5 issues Hindering Pakistani Companies in entering International eCommerce

Here are the 5 issues hindering Pakistani companies in establishing their international eCommerce online businesses on international marketplaces like Amazon, eBay, Walmart and other specialist international marketplaces.

These, directly or indirectly relate to the State Bank of Pakistan regulations, governing foreign exchange.

They are:

1. Permission from State Bank to establish a company in a foreign country, especially, North America and Europe so they can open banks accounts, consign their goods to them which they want to sell online from these marketplaces, warehouse them in these locations, do direct fulfilment to customers in these markets or supply to marketplaces like Amazon for FBA, etc.

2. The current requirement to repatriate export proceeds/funds back within 120 days to 180 days which as we know does not support an eCommerce retail B2C model because we cannot predict with 100% accuracy when the entire stock will be sold. Hence the need to revisit this condition.

3. The current policy of allowing 10% of export proceeds as marketing allowance granted to exporters is a reactive policy not only for eCommerce based exporters but also current exporters. A new exporter entering the business is NOT GIVEN any forex to market and promote their products, buy assets, employ people, spend on marketing and sales promotions, other business services, hiring consultants, building distribution channels, buying a store, including building an eCommerce channels. This must be changed to a proactive policy.

4. Local eCommerce businesses in Pakistan fulfilling B2C orders from Pakistan are hindered by the “Form E” requirement of State bank to verify the buyer.

SBP has no formal process of Form-E approval for exports done by Companies Resident in Pakistan and exporting the product outside Pakistan through E-commerce channel with a small order size of USD 500 and below.

Banks in Pakistan are not approving Form-E due to customer screening issues.

5. As in all businesses as well as in eCommerce as well, there may arise occasions when the eCommerce merchant is unable to sell their merchandise to even cover their export price for a variety of business reasons. Product, price, competition, quality, fulfilment, customer reviews etc. And hence may not be able to repatriate the declared value of merchandise exported. The policy must allow for such exceptions.

In summary.

1. Goods exported for the purpose of B2C or even B2B selling on International online marketplaces is a completely different business model of exports vs. our conventional export model and requires a completely new, different, less controlling regulatory regime to facilitate this sector.

2. Having said that, unscrupulous stakeholders will attempt to take advantage of loopholes to beat the system and use this opportunity for “other” activities. Hence the policy recommendations, above must also come with some level of accountability to ensure they are not misused.

We’re talking of USD10B to USD 20B potential export windfall, low hanging fruit over the next 10 years.

We have amazing products, great entrepreneurs, highly competitive pricing today, even compared to China, India, B’Desh etc. We must ride this massive wave ASAP

We must also actively train tens of thousands of our youth on eCommerce marketing and selling to meet market demand for such talent and create a whole generation of eCommerce entrepreneurs.

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