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Pakistan ranks among fastest growing e-commerce markets in the world, will see $600m trade this year

Country needs to build a strong foundation for e-business as current volume is around $4bn per annum, says PCJCCI chief

Although Pakistan is a late entrant to world of e-commerce, but with more internet penetration and surge in sale of smart phones, there has been a reasonable rise in online shopping trends and other e-commerce businesses.

Such growth trends over last few years — with more than US$ 30 million being spent on online purchases currently — depict a highly positive picture for future and the size of Pakistan’s e-commerce market is expected to reach over US$ 600 million by 2017.

E-commerce industry is booming throughout the region including in China where Alibaba’s e-commerce market capitalization estimated to be over US$ 250 billion. With many new online ventures springing up rapidly and existing businesses recording unprecedented growth rates, there is still a lot that needs to be done to reach the true e-commerce potential of the country and compete with other big players of the region.

Financial experts believe that Pakistan’s entry into 3G and LTE services in 2014 has increased internet accessibility and will also most likely propel the growth of online purchases. With increased access to the internet and social media sites such as Twitter and Facebook, marketing trends are also rapidly changing and transforming the way opinions are now being shaped. This will not only transform shopping trends but also significantly impact several other e-commerce arenas, such as online job hunts, land, property and rental transactions, they said.

According to them, Pakistan is among the fastest growing e-commerce markets in the world, as latest technology is being adopted. E-commerce sector had been doubling in size every year and was projected to surpass US $ 1 billion in 2020.

They said e-commerce was a growing business in Pakistan and had great potential for growth, as Pakistan had adequate ICT infrastructure in place for facilitating fast developing e-commerce sector and there was exponential growth in mobile broadband access to nearly 26 million people.

Experts believe expanding e-commerce could further facilitate the present government’s aim of inclusive economic growth, promoting socio-economic development and providing livelihood for the marginalized segments of society including women.

However, financial experts recommended for increasing financial literacy through government programs, replacing cash withdrawal with non-cash method and investing in legal infrastructure to promote financial inclusion in South Asian countries for their development and economic uplift.

They asked for promoting micro-finance to introduce lending culture, besides easing the documentation requirements and boost competition in the financial institutions. Although, the government had sponsored number of guarantee facilities and subsidized landing schemes to encourage the financial inclusion but still a lot more is required. Despite these efforts, the level of financial inclusion remained low as 10.3 percent adults had an account with the formal financial institutions. This ratio was bellow both in South Asian average of 33 percent and the average for over all middle income countries of 41 percent. About 51 percent of adults used neither formal nor informal products, while 36 percent of adults saved but only 4 percent with the formal financial institutions.

“Our banks need to embark upon the modern day banking and financial services through adopting and offering services including alternative delivery channels like internet banking, channelizing funds inflows, remittances into investment and enhanced financial access to marginalized farmers through service providers and crop production companies,” they said.

Since main goals of financial inclusion were eradication of poverty, financial stability and economic growth, hence, access to financial facilities was the major hurdle in financial inclusion in South Asia as about world’s 20.6 percent unbanked population was living in India, whereas in Pakistan unbanked percentage was 5.2 percent.

On the other hand, banks are required to open up and play their lead role for promotion of e-commerce. Banks must be lender for those entities engaged in e-commerce business. However, generally is it observed that Pakistani banks continued to amass profits in 2016 by investing their clients’ deposits in risk-free government securities.

Safe investments in government papers let banks grow their bottom lines while minimizing the risks associated with private-sector lending. Investing deposits in risk-free government securities is lazy banking. The practice allows banks to grow profits while avoiding risks associated with the expansion of the private-sector loan book, financial analysts said.

E-COMMERCE TO CHANGE THE WORLD

According to the founding President of Pak-China Joint Chamber of Commerce & Industry (PCJCCI) Shah Faisal Afridi, at present, the overall volume of e-commerce in Pakistan was around $4 billion per annum and it was estimated that in near future, almost 25 percent of traditional business would be converted into internet business.

Afridi elaborated that establishing business through e-commerce was effective due to low cost as billions of buyers and sellers could be connected simultaneously across the world. “E-commerce, if handled well can greatly reduce the costs of a company and achieve better results than the traditional form of business,” he said.

According to an authentic estimate, he said, the e-commerce was going to change whole world in future, therefore, Pakistan government should take better initiative to improve required infrastructure to promote e-business.

“We must understand that almost 78 percent of e-commerce activity takes place in USA, obviously driven by use of internet in that country. Nevertheless, Pakistan can make good use of this opportunity with proper planning and execution,” he mentioned and suggested to focus on domestic e-business before going for global market.

He called for changing entrepreneurs’ perception about e-commerce to build a strong foundation for e-business and, these should be taught about latest and most popular trends of e-commerce such as, business-to-consumers (B2C) and business-to-business (B2B), Business-to-government (B2G) and government-to-citizens (G2C).

The e-commerce, he said, created a cost-efficient marketing opportunity for SMEs, which could not approach targeted audience through traditional medium of advertisement because of financial constraints. Moreover, online shopping was also a new trend in the world and consumers now purchased items of their need online.

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