid Khaqan Abbasi's direction to monitor progress and ensure coordinated cross-institutional efforts for development.

The State Bank of Pakistan (SBP) has devised and approved regulations pertaining to the framework of Payment System Operators (PSO) and Payment Service Providers (PSP), while the development of an e-commerce policy framework is also under wraps.

The report says that entrepreneurs in the private sector have launched numerous e-commerce initiatives for consumers (B2C) that have, over time, become success stories.

The most important element of the e-commerce ecosystem is the payment gateway that will enable the entry of credible international players in Pakistan's e-commerce ecosystem and will resolve a longstanding barrier to its growth.

Alibaba — the world's largest e-commerce company — has also shown an interest in the Pakistani market, having recently signed a Memorandum of Understanding (MoU) with the Trade Development Authority of Pakistan (TDAP) to help boost small and medium enterprises.

With its status as one of the leading e-commerce service providers, Alibaba has the ability to elevate Pakistani products to international platforms.

Pakistan is generally a cash-driven economy, the report noted, as mobile wallet (m-wallet) accounts are scarce and the number of debit/credit card-holders is small — indicating that over 95 per cent of the transactions in the country are done on a cash-on-delivery basis.

Pakistan is also making good progress in terms of business-to-business (B2B) front, with the software industry aiming to reach exports worth $5 billion by 2020. It has various medium-sized firms that earn over $500 million, mainly in software development and service outsourcing.

However, it is noteworthy that Pakistan's IT sales amount to only 0.0875 per cent ($2.8 billion) of the Herculean $3,200-billion global market.

What gives hope is the fact that Pakistani consumers' trend of online purchases is not just limited to day-to-day products; websites offering cars, property, and travel packages exist in the country, showing that people are using the Internet to buy a wider range of "experiences".

Some of the local portals — PakWheels, Zameen.com, Food Panda, Rozee.pk, Daraz.pk, to name a few — have emerged as leading online businesses in Pakistan.

However, it is imperative that the government and private sector enable a safe, reliable, and unrestricted environment for the consumers' e-commerce activities.

The success of such online ventures has made the nation's e-commerce market a lucrative one for foreign investment.