PESHAWAR: Despite the promise of booming e-commerce, Pakistan’s reliance on cash, patchy digital infrastructure, and regulatory hurdles are holding the sector back, according to a senior researcher.
Rafia Jalil, from the Policy Research Institute of Market Economy (PRIME), said that while COVID-19 initially propelled e-commerce, its growth remains sluggish due to the fundamental challenge of a cash-dominant economy clashing with the digital payments nature of online platforms. “Pakistan heavily relies on cash, while e-commerce thrives on digital transactions,” Jalil explained. This mismatch creates friction for both consumers and businesses.
Further compounding the issue is the uneven distribution of digital infrastructure. While the government reports 49% internet penetration and 82% cellular coverage, significant rural-urban and gender disparities persist, leaving many potential customers offline.
Jalil also pointed to limited consumer credit data for online transactions and a restrictive regulatory framework for fintech as roadblocks. She suggested tax incentives for e-payments, simplified fintech rules, and dedicated fintech support desks to unlock the sector’s potential.
Beyond infrastructure and financial hurdles, Jalil identified platform integration issues, complex e-commerce taxation, cross-border payment restrictions, and inadequate warehouse management as additional obstacles.
To overcome these challenges, Jalil advocated for streamlined regulations, attracting international e-commerce players, supporting SME digitization, and bolstering cybersecurity. Additionally, she recommended lowering import duties on fiber optic cables, prioritizing widespread 4G access before 5G rollout, and cultivating an investment-friendly climate for digital infrastructure development.
“Comprehensive policy and regulatory frameworks are crucial to address the challenges and unlock the full potential of Pakistan’s digital economy,” Jalil advised. Only by bridging the digital divide, promoting e-payments, and streamlining regulations can the country’s e-commerce sector truly blossom.
