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i. Junaid Ahmed Domki (group leader)

ii. Bilal Ahmed Arain

iii. Bilal Kaimkhani

iv. Arsalan Chandio

v. Irfan Umrani
Scope of E-commerce in Pakistan

E-Commerce is very important issue now days because it is the Era of

Information Technology. In these days IT can play an important role in
the development of economies of the world. The Government of
Pakistan took initiative of Information Technology and in E-Commerce
in early 2000.

Use of Internet is rapidly going to change the whole world. According

to government & rsquo;s survey for 2006/07 there are 2.4 million
subscribers and 10.7 million internet users in Pakistan. Lot of telecom
companies are working to provide the best facilities to their users.
Some Companies are spreading Fiber Optics network in whole over
Pakistan. Fiber Optics Network facilities is available in more than 500
cities. E-Commerce related to the delivery of information, product or
payment via telephone lines, network or any other means. E- Commerce
directly relates to online business, services and many more.

Pakistan has the capability to move into the Era of electronic trade.
Due to the use of Internet more and more countries are involved in E-
Business. Doing business via internet is easy task and billion of people
can be connected at same time.

The over-all volume of e-commerce is more than $4 billion annually.

Doing Business is effective due to low cost and in near future it is
expected that around about 30% business will be through Internet.
The corporate and the business world are appropriately supported by
the IT industry.

As we start warming up to global e-commerce in Pakistan, we must

understand that almost 78 per cent of the e-commerce activity takes
place in the USA, obviously driven by the use of internet in that
country. As the January 2000, over 110 million people have internet
access there compared to 279 million the world over.

The issue of E-business in Pakistan is becoming very popular among the

businessmen. The Government of Pakistan should take better initiative
to improve the required infrastructure to promoting the E-Business in

Those Companies who wants to start business via internet then they
should prepare their own web sites, containing all the information
about their organization, also providing the extra facilities to their
customers such as providing free detailed information about the
product and services.

However, Pakistan is still far behind in chasing the west in this regard.
Entrepreneurs in Pakistan are of the opinion that e- commerce means
being able to make and receive payments through internet and any
other activity through internet is not considered as e-commerce. This
low level of understanding has led many Pakistani firms to give low
priority to e-commerce due to unavailability of proper
framework for the internet in our country.

In Pakistan, the Concept of E-Commerce is not very common. The

Government of Pakistan should take initiative to provide the basic
information about the E-Commerce. The government provides the basic
infrastructure in telecom sector.
Telecom sector is the basic way of
doing business via Internet. E-
commerce is a very hot issue these
days. After the revolution of
Internet, more and more countries are getting involved in it. However,
in general, if we use any type of electronic devices in getting orders
and sending catalogues, like telephone, fax or any other such
instruments, we are supposed to be applying electronic business

However, the real sense of e-commerce is the business on the internet

of which there are different modes, like opening a retail store on
internet, where all transactions are done on line, from selection of
product to payment of bills. The over-all volume of e-commerce is more
than $4 billion annually. Doing business on internet is not a very costly
investment. It is estimated that in near future, almost 25 per cent of
the traditional business will be converted into internet business.

Trends: E-commerce is an information technology trend developing

fast in the business world. The corporate and the business world, aptly
supported by the IT industry, already stands transferred, which by
recent estimate will exceed $400 billion this year.

Nevertheless, Pakistan can make good use of this opportunity with

proper planning and execution. To begin with, let us focus on the
domestic front before going all out for the global market.

Domestic activity: Offer for improving and productivity to bring

it to the excellent level. It also allows our entrepreneur to test their
web business and marketing skills before taking on the international
markets. E-commerce is not for all but for those who understand it.
Yet, e-commerce is not a technology.

The issue at the individual level, it is purely a business matter. At the

govt level, it is a matter of providing infrastructure for transactions on
internet. E-commerce or business through internet is becoming very
popular mode of trading around the world particularly in the developed
world. E-commerce is a broad term used to quantify the trading taking
place on the internet.

Most studies, however, suggest that e-commerce runs through four

steps. The very first step is, to build a website to let the world know
about your existence. The website contains information about the
company, product/services and other related information, which can
help visitors to learn more about the hosts. The second step involves
asking customers to lose their pockets and buy on line.

This step requires adopting advance level of software capable of

handling orders. In the third stage inventory, management adds to the
system and lastly, providing provisions of payments through online
banking partnership between buyers and sellers, the most difficult and
complex part of e-commerce.

The most common and popular forms of e-commerce are business-to-

consumers (B2C) and business-to-business (B2B). Business-to-
government (B2G) and government-to-citizens (G2C) are other forms,
running on the internet but with low steam. However, the use of former
two still dominates the internet.

In Pakistan, e-commerce is still in its infancy and faces many barriers

to grow. The notable barriers are: unavailability of proper
infrastructure [telephone line of stem lines of steam age, frequent
failures of power] limited user of internet hardly one per cent of the
entire population have access to the internet], the issue of security of
transactions on the internet, high bandwidth rates, and last but not
least the rigid and monopoly role of the PTCL.

