Despite the potential for progress in e-commerce, Pakistan still faces numerous challenges that hinder the sector’s growth in the country. Talking to WealthPK, Rafia Jalil, a senior researcher at PRIME (Policy Research Institute of Market Economy), she said that the e-commerce sector in Pakistan was experiencing average growth despite the catalytic effect of the Covid-19 pandemic, which should have principally boosted traffic on e-commerce platforms. While pointing toward the challenges that are hampering the growth of e-commerce in Pakistan, she highlighted the cash-based nature of the economy. “While Pakistan predominantly operates as a cash economy, e-commerce platforms typically emphasise digital payments.” The second challenge, she underscored, was the lack of digital infrastructure in the country. According to the "Digital Report" published by the Ministry of Commerce, internet penetration in Pakistan stood at 49%, and approximately 82% of the population was covered by cellular mobile connections, while active social media users made up 31.5% in the fiscal year 2022-23. Despite advancements in digital infrastructure, notable gender and geographical disparities in fibre optic connectivity persist.

Jalil added that the other challenges included restricted consumer credit data for evaluations and a rather stiff regulatory framework for fintech – financial companies using the latest technologies in their operations. “Promoting electronic payments through tax incentives, simplifying fintech regulations, and establishing fintech facilitation desks can improve growth in this sector, positioning it as a significant contributor to economic transformation.” She maintained that challenges associated with platform integration, e-commerce taxation, cross-border funds movement, and warehouse management impeded progress. “To foster growth, policymakers should streamline regulations, attract international e-commerce firms to establish regional offices, support the digitisation of small and medium enterprises, and enhance cybersecurity efforts,” she emphasised. The senior researcher also recommended cultivating an investment-friendly environment, lowering import duties to encourage the development of fibre optic cables, and ensuring widespread access to 4G mobile service before initiating the 5G rollout to enhance overall connectivity. In a nutshell, the government should formulate comprehensive regulations and policies that address the challenges the country’s digital economic landscape is facing.

Credit: Independent News Pakistan (INP)