Demand For E-commerce in Pakistan By Dr Nosharwan A Abbasi

E-commerce and other online businesses have been demanding access to online payments gateways and permission to introduce foreign companies to operate in Pakistan for a long time. Global tech giants are either reluctant to enter Pakistan market or they are discouraged due to government policies. However, major hindrance can’t be figured out as ministers repeatedly promised to allow overseas companies to operate locally but not a single company got permission. Similarly, freelancers and tech companies have long been demanding to allow a major payment platform “PayPal” due to payment challenges locally and from overseas clients. In recent shout-out, a major discourse started on Twitter with hashtag #AmazonInPakistan. It started trending when Pakistani users started demanding amazon operations in Pakistan as it’s a popular e-commerce platform globally. However, owing to government policies, Amazon remains reluctant to start business in Pakistan. Pakistan can be a major market for Amazon or a similar e-commerce platform.

Previously similar campaigns were launched by people on social networks to demand the operation of global tech companies in Pakistan. Waqar Zaka, a famous reality show host has filed several petitions in Sindh High Court to legalize cryptocurrency. He also filed petitions to lift ban on a famous game and similarly raised his voice when a video publishing app was banned. Asad Umar, the then Finance Minister and Fawad Chowdary mentioned about welcoming Pay Pal and crypto currency but it just reminded a political promise or statement. Initially it was mentioned that State Bank has banned cryptocurrency and it is believed that its illegal. However, recently the Securities and Exchange Commission of Pakistan (SECP) published a paper discussing cryptocurrency regulation in the country. Meanwhile, the Central Bank has reportedly confirmed that there is no cryptocurrency ban. Such ambiguous situations and comments from different departments show that there are no definite regulations related to the latest technology innovations. Twitter users in Pakistan have been discussing such tech related issues in Pakistan and different hashtags appeared trending in different times such as #unbancryptocurrency #PayPalInPakistan #AmazonInPakistan #UnBanTikTok #UnBanPUBG etc. Thousands of tweets stormed to discuss these issues and twitter users in Pakistan got these issues trending on Twitter. It’s clear that people want Amazon to start in Pakistan and they are requesting its CEO Jeff Bezos to launch service in the country. Amazon is currently operating in 16 countries including India where they have invested $1bn.

During COVID-19, e-commerce and the digital economy has received a huge sales boost as physical mobility of shoppers has remained limited. Despite limited available options people started using digital products which has increased contribution of the tech sector in boosting the country’s economy. The State Bank of Pakistan (SBP) claims that the shift to electronic payments would stimulate consumption and trade, helping the country’s economy by as much as 7%, creating four million jobs and boosting gross domestic product (GDP) by $36 billion by 2025, the report added. There are several challenges for existing e-commerce in Pakistan including logistics issues, quality assurance and payment gateways issues. Most users have to rely on cash on delivery options which is not suitable for e-commerce business. Payment gateway could solve this issue and cash on delivery option can be eliminated, however, online payment gateways are facing challenges to operate in Pakistan. On one hand the government is emphasizing on increasing the digital economy and support tech industry to bring in more revenue to country’s economy but on the other side government is not ready to solve problems. Government imposed a 6% tax on online generated revenue in 2019, while recently in 2020 15% tax was imposed on online earnings with over $400 monthly income. The decision comes as a surprise to most in the freelancing community although it is not unexpected as the FBR had been sending tax notices to content creators like and YouTubers and Nadir Ali in the past. The decision seems somewhat unfair as $400 dollar annual limit is barely enough for the expenses that are incurred and the effort that goes into content creation.

Government has to take digital economy seriously in order to increase revenue and attract foreign investment in Pakistan. Tech giants such as Google, Facebook, Apple, Amazon are bringing huge investment to India and making local products. Similarly, China’s tech giants Baidu, Alibaba, Tencent are leading Chinese investors to invest in India. Smartphone companies both Chinese and global players such as Apple, Samsung, Xiaomi, Oppo have been directly investing in India and moving their assembly line to India. While in Pakistan all these tech giants are reluctant to invest and start local business owing to political uncertainty and lack of policy. It is the need of the hour to create an investor-friendly environment so that global technology players can invest in Pakistan. China’s e-commerce giant Alibaba’s revenue in 2020 was $72 bn, similarly Amazon revenue was 280 bn in 2019. These companies are adding a huge amount of revenue in the country’s economy while creating millions of jobs in different countries. These numbers prove that digital economy is becoming a major contributor to the country’s overall economic situation. Pakistan is ignoring major contributors to the economy, while public clearly demands ease of business for e-commerce and other tech companies. It will not only bring overseas investment to Pakistan but also create large employment opportunities.

—The writer is PhD from Communication University of China and Lecturer at NUML Islamabad.

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