ADB and UNESCAP report: Improved ICT infrastructure and regulatory policies unlock e-commerce potential

An announcement made by the Asian Development Bank (ADB) highlighted the report it released together with the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), which discussed the E-commerce situation in Asia and the Pacific region. It also emphasised why challenges with information technology infrastructure should be addressed and what the importance of strengthening regulatory frameworks is in unlocking the full potential that E-commerce has.

E-commerce is enabling small and medium-sized enterprises (SMEs) of Asia and the Pacific to reach global markets and compete on an international scale. This resulted to the creation of many jobs according to a report launched jointly by the ADB and the UNESCAP at an international conference in Tashkent, Uzbekistan.

But in order to maximise its benefits, the region has to first tackle difficult issues of information technology infrastructure and strengthening the regulatory frameworks.

ADB Vice-President for Knowledge Management and Sustainable Development Mr Bambang Susantono said, “Emerging digital technologies are transforming the e-commerce landscape and offer a new set of modern solutions and opportunities to build more inclusive growth and spur innovation,”

He added, “It offers a chance to narrow development gaps; whether demographic, economic, geographic, or cultural. It also helps narrow the rural-urban divide. However, realising the full potential of e-commerce calls for coordinated regional and global efforts.”

The Embracing the E-commerce Revolution in Asia and the Pacific report examines how Fourth Industrial Revolution technologies such as blockchains, the Internet of Things (IoT), machine learning, artificial intelligence (AI) and 5G wireless networks will transform the e-commerce industry and help unlock its dynamic potential.

The report described Asia and the Pacific as the world’s largest business-to-consumer (B2C) e-commerce marketplace and continues to grow rapidly. The size of e-commerce relative to gross domestic product by the end of 2015 was 4.5% in the region as compared to North America’s 3.1% and Europe’s 2.6%.

The Internet retailing market share of Asia and the Pacific is expected to reach around a half of the global total by 2020.

The report also stated that a wide diversity in ICT infrastructure development and socioeconomic readiness to join the e-commerce marketplace exists in the region. The governments need to increase their efforts in order to address this and catch up.

In terms of world average regarding speed and affordability of broadband services, and availability of secure Internet servers, the region lags behind even though there is a evident progress in basic Internet access and availability.

Compared to other developing regions, Asia and the Pacific have more fixed and mobile broadband subscriptions. There is a wide variation in affordability of broadband access, with the irony being that the poorer the economy, the higher the cost of broadband.

The report also described the availability of alternative payments across countries in the region. The top four economies in the region spend around 200 times the amount that the bottom four economies spend in credit card payments per capita. Many economies in the region still rely on cash-on-delivery to make online purchases because of limited online payment options.

Although most economies in the region have some type of electronic transaction and cybercrime legislation, the laws related to privacy, data protection, and consumer protection remain slow.

Additional challenges also include lack of awareness of potential opportunities that digital businesses offer. Add to that the low computer literacy and English proficiency in the context of the English-centric nature of websites, software, and computer interfaces.

Policy recommendations to help lower barriers to e-commerce development are also included in the report. Developing a viable e-commerce ecosystem requires a holistic approach and concerted efforts by all stakeholders in e-commerce development.

National governments and international development institutions; trade associations and industry bodies; businesses such as e-commerce vendors, payment service providers, and logistics service providers; and consumers must all work together.

Policy priorities should be on establishing a legal and regulatory framework for e-commerce, harmonising international laws and standards, promoting ICT infrastructure development, broadening Internet access and affordability, and supporting financial and e-payment infrastructure.

Recognising the significant role of trade for economic growth and poverty reduction in Asia, ADB will continue to provide support for the region’s trade facilitation initiatives.

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