However, the SBP has recently put a crack on the barriers when it
approved the merchant ID accounts to facilitate online transactions.
But there is still a long way to go and requires government to continue
to grease the wheels of e-commerce to speed up the process.

Prospects: Those who create, distribute, and sell goods and services
to consumers also have reason to look forward to this new mechanism.
All enterprises, including the small and medium sized can reach
customers throughout the world instantly and comparatively
inexpensively. Many vendors can sell globally without the costly
infrastructure of worldwide retail stores, sales offices, distributors,
or warehouses.
Greater sales and inventory efficiency maybe possible through the
increased interaction with prospective customers, which electronic
commerce can afford. One to one marketing becomes possible on
massive and global scale. Active and alert supplier will also benefit
from the new structure of product and service distribution likely to
results from electronic commerce. With conventional distribution, a
manufacturer must reply to wholesalers and retailers to serve
customers in large volumes. E-commerce’s automated customer’s self-
service capabilities can eliminate the need for these intermediaries.
The manufacturer no longer has to share profit with others. In
addition, the manufacturer gains direct contact with consumers that
can facilitate future sales.

With this, as the role of conventional intermediaries—such as retail

store clerks, travel agents, bank tellers, and wholesale representatives
may diminish or end, new intermediaries have started to appear.

Electronic commerce connects manufacturers directly to consumers.

The consumer gets product information directly from the ultimate
source. The manufacturer can get customer preferences and needs
directly from the ultimate source. Each consumer’s physical location no
longer determines whom the consumer’s contacts to purchase a
product. With the purchase of intangibles that can be delivered
electronically, physical location becomes irrelevant to product delivery
as well. The internet makes the connection between a French consumer
and an Egyptian supplier virtually indistinguishable from the connection
between a Persian consumer and a Persian manufacture.

Legal Environment of E-commerce in Pakistan:

Electronic commerce has completed the transition from a utopian vision

to a veritable economic reality. Unsurprisingly, the rapid growth of e-
commerce has encouraged a corresponding rise in proposals for its
regulation. While there is a broad consensus that electronic commerce
should not be restricted by over-regulation, there is also a general
agreement that traditional paper-based legislation does not provide
answers to questions raised in an electronic environment.

Legal Barriers to E-commerce:

It is not easy to create legal regulations when they should relate to a

phenomenon which is built on continuously changing technological
solutions. A regime to create an effective infrastructure for securing
e-commerce requires a concerted and comprehensive development of
several elements, including laws, policies, industry self-regulation,
technical standards and law enforcement. Together these elements can
provide a positive environment and infrastructure to support the legal
growth of e-commerce with reduced threats. Traditional commerce is
heavily based on documents, which must personally be signed in order
to develop legal relevance and legal commitment. With the ongoing
shift from traditional commerce to electronic commerce, traditional
documents become electronic or digital documents. These electronic or
digital documents require to be signed by a substitute for the personal
Traditional Personal
Commerce Documents Signatures
Electronic Digital/ Digital
Commerce electronic Signatures

Like all transactions, electronic transactions involve documents (often

referred to as “records” “electronic records” or “data messages”, and
signatures (usually referred to as “electronic signatures”), that are
created, communicated, and stored in electronic form.

Legislative Response in Pakistan:

Before the passage of the Electronic Transactions Ordinance, a legal

framework for ecommerce did not exist in Pakistan. There had been a
growing realization in Pakistan in recent years that e-commerce can
only achieve its full potential if there is a modern legal infrastructure
that can support the growth of e-commerce. In order to develop laws
relating to electronic transactions and e-commerce for Pakistan, an IT
Law Forum was constituted by the Government of Pakistan in 2000
comprising of leading lawyers of the country working in various fields
of law related to information technology. The forum convened various
consultations with financial sectors and legal community to draft the
Electronic Transactions Ordinance. Following the process of
deliberations and after studying UNCITRAL model laws, reviewing
different implementation schemes of electronic authentication,
regulatory models and best practice guidelines, and keeping the
“International Consensus Principals on Electronic Authentication”
designed by Internet Law and Policy Forum as standard guidelines, the
Electronic Transactions Ordinance, 2002 was promulgated on
September 9, 2002.

Legal barriers:
It may however be remembered, are not necessarily the greatest
barriers to the evolution of e-commerce. Commercial difficulties and
user resistance probably offer an equal, if not greater, barrier to its
widespread use at present. In fact, it would be fair to say that some
legal barriers may be even desirable, for the protection of the public
interest, including the prevention and detection of crime.

It can be concluded that there is a lot of scope of e- commerce in

Pakistan, and most companies are eager to going to the digital world,
but at present due to absence of any policy framework and limited
internet market, companies are holding their plans to start e-business
until clouds of barriers as discussed are disappeared.