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PROFILE PROF. DR. KHAWJA AMJAD SAEED
COLUMN FOR THE RECORD
INFORMATION TECHNOLOGY E-COMMERCE AND DEVELOPMENT

 

E-COMMERCE AND DEVELOPMENT
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 What are the limitations to the use of the Internet in Pakistan?

By ARSHAD KAMAL SETHI
Email: akamal2002@yahoo.com

July 21 - 27, 2003
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Pakistan has a total population of 120 million people of which 11% live in the metropolitan city of Karachi which is the only port city of the country and therefore a commercial centre of Pakistan, on which the entire trade and commerce of the country largely depends. This city provides over 40% of the total revenue generated by the country and has the headquarters of all the banks, development financial institutions, insurance companies, major traders, leading business houses and offices of almost all the multi-national companies which are operating in Pakistan. The importance of growth potential of Karachi has always been under-estimated and therefore the pace of development was always meager and did not meet the requirement of this ever growing metropolis. Though the present conditions in the country has temporarily restricted the economic growth in Karachi, yet it is anticipated that the situation would improve in the near future and would be most favourable in coming 3 to 4 years. The population of Karachi is expected to grow at over 6% per year.

Owing to the importance of Karachi a recent survey of 87 companies listed on the Karachi Stock Exchange laid bare some quite interesting facts regarding basics of Information Technology. Of the total 87 companies surveyed, 67% were transnational organizations, while the remaining 33% were domestic firms. The survey revealed that none of the aforementioned companies were engaged in e-commerce trade at present, but had future plans to do so.

HERE ARE SOME LIMITATIONS/FACTS:

i) The level of understanding about e-commerce, among the members of these firms was found to be:

59% High
28% Medium
15% Low
2% Zero

ii) Response of some IT Personnel over future of e-commerce in Pakistan:

83% saw potential for selling over Internet

17% felt there existed no such potential.

iii) On being asked when they foresaw their companies to be engaging themselves in e-commerce activities:

55% no idea of a timeframe

20% gave a time frame of six months

25% thought that e-commerce might begin in their companies in a year

iv) In reply to the question whether the government was doing enough to promote Information Technology in the country:

46% yes

43% no

11% no idea

 

 

v) Predicting about growth of e-commerce in the country:

32% at a first rate

54% slow

5% moderate

9% not certain.

vi) Access to Internet of 87 companies surveyed, showing following:

94% had a very good access to Internet

39% had hosted their own web sites

90% had their own e-mail accounts

58% had LAN (Local Area Networks) installed at their organizations

vii) Selling trend of these firms is that:

59% sold their goods through a chain of wholesalers and retailers

28% used direct selling methods by accessing the end users

13% used a combination of both of these techniques for sales.

NOTE:

The survey revealed that 85% of the companies had a staff of more than 100 people.

Apart from the limitations mentioned above, what are the main obstacles to the development of e-business in Pakistan?

The main obstacles to the development of e-business in Pakistan are of different nature. Some are detailed below:

1. The requirement of software engineers is around 1500 per annum. However, the local universities and students coming back from abroad only make up for one-third of the annual requirement and there is need to expand the academic network.

 

 

2. This Government also faces the low literacy problem which is an impediment to the growth of IT and other sectors

3. Special software in local languages which shall help lift education standards and development.

4. Intellectual Property Rights are very important. Companies offering free software for standard computer applications could be utilized.

5. Monopoly of PTCL The aggressive proponents of an IT revolution in Pakistan advocate that Singapore's example should be followed which deregulated its state monopoly, Singapore Telecom in April '99 three years ahead of schedule. It is mentioned that the availability of telephone line and other services at 58 telephone per 100 people and its IT boom is because of the forward looking policies of the Singapore government. PTCL revenues would further build-up once it is deregulated. Also note that current private sector funding in telecom projects would shoot upto US$ 3-4 billion from US$ one billion at present, if the voice monopoly of PTCL ends. Although it implies certain legal implications due to securitisation of PTCL's revenues till 2002. Government could hold dialogue with the corresponding financial institutions involved, get some back up financial guarantees from private sector groups/foreign investors which are eager to invest in Pakistan's telecom sector after PTCL's deregulation and use them to offset this legal hitch. Since the IT applications, software export and internet usage are dependent on telecom infrastructure, the opening up of the telecom infrastructure holds great importance.

6. The Government of Pakistan has to ensure that with all the tax concessions, soft telecom rates etc, the basic stress of IT usage should be to lift productivity standards of the local manpower and industry. If the companies earn software export revenue after meeting the local demand, that is all the more welcome. The academic plans and financial plans under the IT policy are not devised in this direction.

7. There is desperate need of forming a body in the government that should welcome and appreciate investors and guide them precisely. The investors always come in with their money and hanged with one question, "how to begin?" To solve this question they are lost in a never ending plethora of policies. It is a fact that unless the government takes concerned measures the country wont develop as fast, it should. Malaysia set several brilliant examples by planning way ahead. They are making IT Parks where they will give tax-free incentives to foreign organizations in order to encourage them to come in. Investor-friendly policies should be implemented here; we have industrious manpower, IQ level etc.

8. No concept of digital democracy; surely it makes easier for people to participate in politics.

 

 

9. The draft IT plan for Pakistan does provide for about billions of rupees to be spent on human resource development in the past financial years. The government will need to support this effort fully in spirit and with generous funds with dedicated and competent team of experts backed by advice from expatriates. Main hurdle old bureaucratic system still existing.

10.The visible links of IT with poverty alleviation and disaster mitigation strategies have not been emphasized in any meaningful way, nor has any specific reference been made to digitize and further enrich the traditional alternative knowledge of our societies.