Abdul Razak Dawood, advisor to Pakistani prime minister on commerce, textile, industry and production, and investment, said on Monday that the special focus of the government on e-commerce policy will benefit the country, particularly giving a quantum jump to its exports.
Addressing a workshop here on e-commerce, the advisor said that in line with the government’s vision of “Digital Pakistan”, many lacunas in the procedural framework will be fixed.
“The moment we start minimizing the interaction between people with everything working online, then corruption will go down, inefficiency will go down and we will be able to move in a much, much faster way,” he said.
Currently, Pakistan’s services sector exports are around five billion U.S. dollars, said Dawood, adding that prioritizing opportunities for the startups and small and medium-sized enterprises (SMEs) through the policy of digitization and e-commerce, service exports could be enhanced to a great extent.
According to a report about the e-commerce policy framework of Pakistan released by the country’s commerce ministry in September 2019, there are over 3.2 million SME units in Pakistan, accounting for 98 percent of all the enterprises, and the SMEs employ “nearly 78 percent of the non-agriculture labor force in Pakistan and contributes more than 30 percent” to the overall gross domestic product (GDP).
“E-commerce is an opportunity to bring SMEs in the mainstream and connect them with international markets through global e-commerce platforms as well as Pakistani online market places,” the report added.
Talking to Xinhua, Badar Khushnood, a member of the Pakistani software houses association P@SHA, said that the China-Pakistan Economic Corridor (CPEC) is providing a great opportunity to Pakistan to learn and collaborate with Chinese tech giants like Tencent and Alibaba to tap its e-commerce potential.
Khushnood is of the view that companies like Alibaba, Uber and Careem have conducted B2C business in the country, and the business can be further expanded within the B2B framework as well.
According to a report released by the website Export.gov which is managed by the U.S. Department of Commerce, it is estimated that Pakistan has around 32 million Facebook users, and one of the highest rates of smartphone penetration in South Asia at nearly 34 percent. This makes it a potential market for e-commerce services and businesses.
Jawaid Ghani, professor of strategy and marketing research at Karachi School of Business and Leadership, told Xinhua that e-commerce facilitates make transaction easier, which is essential for foreign direct investment.
To increase exports, Pakistan has to introduce new e-commerce avenues as this would increase economic activity across all levels including B2B, B2C and C2C, he said.
The Export.gov report also noted that a large component of Pakistan’s economy is informal and this is mainly because the majority of transactions are conducted in cash, except for those that are very large and require a bank draft or pay order. The majority of the local companies especially the SMEs are undocumented and therefore out of the tax net.
Ghani said that e-commerce and digital payment services would ensure transparency in transaction along with bringing the documentation of the undocumented transfer of money.
The McKinsey Global Institute report estimated that Pakistan can have an increase of a cumulative seven percentage points in its GDP along with the generation of around four million new jobs during 2016-2025 through utilizing digital financial services alone.