Registration with SECP mandatory for online businesses having sales of more than Rs1 million per annum

It is compulsory for all online businesses to maintain the code of conduct introduced for e-Commerce platforms

IT ministry and SBP will approach PayPal and other payment gateways to ensure availability of int’l services in Pakistan

ISLAMABAD: The federal cabinet has finally approved Pakistan’s first-ever e-Commerce Policy Framework, paving way for the promotion of digital trade and business in the country.

The long-awaited policy, which remained under discussion and policy drafting for many years at the Ministry of Commerce, was presented before the cabinet on Tuesday after necessary feedback from the stakeholders on the policy’s draft, which envisaged new regulations and consumer protection laws in the online shopping market.

The policy covered and provided guidelines on key components for promotion of e-Commerce, including a better regulatory environment, financial inclusion and digitisation through payment infrastructure, empowerment of youth and small & medium enterprises, consumer protection, taxation, information and communication technology infrastructure, logistics, data sovereignty and engagement in multilateral negotiations.

The commerce ministry, for the first time, has underlined a definition for the e-Commerce market. According to it, e-Commerce is defined as “buying and selling of goods or services including digital products, through electronic transactions conducted via the internet or other computer-mediated (online communication) networks.”

As per the approved policy draft, e-Commerce sales in 2017 were recorded at Rs20.7 billion which grew by 93.7pc in 2018 with over Rs40.1 billion of digital business.

“In terms of value, 60pc of e-Commerce transactions are post-paid, cash-on-delivery (CoD) transactions.”

The key objectives of the policy framework included the constitution of a National e-Commerce Council as well as a single-window hub to review and implement the policy. The role of these bodies also would be to enhance the country’s exports through e-Commerce platforms’ and ensure youth empowerment and employment opportunities, digital connectivity, efficient payment infrastructure, streamlining of legal systems, taxation structures and digital infrastructure, e-Commerce ecosystem, dispute resolution, transparency and accountability in the digital industry.

“They would also ensure implementation of Sustainable Development Goal-8 (Growth & Decent Work), Goal-9 (Infrastructure and Innovation) and Goal-12 (Sustainable Consumption and Production).”

The commerce ministry maintained that the public and private sectors were consulted extensively in policy formulation, as 50 consultative sessions were held and 300 stakeholders were consulted in this regard.

Under the digital business policy, it is mandatory for any e-business having sales of more than Rs1 million per annum to register itself with the Securities and Exchange Commission of Pakistan (SECP). It is also compulsory for all online businesses to maintain a physical address in Pakistan as well as the code of conduct introduced for e-Commerce platforms to ensure consumer protection.

The protection of consumers has also been ensured through amendments in the existing federal & provincial consumer protection laws. Under the policy, it mandatory for all e-commerce platforms to set up a customer support system and dispute resolution mechanism; consumer courts in all districts of the country would also be ensured.

Besides, the establishment of independent alternate dispute resolution mechanism at the federal & provincial level, the inclusion of e-Commerce disputes in draft Trade Dispute Resolution Act (TDRA) and the creation of e-Courts have also been included in the policy.

On the taxation front, harmonisation of the general sales tax collection system at the provincial level has been included to avoid double taxation. Moreover, the introduction of a simplified, one-paged sales tax return form, encouragement and promotion of e-businesses through reduced GST on services by the provincial revenue authorities have also been proposed.

According to the policy framework, there are 161 million cellular subscribers, 70 million 3G/4G subscribers and 72 million broadband subscribers (PTA’s data of 2019) in the country which may be involved in digital business.

Pakistan Post, under the policy, would introduce an Express Mail Service (EMS Plus) for speedy export processing to Saudi Arabia, UAE, Japan, UK, Thailand and Australia. Besides, for data protection and investment, Pakistan’s first Cloud Policy is being developed by the Ministry of IT. The early enactment of the Data Protection Act would also be ensured.

As per the new proposals, an “e-Procurement model” may be adopted by public and private sector to encourage and promote digitization of procurement procedures in Pakistan.

The ministry, as per the addition to policy, will gradually shift Cash-on-Delivery (CoD) payment method to digital payments, with a timeline of Sept 2022 for payments beyond Rs10,000. Furthermore, efforts shall be made to convert all CoD payments into digital payments preferably within 10 years (2029).

It is recommended that M/oIT&T in collaboration with SBP will approach PayPal and other payment gateways to ensure availability of several international payment gateways in Pakistan.

The Ministry of Communications shall include in its draft National Freight and Logistics Policy a dedicated chapter on facilitating e-Commerce, including timely payments to sellers by the logistics companies.

Final Version of Presentation on e-Commerce for the Cabinet,25th Sep 2019