HE prime minister`s secretariat has expressed concern over the inability of the commerce and information technology ministries to formulate a sound national e-commerce policy.

The policy will mainly focus on the development of the e-commerce market along with related financial and legal issues.

The current size of Pakistan`s e-commerce industry seems to have no ballpark number; the commerce ministry estimates it will reach $1bn by 2020.

The ministry has proposed the exemption of sales tax on ICT services.

The Electronic Transaction Ordinance 2002 and prevention of Electronic Crime Bill 2016 provides the basis for legislative infrastructure for of e-commerce operations. Additionally, an Electronic Certification and Accreditation Council has been established to deal with e-signatures and e-contracts for e-transactions.

However, there is a weak regulatory mechanism for consumer protection, data and information privacy, insuranceliability and dispute resolution for e-commerce transactions.

A separate law has been proposed which may include a provision for seller protection, specifying rights, obligations, liabilities and penalties for both sellers and consumers.

The question will be whether the Competition Commission of Pakistan is ready to deal with online negative business practices? Moreover, the government will have to adopt a law for data protection. Industry players doubt the capacity of the FIA to stop data transfers which may be used for spying. The EU has imposed a ban on such transfers.

Currently, the country`s judicial system may not be ready to respond swiftly to online disputes. The government needs to make fully functional the trade dispute resolution organisation, which is currently understaffed.

Foreign exchange regulations are to be amended to facilitate cross border electronic transactions. The question is whether the State Bank is ready to trek all online transactions traffic across frontiers.

Currently, e-commerce stakeholders are individuals/companies selling services. Interestingly, the existing legal framework only accommodates traditional retail transactions.

The potential for e-commerce is immense. The United Nations Conference on Trade and Development`s e-commerce readiness index for the developed world is 77, and for developing Asia it is 41. Pakistan`sindex stands at 36; while that is marginally higher than the Saarc average, the country`s position in the index shows that there is still a huge task ahead.

Over the years, several committees were constituted to develop policy. On the basis of these committees` reports, a summary was submitted to the prime minister`s secretariat on Sept 9 by the commerce ministry for approval.

The summary listed steps to be taken out in a period of three to six months for promoting e-commerce in the country. On the surface it seemed doable, but not in the given short timeframe.

E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems.

For development of the e-commerce market, there is an adequate ICT infrastructure. The launch of 3G and 4G bandwidth for mobile network operators has increased the number of mobileusers to nearly 26m. The number of smart phones will reach 60m by 2017 from existing 40m. Building blocks now exist and it is up to policy makers to connect the dots efficiently.

According to an official report, 60pc of all recorded visits to e-commerce sites were made via mobile phones.

The Global Findex report branded Pakistan as a leader in mobile banking transactions in South Asia with 11pc of Pakistani citizens using mobile phones to carry financial transactions.

To make access to hardware easy, the government will have to speed up work on the accession to information technology agreement of the WTO. The government will also have to establish a separate wing in the ministry of commerce for content management and ensuring net neutrality.

As there are no rules for the payment system, local vendors offer cash on delivery options. The State Bank of Pakistan just approved the concept of establishment of the national payment gateway in 2015.

Industry players say the government will have to invite global online payment giants US-based PayPal and Chinese giant Alibaba to offer their services in Pakistan. The tax structure customs and sales tax on the e-commerce also needs a thorough revisiting.

They ask: is the FBR ready and does it have the capacity to tax online transactions? This is not easy because currently developed countries like US find it challenging.