E-commerce can spur intra-South Asia trade: World Bank
Business Line
New report says e-comm can boost firm productivity,
diversification of production and exports.
E-commerce can become a driver of
growth across South Asia and boost trade among the region’s countries, but its
potential remains largely untapped, says a new World Bank report.
This report, Unleashing
E-Commerce for South Asian Integration, notes that although e-commerce has
grown significantly in South Asia, online sales accounted for a mere 1.6 per
cent and 0.7 per cent of total retail sales in India and Bangladesh, compared
to 15 per cent in China and around 14 per cent globally.
Increasing the use of e-commerce by
consumers and firms in South Asia could potentially help boost competition and
firm productivity, and encourage diversification of production and exports, the
report added.
Like the European Union’s Digital
Single market proposal, South Asia could aspire to have a regionally integrated
Business-to-Consumer (B2C) e-commerce market, the report suggested.
“E-commerce can boost a range of
economic indicators across South Asia, from entrepreneurship and job growth to
higher GDP rates and overall productivity,” said Sanjay Kathuria, World Bank
Lead Economist and co-author of the report.
“By unleashing its online trade
potential, South Asia can better integrate into international value chains,
increase its market access, and strengthen commercial linkages between
countries across the region.”
Reacting to the report, Bipul
Chatterjee of CUTS International said that e-commerce can be a good platform
for further integration of South Asia. “The report deals with the entire
ecosystem around e-commerce, and hence can be looked at as a framework for
future regional integration,” he said.
A survey of over 2,200 firms in South
Asia showed that the top concerns on cross-border e-commerce sales included
e-commerce related logistics, e-commerce and digital regulations, and
connectivity and information technology infrastructure. These barriers are
significantly higher when trading with other South Asian countries.
The main international e-partners of
firms in South Asia are China, the UK, and the US, and not other South Asian
countries.
Small and medium enterprises in the
region reported that removing regulatory and logistical challenges to
e-commerce would increase their exports, employment, and productivity by as
much as 30 per cent.
Reforms proposed
To overcome these hurdles, the report
proposes reforms in areas such as payments, delivery, market access
regulations, consumer protection, and data privacy, at the national, regional,
and global levels. “Some practical steps to strengthen online transactions
include leveraging the reputation of large e-commerce platforms to offer
consumer protection, return and redress, and data security as an initial
substitute for robust contractual and consumer protection mechanisms, and
permitting cross-border e-commerce payments,” said Arti Grover, World Bank
Senior Economist and co-author of the report.
The report also suggests an
incremental approach to taking these steps, if necessary, in order to build
confidence.
“While cross-border trade within
South Asia represents only 5 per cent of the region’s total trade, e-commerce
has the potential to stimulate regional trade by bridging the gap between
buyers and sellers on different sides of national borders,” said Viviana
Perego, World Bank Agriculture Economist and co-author of the report.
And apart from firms, consumers in
South Asia stand to gain significantly from the potential reduction in costs
and availability of a greater variety of e-traded goods and services, the
report says.
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