- The Federal Cabinet has approved the much-awaited first-ever E-Commerce Policy Framework.
- The Policy Framework will encourage micro, small and medium enterprises to play their role in Pakistan’s economy and prosperity.
- The policy includes a gradual shift of cash-on-delivery payment method to digital payments, with a timeline of September 2022 for payments beyond Rs10,000.
The federal government has finalized the E-commerce policy framework to create an enabling environment for the growth of e-commerce across the country.
This will help to protect the interests of consumers and sellers. It will give special focus on the development and promotion of Small and Medium Enterprises (SMEs) to transform Pakistan into a significant player in the regional and global digital economy.
E-Commerce has played an important role in the success of SMEs. This is because it helps to reduce transaction costs, explore niche markets and avoid intermediaries.
Back in 2017, the value of worldwide E-Commerce transactions was approximately $29 trillion of which $23.9 trillion was Business to Business (B2B) E-Commerce.
On the other hand, Business to Commerce (B2C) E-Commerce stood at $3.9 trillion. However, cross border B2C is estimated at $ 412 million.
The E-Commerce industry in Pakistan is performing fairly well over the last few years. According to the State Bank of Pakistan, E-Commerce sales stood at Rs.18.9 billion by the end of June 2018. During 2018, the total size of Pakistan’s E-Commerce market in 2018 was Rs.99.3 billion.
There is a need to take measures to increase the competitiveness of the local enterprises in order to enhance their share in global trade, without compromising consumer trust. For this, it is crucial to develop a policy framework for addressing key areas of concern.
It is also crucial to develop a policy framework for addressing key areas of concern; consumer protection, inability for the financial sector in optimizing its growth and tap its potential to generate revenue in the medium to long run.
Prime Minister assigned the task to the Commerce Division to frame a comprehensive national E-Commerce Policy Framework in consultation with all the stakeholders including the private sector.
He underscored that the subject of e-commerce is ever-evolving. Pakistan has taken its first step in the right direction and this policy framework will bear fruits in the near future.
The following bodies are constituted to deliberate on the prospective Policy Framework:
- National E-Commerce Advisory Council
- National E-Commerce Policy Board
- National E-Commerce Policy Unit
- Five working groups on taxation, payments infrastructure, regulatory framework – Commerce Logistics and E-Commerce & WTO
The Ministry of Commerce conducted extensive consultations with all the stakeholders, including:
- The Federal Board of Revenue (FBR)
- State Bank of Pakistan (SBP)
- Ministry of IT & Telecom
- Securities and Exchange Commission of Pakistan (SECP)
- Provincial Revenue Authorities
- Private sector
Moreover, the working groups made recommendations to address various issues. These recommendations have been incorporated into the proposed E-Commerce Policy Framework.
Areas included in the Policy Framework:
The planned E-commerce policy framework covers areas such as:
- Consumer protection
- Taxation issues
- Payment gateway
- Privacy and personal data protection
- Data sovereignty and localization
- Training of the SMEs for establishing their online presence
What would the Policy Framework do?
The policy framework will pave the way for developing E-Commerce in Pakistan by creating an enabling environment for:
- Growth of existing E-Commerce enterprises
- Encouraging new entrants
- Facilitating local and cross border trade (especially exports)
- Enhancing competitiveness
- Contributing to the overall digital economy
Further, the policy framework will also lure enterprises to venture into E-Commerce, enhance their productivity and generate new employment opportunities.
National E-commerce Council:
The government is planning to establish the National E-commerce Council. It is aimed at promoting and regulating the growing industry of online trade through incentives. The National E-commerce council will work under the Ministry of Commerce and collaborate with different relevant ministries as well.
The Council will work as a single-window for policy implementation and review to facilitate E-commerce players and will also reflect on the current issues being faced in each of the nine areas including:
- Regulatory and facilitation framework
- Financial inclusion and digitization through payment infrastructure development
- Empowerment of youth and SMEs through E-commerce
- Taxation issues
- Consumer protection in the digital environment
- ICT sector and telecom services in Pakistan
- Data protection and investment
- Global connectivity and multilateral negotiations
The National E-commerce Council will provide strategic direction on policy and initiatives to the sector. Its stakeholders will monitor the collaborative initiative among the players.
It will provide recommendations and progress on the development of E-commerce to the federal government.
The recommendations were made in the policy framework for the gradual shift of the Cash-on-Delivery (CoD) payment method to digital payments, with a timeline of September 2022 for payments beyond Rs.10,000.
Furthermore, efforts shall be made to convert all CoD payments into digital payments preferably within 10 years.
It has been also decided that all online businesses maintain a physical address in Pakistan. The Code of Conduct will be made public for E-commerce platforms to ensure consumer protection.