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Much needs to be done to boost e-com in Central Asia: Study

28 May '22
4 min read
Pic: ADB
Pic: ADB

Much still needs to be done to boost e-commerce in Central Asia, where many countries lack the systems needed for a robust e-commerce ecosystem, according to a joint study by the Asian Development Bank (ADB) and the CAREC Institute. Improving Internet infrastructure, enhancing cybersecurity and raising digital and financial literacy are some recommended actions.

Xinjiang-China-based Central Asia Regional Economic Cooperation (CAREC) Institute is an intergovernmental organisation contributing to the CAREC programme through knowledge generation and capacity building.

Regional cooperation can help to create a robust e-commerce economy, drive economic growth, create jobs for underrepresented groups and ensure continuity of services even amid disruptions like the COVID-19 pandemic, the study concluded.

In Central Asia, around half the population lacks internet access and many countries don’t have the systems needed for a robust e-commerce ecosystem.

In 2019, less than 10 per cent of the population in Azerbaijan, the Kyrgyz Republic, Mongolia, Pakistan, Turkmenistan and Uzbekistan shopped online, the study found.

More people were shopping online in Georgia, Kazakhstan and Tajikistan, but they were still way below the 63 per cent average for the European Union and the 30 per cent average for countries with more similar socioeconomic profiles like Turkey. China was the only CAREC member country that had high figures.

The CAREC programme is a partnership for countries in Central Asia and beyond to promote sustainable development through regional cooperation. Last year, ministers from CAREC’s member countries endorsed the CAREC Digital Strategy 2030 that identifies areas where they can collaborate to enhance digitalisation across the region.

The study suggests four ways through which CAREC countries can make the change happen: improving Internet infrastructure to expand access and lower costs; enhancing cybersecurity and raising digital and financial literacy; upgrading payments systems to make online transactions easier; and making delivery services more reliable and less expensive, according to an ADB press release.

While broadband wireless technology infrastructure in most CAREC countries is fairly developed, some rural and remote areas remain uncovered. This could be addressed through stronger competition or the cooperative sharing of infrastructure by existing operators.

The cost of accessing the Internet can be kept affordable by establishing or strengthening internet exchange points (IXPs), facilities where internet service providers, content providers and others come together to exchange their data traffic.

IXPs reduce costs by keeping domestically destined traffic within the country and can help save on international data transit costs. Having more data centres and access to local cloud computing will also boost the ability of businesses and entrepreneurs outside China, where e-commerce is already thriving, to host e-commerce sites domestically.

Consumers need to be confident that their information will be safe when they buy online, and that there are safety nets if they encounter problems. CAREC countries—most of which rank low in the various measures of cybersecurity—need to ensure the use of encrypted servers, require companies to acquire international security certifications, and create security incident response teams.

Increasing consumer trust in financial institutions and mobile payment systems is also important. This can be done through consumer protection regulations, financial and digital literacy training, and raising awareness of the convenience and functionality of mobile payments.

Electronic payment systems in the CAREC region have improved, but some countries should be upgraded to increase their capacity to handle all types of transactions, including bank transfers, in real time.

Azerbaijan and Uzbekistan, for example, also need to simplify the processes that enable merchants to accept online payments. Wider access to smartphones, which are used for mobile banking apps, digital wallets, and QR codes, could be enabled by reducing or eliminating duties on smartphone imports.

Automating trade documentation, including adopting single-window systems, can cut the time products spend in customs and reduce costs. Adopting a de minimis, possibly a uniform rate for CAREC countries, will also allow products under a certain value to be imported duty free. All these steps will further encourage international trade, the study added.

Fibre2Fashion News Desk (DS)

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