Page 105 - SAMENA Trends - August 2019

REGULATORY & POLICY UPDATES SAMENA TRENDS

in real GDP is around 60 per cent at end of fiscal year 2018, and framework proposes registration of e-commerce businesses with
around 56 per cent in nominal Gross Domestic Product (GDP), the Securities & Exchange Commission of Pakistan (SECP) and
the latter is higher than South Asia average. Service sector has making it mandatory for them to maintain a physical address in
been witnessing a shift towards the digitization as growing Pakistan. In addition, for enhancing consumers’ trust, measures
internet penetration is revolutionizing the way consumers and for protection against counterfeit goods and a code of conduct are
businesses gain and share information, executes transactions, proposed under this Policy Framework. Moreover, with e-commerce
and manages their day- to- day operations. As per draft policy enterprises making their presence felt, laws and regulations have
framework document prepared by Commerce Division, improving been introduced to enable existing financial institutions to cater
digital connectivity is reshaping consumer behavior, which is to electronic transactions and encourage new private sector
increasingly tilted in favor of convenience, cost savings, and intermediaries to enter the field. However, a lot more is required
customized retail experiences. Businesses are also capitalizing to be done to address needs of a large segment of population,
on opportunities enraging from the digitization, such as supply which the e-commerce industry shall target as its consumer base
chain efficiency, lower transaction cost and enhanced flexibility in in the future. In relation to this, it is essential to enable Card-Not-
addressing consumer needs. Pakistan is among the economies Present (CNP) transactions and explore the possibility of co-
where digitization is triggering changes in some components badging with international card payment schemes. Moreover, it is
of the service sector. The shift is most prominent in areas like proposed that banking services should be improved for promoting
e-commerce, fintech and e-government, where new ventures use of local online merchant accounts by online businesses and
and approaches to deliver services are picking. Specifically, the exploring the possibility of establishing an international payment
market size of e-commerce has grown significantly in Pakistan gateway in Pakistan. With regard to consumer protection, the
over last few years, transforming the way consumers interact existing laws in the country do not contain specific provisions
with, and especially pay businesses. The other objective of this for addressing concerns of consumers transacting in digital
initiative is to Bottom of Form Bottom of Form transform Pakistan environment. In relation to this, recommendations have been
into a significant player in regional and global digital economy. made for introducing specific amendments in these laws. An
Listing the goals, the document further revealed that it would important aspect of consumer protection is ‘dispute resolution
increase e-commerce industry’s growth to make the area one mechanism’. This Policy Framework proposes that it should be
of the key drivers of Pakistan’s economy. The other goal is to mandatory for all online businesses to provide for an efficient
streamline regulatory framework for e-commerce businesses in customer support and dispute resolution mechanisms and
Pakistan, to contribute achieving higher export growth through Federal and provincial governments should make arrangements
enhanced activities from e-commerce platforms, to promote for establishing independent alternate dispute resolution
small e-businesses and create employment opportunities centers for expeditious settlement of disputes. Taxation is one
through digital connectivity for empowering youth, especially in of the major issues for stakeholders of online marketplaces. The
remote areas. As per details, in 2017-18, the number of registered Primary concerns relating to taxation are imposition of minimum
e-commerce merchants was 496 which reached 1,094 by year-end income tax, withholding tax and provincial sales tax. This policy
and was around 1,242 by first quarter of 2018-19. E-commerce framework proposes that for purposes of provincial sales tax,
transactions processed by these merchants are also increasing online businesses should be treated at par with other businesses
proportionately. Pakistan’s e-commerce industry is emerging and parallel to that, provincial sales tax regimes should be
rapidly and has the potential to strengthen the country’s economy harmonized to address concerns of online marketplaces. In
by creating more job opportunities, linking remote areas to the Pakistan, business-to-consumer (B2C) e-commerce model has
mainstream, development of small and medium enterprises and grown significantly in last few years and this trend is likely to
finally enhancing exports through online platforms. For this, it is continue. Logistics play a pivotal role in the B2C model. The main
crucial to develop a policy framework for consumer protection, the area of concern to be addressed is system automation of B2C
role of the financial sector in optimizing its growth and its revenue- players and third-party-logistics (3PL) businesses. In addition,
generating potential in the medium and long run. This policy within framework of Pakistan’s National Transport Policy, a policy
framework provides a glimpse of the current status of Pakistan’s on logistics shall be formulated to address concerns relating
e-commerce as country’s basic laws concerning Information to e-commerce industry including expeditious processing for
Technology (IT) extend legal recognition to transactions carried export of low-priced small consumer goods. Another important
out in digital environment and electronic payments. However, area is Data Ownership and Localization which is termed as
generally, e-commerce is regulated under statutes concerning ‘oil’ of the digital industry and is the most valuable resource in
traditional commerce. This gives rise to various concerns for digital economy. To unleash the true potential of e-commerce,
industry and the concerned authorities. For addressing these it is essential to localize data generated in Pakistan and prevent
issues it is necessary to take measures for allowing re-export/ its transfer to any other country or any entity not incorporated
re-shipment of goods, launch National Single Window (NSW) for in Pakistan for the utilization of local digital industry. At present,
speedy processing, especially for export of large volume of low- Ministry of Information Technology and Telecommunication
cost goods/items. Moreover, in order to cater for possible impact (MoIT) is in process of formulating Pakistan Cloud Policy. The
of import of digital goods in Pakistan, infrastructure and technical said policy should also address issues concerning e-commerce.
capacity should be developed to enable the government to impose Overall, this policy framework is aimed at ensuring reasonable
customs duties on such products on their import. At present, there growth of e-commerce, creating employment opportunities and
is no mechanism/registry for e-commerce businesses. This policy generating revenue for state. (August 4, 2019) urdupoint.com

105 AUGUST 2019