Cover Story
There is a need to address the real issues
By SHABBIR H. KAZMI
Nov 08 - 14, 1999
There is no generally accepted definition of electronic commerce
(e-commerce). However, the World Trade Organization(WTO) Work Programme on Electronic
Commerce is understood to mean the production, distribution, marketing, sales or delivery
of goods and services by electronic means. A commercial transaction can be divided into
three main stages: advertising and searching; ordering and payment; and delivery. Any of
these transactions can be carried out electronically and may therefore be covered by the
concept of e-commerce. Pakistan has to take two initiatives. One is joining the
information technology agreement and second is conducting the study on the implications of
e-commerce. The issue is directly related to WTO agreements like Trade in Services, TRIPs
and transparency in domestic regulations.
The advent of Internet has not only opened a new chapter in the life of
an individual but has created new vistas in corporate environment. It has never been so
easy to communicate, gather information and then use it one's best advantage. The natural
outcome is that globally the economies are going through transition at a very fast speed
not only to compete in the global village but also to get an edge over others.
The process of globalization offers new opportunities besides posing
many threats. As the tariff and non-tariff barriers are being demolished, the competition
is intensified. The countries desirous of attaining larger market share, on the one hand,
have to be more competitive, and on the other hand, need to have access to more and more
customers to get a bigger bite of the pie. They have to offer better quality of goods and
services and cut down delivery time. The e-commerce has thus been evolved as a competitive
advantage. Presence of a company on the worldwide web acts as its virtual front office
— 24 hours a day. The e-commerce offers enormous potential and Pakistan just cannot
afford to miss the train.
The worldwide web has enhanced global connectivity. It offers a new
corporate face to the world. The web has not emerged overnight. The evolution of
information technology (IT) led to e-mail emergence in 1972. The Internet, a connected set
of networks, came up in 1982 and invaded every country — some getting linked up
faster and many lagging behind. However, it is a fact that whether some one likes it or
not or postpones the global connectivity, worldwide web is the name of the game —
only laggers will be the losers.
The e-community is rapidly growing at an unprecedented rate. The
worldwide Internet connectivity surged from 27 million in 1996 to 70 million in 1998. It
is expected to touch 100 million by the end of this year and more than double to 240
million by the year 2004. The USA has the largest community of Internet users but the
population in Asia is expanding at the highest rate and China is emerging to be the
largest user of Internet in Asia.
Pakistan cannot remain immune to this phenomena. It is very fortunate
as well as very unfortunate when one looks at the state of IT and its use. It is fortunate
because any product launched in the developed world is also released in the Pakistan
simultaneously. But the government policies, shortage of skilled manpower are the largest
impediments. It is also the national psyche of "keep it pending' when it comes to
actual use of hardware and software. However, it is heartening to note that there has been
a visible and significant change in the thinking of up coming generation over the last
five years.
The rapid advancement in the IT has rendered conventional channels of
communication obsolescent. In Pakistan, over the last two years there has been a
recognition of the fact. It has been realized that delays in making timely decisions, with
regard to IT matters, have resulted in Pakistan lagging far behind. Whatever, activities
have so far undertaken were based on attempts made individually with minimum level of
government coordination.
The progress in IT in the country has been amply hampered due to
absence of a central coordinating authority. There is a need to ensure coherent, focused
and accumulated efforts to produce quantifiable results.
During Nawaz Sharif rule the draft of Information Technology Policy was
prepared and circulated. The steering committee was given the mandate. The then deputy
chairman planning commission and the chief coordinator Pakistan 2010 programme was
nominated IT coordinator for Pakistan. To ensure meaningful implementation, a two-tier
structure was conceived. The Board of Information Technology was to be created as the
highest decision making authority for the IT related issues. The steering committee, in
addition to its mandate, was to ensure implementation of the decisions and policies and
formulate recommendations.
Key Issues
Any product that can be reduced to digital format can be delivered
electronically. This includes music, books, films, computer software and financial
services architecture plans etc. These products can also be delivered by conventional
modes of transportation or non-electronic means. The introduction and speed of Internet
has established e-commerce as an important means of carrying out commercial transactions.
It raises a basic question that "Can e-commerce replace the
traditional trading system?" To certain extent it can become a substitute. An
increase in the volume and value of transactions conducted on Internet is expected to
surpass the quantum of transactions conducted by traditional means.
According to some experts, e-commerce has this potential as it can
reduce the cost per transaction, increase efficiency, promote competition, lower prices
and enhance international demand. It can open new areas for transactions like on-line
education, medical services, consultancy and data exchange. It can complement trade
through domestic and international market research, advertising and marketing. In the
financial services area it can facilitate speedy transactions and transfer of funds.
It has the potential benefits not only for large corporation but also
help small and medium size enterprises to overcome their traditional drawbacks in trade.
They can benefit from virtual presence and overcome lack of information about market
opportunities and available supply.
Infrastructure
The physical infrastructure requirement for conducting e-commerce
depends on the type of business in question. Delivery of an item through Internet requires
use of appropriate hardware and software, compatible telecommunication system and
uninterrupted electricity supply. The Internet is the means through which transactions can
be conducted. Like any other developing country, Pakistan is far behind in required
physical infrastructure. These include: computer hardware and software, telephone lines
and uninterrupted electricity supply.
The other but more important issues are: transfer of funds in foreign
exchange, customs clearance, payment of duties and taxes. Goods traded electronically may
never cross the border physically and thus it will be almost impossible to collect customs
duties and there is an incentive to by-pass the conventional trading system. This may lead
to not only economic distortions but also result in loss of revenue for the government.
However, there is a need to study the potential loss of revenue against long-term
benefits.
There are some legal issues involved. For example: determination of
country of origin, agreements, need for original documents, establishing the authenticity
of documents. UN Commission on International Trade Law has already undertaken the work on
model laws for conducting e-commerce. Pakistan needs to keep a track off these
developments and interact more with the Commission and its trading partners
