Capacity-constraints on E-commerce in Pakistan

There is little doubt that electronic commerce has penetrated many people’s—and particularly business’—lives in one way or another, during the past few years. But how many businesses really use the Internet? How do they use it? And how are they planning to use it? When it comes to a precise evaluation of the importance of e-commerce, including its dimensions, growth-rate and role in economic growth and development, uncertainty prevails. The IT sector has shown appreciable progress over the past three years in Pakistan. The Ministry of Science and Technology took a leading role in bringing the IT sector into the center of government policy. The National IT Policy and Plan of Action (August, 2000) was the driving force to strengthen the IT Sector in Pakistan. The government encouraged import of IT equipment, by significantly reducing custom duties; there were tax-incentives for income generated through IT business, bandwidth costs were brought down manifold and Internet-access was provided to more than 800 cities/towns/villages. On the supply side of the equation, this is an enviable progress. However, there are challenges on the demand side. The number of businesses using ecommerce is negligible. There is a cumulative effect of human-resource capacity-constraints, old business processes, a high proportion of informal economy, lack of trust in electronic-payment culture, insufficiency of legal systems to enforce contracts, etc. E-commerce capacity-constraint can be overcome through ensuring the value of their resources, both for the businesses and customers. If a technology cannot provide value for their resources, its use cannot be sustainable in the longterm. The sustainability is directly proportional to the value provided by the technology and its demand and