In Pakistan e-commerce is still experiencing infancy and has many a barriers to its growth


July 29 - Aug 04, 2002


Today's age is that of Information Revolution, casting a unifying impact on the whole globe in its entirety and undercutting the split cascaded by the Industrial Revolution in the past. The hinterlands have been dragged in and stationed at a stone's throw; thereby affording an inter-face to those at thousands of kilometers' distance; bringing home the notion and aspiration to feel at home while landing at alien lands; facilitating the observers in eyeing the opportune moments to do business, after they have viewed the multiple facets of the products, featured as fantasized by the sellers. Simultaneously, extending the viewer a convenience on a small screen as if he is peeping through a windowpane and the goods being displayed affront in the street. Again; this has justly lubricated the transitory process, rendered borders insignificant; and plugged the pot pouri of souls in a common socket. And has thus abolished all geographical barriers and mitigated cross-cultural prejudices; and materialized an ancient whim that of "Global Village", hic jacet propagation of paradigm. By saving economic costs of ordering, carrying and holding inventories; it has economized the time and money of the Economic Men otherwise wasted.

The currency of the Information Interchange is electrifying the dark, dormant, dull and dunce brains of many a people. The ocean of lore and wisdom is graciously inviting and blissfully entertaining the philatelists; satiating their lust, teeming them with conviction and pragmatism. This is an elixir, an alchemy for the chronic lethargy pervading conventional commercial exchange system, a magic; an Aladdin's lamp, an extended favour, an artifice.

The role of financial sector in energizing electronic commerce can no more be overemphasized. Like as "money makes mare go" ipso facto, the structured financial infrastructure, institutionalized and patronized by the state and owned and regulated by the subordinate authorities can certainly rejuvenate the frail and faint structure of trade and commerce. Hence, paying for goods and services over the Internet calls for resuscitation of the conventional banking system. Now E-Banking rather most recently, Web-Banking has taken over the traditional banking and E-Commerce is on the verge of displacement in the hands of Mobile Commerce. Practices of using Credit and Debit card networks, Electronic Money and Smart Card are at the threshold of becoming a routine-matter in the West. In USA, the G-7 Heads of State have already issued Economic communiqué at the Lyon Summit, articulating the appropriate implementation plan for retail electronic payment system. On the constitutional front, the codification of substantial portions of commercial law through Uniform Commercial Code (UCC) is also underway. Again to ensure the perpetration of UCC, the National Conference of Commissioners of Uniform State Law (NCCUSL) is striving hard to adapt to new contractual facility. Other nations are not far behind. However, the fructification of US plans is evident from the heap of revenues they are reaping.

In Pakistan e-commerce is still experiencing infancy and has many a barriers to its growth. Chiefly being, unavailability of proper infrastructure (telephone lines of steam age, frequent failure of power), limited users of the inter-net i.e., 1 % of the total population, insecure transactions on the inter-net, high bandwidth rates and monopolistically rigid role of PTCL. However this is encouraging that government has got alerted and steps are being regulated and appreciated to develop an E-culture in Pakistan. The government has generously allocated Rs.15 billion for this purpose. It has also decided to construct 5 IT universities costing Rs. 15 billion. It also proclaims signing of a US$ 30 million contract for setting up a Tele-Housing Project. The government has succeeded in reducing the rate of Internet bandwidth from US $ 360,000 to US$30,000; which is cheaper than India and even Dubai. (Through all this exercise we might just be able to emulate India where software exports fetch over $4 billion annually!)

Here the situation is grim. A study conducted by SZABIST revealed that 83% of the sample (95) listed companies, show potential where as 55% are devoid of any solid planning for adopting internet. A 54 % of the sample considered a slow pace of internet growth in Pakistan in future however 39 % would welcome this era by floating websites. But it was pathetic that 99 % of the sample believed that internet is applicable to cash payments and receipts, and else is not e-commerce!

Modern and au courant nations have taken the Information Technology to hold firm-footed by taking adequate measures to affirm it at the grass-root level and then have geared it up to shoot to the top. Even China is enjoying 15% share of information and communication in the GDP and is simply three times ahead of Pakistan. Taiwan with 26 %, Australia 37%, USA 40%, Western Europe 20% and Asian countries with 16% are among other game players.

The adaptation to information technology by the state on modern lines, at least spirit to appreciate that, if alive, can wake us up, and make us stand the global occasion where the festival of electronic commerce has interwoven and absorbed the demand and supply factors stemming from the "rational consumers" and "enterprising vendors".

Though insurance companies are not much responsive to the universal wave of E-Business all over the world and so are in Pakistan, yet chief thrust still rests on the remaining body of the financial sector. A major mode of Business-to-Business payment "Electronic Funds Transfer" (EFT), leads others like Digital Cash and E-Cash. The latter two forms deal with small amounts during Business-to-Consumer interaction. The fundamental concerns regarding electronic payment system are: Security, lest it may lead to entanglement in one of the clauses of Computer Crime, Authentication both the seller and the buyer should have faith in electronic currency, Anonymity, both the parties should be able to ascertain the transactions as entre nous, Divisibility just getting divided into parts and subparts to facilitate the exactitude of the transaction.

The developing countries however, may face problems in maintaining the level of telecommunications services, in developing a legal framework, advancing money against digital signatures, formulating encryption and revising banking procedures that may further resistance and indifference within the financial institutions.


By grouping together the small and medium sized enterprises, they can share costs while creating E-financial services. This synergy might usher them to a stage where they can complement each other's weakness and capitalize upon the mutual strengths. This mode has worked successfully in Latin American countries.

Banks being heavy potential users of electronic and digital technologies can adopt new procedures entailing low marginal costs, enabling themselves to respond to clients' new demands. Growing standardization also opens new vistas for banks where they can enlarge their package of traditional services through new channels, as well as specifically designed new products.

Government, by regulating but not over-regulating newly emerging E-society, and by adopting E-business can itself become a client for different sectors. Through this it can have direct feedback about the governance — in the perspective of Inter-net advancement, and regulation of the economy in an attempt to steer it towards E-world. On the other hand, it can create a demonstration effect for private enterprise thereby encouraging them to venture into this modern sphere.

The table below gives Key Estimates of Global Internet Use during 2002:


600 to 1000 mil

PCs connected to inter-net

200 to 380 mil

Proportion of Global Economy affected

1.5 to 4 %

Proportion: online trade across border

10 to 30 %

Proportion: internet users making purchases

10 to 20 %

Countries affected

All but LDCs.

At present, over 50 million computers have been connected to the internet, turning the number of users to three times of the number of computers connected. Over three million sites have been developed catering 100 billion dollars worth of transactions annually. The number of computers purchased is doubling every 18 months, so is the number of users doing every 12 months. "Intranets" and "Extranets" coupled with supply chain management system and E-procurement are also emerging. To maintain security in inter-bank communication and the exchange of structured business documents, Electronic Data Interchange (EDI), blended with Secure Sockets Layer (SSL) that applies encryption technologies to scramble sensitive information and also the Secure Electronic Transfer (SET) extending a new standard of security, has also entered the spectrum. Stakeholders are wearing new definitions. The traders, manufacturers, service providers, government institutions and decision making bodies in the areas such as finance, planning, economics, commerce, law, customs and IT, all are being gilded by E-orientation. This present mirth and vigor reflect the gleaming future of this planet; now we can foresee and gauge its potential magnitude. Thus without proclaiming to be a clairvoyant, and considering our strengths and weaknesses we can circumspectly dream our status in the future scenario of advance nations.