Internet and e-commerce industry in Pakistan

This Islamic country, located in the mountainous region neighboring to the Central Asia and the Middle East, is the sixth most populous country in the world and has the second largest Muslim population in the world after Indonesia. That is Pakistan. The country is listed among the "Next Eleven" economies that means it’s among eleven countries, such as Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, The Philippines, South Korea, Turkey, and Vietnam, identified by Goldman Sachs investment bank as having a high potential of becoming the world's largest economies in the 21st century along with the BRICs, the fast growing developing economies of Brazil, Russia, India, and China. So, we are to examine how it’s going on with Internet industry and e-commerce infrastructure level of development in Pakistan. 

First, let’s turn to the figures, presented by http://www.internetworldstats.com. Thereby, Internet access has been available in Pakistan since the mid-1990s and the number of users reached only 0.1 % of the population, or 133,900 of citizens. Over the last several years the Internet usage growth has been fastening, reaching in 2006 the volume of 12,000,000, or 7.2 %; and in 2008 the volume rose to the amount of 17,500,000, or 10.1 %. So, it’s obvious that in spite of the rapid growth, shown in Pakistan, Internet penetration still remains rather low as only tenth of the Pakistanis has regular Internet access. And broadband penetration rate in Pakistan has only 2.7% share of total in Asia. Nevertheless, Pakistan occupies the seventh position among 10 most Internet connected Asian countries, leaving behind Malaysia, Taiwan and Philippines. However, at the end of 2008 Pakistan Telecommunication Authority reported over 22 million internet users.

Pakistan’s Internet top level domain, or ccTLD, is .pk or .com.pk. The two year contract allowing registration in the zone of .pk or .com.pk domain is $119. This price is relatively high, if compared to China’s .cn that costs only $70 and India’s .in domain cost of $99. However, it’s rather cheap relative to Malaysia’s .my that is worth $299 and Vietnam’s .vn that costs $499.

As it was said already, Internet access has been available in Pakistan since the early 1990s. Pakistan Telecommunications Company (PTCL), consisting of around 2000 telephone exchanges across country that provide with largest fixed line network, started offering Internet trough the nationwide local call network in 1995, and became the monopolist. PTCL is also part of the consortium of three major Submarine communication cable networks: SEA-ME-WE 3, SEA-ME-WE 4 and I-ME-WE. Today PTCL also provides fixed line service through its countrywide CDMA based WLL (Wireless Local Loop) network, under the Vfone brand name. However, in the year 2005 the Pakistan government decided to privatize the company that lead to the wide protest and strike by PTCL workers. As for Internet Service Providers Association of Pakistan (ISPAK), the privatization of PTCL influenced seriously the country’s internet service providers and business process outsourcing sectors. 

Though, broadband service had been first introduced in Pakistan previously, earlier in 1995 by Australian telecom company, Telstra, with the design being done by Designman, an Islamabad civil engineering company. 

In 2000 World Call presented the first and only official cable Internet service under the brand name of GO4B. In 2002 Islamabad/Rawalpindi Micro Net company implemented the first DSL service. 

There is around 130 ISPs in Pakistan, concentrated mostly in the areas of large cities like Islamabad, Karachi and Lahore. The largest ISPs are PTCL, LINKdotNET and Wateen. Other small DSL providers are Micro Net, Maxcom, Multi Net, World Call, Cyber Net, Gerry's Net, Brain Net and Comsats. Thus, broadband is provided in Pakistan from 512 kbit/s to 12 Mbit/s in all the main cities. 

A wireless network infrastructure was established by Wateen Telecom, subsidiary of Warid Telecom, in collaboration with Motorola since early 2006, which installed the network in the length and breadth of Pakistan in early 2007 under the WiMAX name. The Wi-max deployment contract worth $ 60 million and the network became the largest and the first nationwide WiMAX network in the world. Pakistan became the first country in the world to have 802.16e Wi-Max technology for WLL application serving residential and corporate customers for data and voice alike at unprecedented data rates. The newest technology uses IMS core architecture, making it the first 4th Generation Network. Motorola's carrier-class Wi-Max network supports both the 2.5GHz and 3.5GHz frequency spectrums and uses special antenna techniques to provide greater coverage range and penetration. Connections are available from 256Kbit to 1Mbit. Wi-Tribe and Mobilink are also offering WiMAX. 

Pakistan has also become one of the few countries in Asia to have FTTU - Fiber to the User triple-services through Nayatel, which are available in all major cities of the country. 

Well, as we could see, Pakistan’s broadband market has great potential as it’s being supported and encouraged by the government, which is following an aggressive IT policy striving to use Internet deployment as the driving force for the economic modernization and creating an exportable software industry. Today, the majority of Pakistani companies and government departments maintain their web sites which also increased their demand for Internet.

E-commerce, let’s see if it’s also being in progress as well as IT industry. As we told already, government plays an important role in the development of e-commerce in Pakistan, starting an IT and e-commerce initiative in early 2000. That was made in order to let banks to lead the way into e-commerce sphere. Though the banking sector, the half of which had been computerized by August 2006, is a leader in supplying with e-commerce services, so called e-government affected this sphere advancement mostly.

The majority of banks and exchange companies offer online funds transfers from abroad, such as for workers remittances while some of the banks offer mobile-phone banking, where customers can pay utility bills using their mobile phones. In February 2001 the State Bank of Pakistan signed the permission enabling to process merchants’ financial online transactions via the Internet merchant accounts. However, the system was not worked out completely and by the mid-2006 only Citibank (US) offered these accounts, which were used actively by airlines, mobile companies, ISPs and online merchants. So, the transactions using international credit cards are being processed outside Pakistan. Internet merchant accounts users, undertaking transactions outside Pakistan, need to submit electronic forms for transactions valued at $500 or more to their banks, which must then submit the same in consolidated form on a monthly basis to the central bank.

As for the business solutions providers, the number of B2B portals exists, but they are designed for providing the information mostly, and less for carrying out transactions. Below there is a brief list of the most popular B2B e-commerce solutions providers available in Pakistan, presented by alibaba.com: 

• Apex Solutions – provides with e-commerce solutions
• Sibexsoft - a professional, affordable, and complete way to take business online
• Evision Technologies (Pvt) Ltd - a small sized company that provides complete software and hardware
• Ezxs Solutions(Pvt) Limited –provides with e-commerce solutions services
• The Red Signal - a web design and web applications Development outsourcing Company with great teams for PHP / MySql and Net / MSSQL program

Pakistan is a participant of the 15-member Asia Pacific Council for the Facilitation of Procedures and Practices for Administration, Commerce and Transport. The council’s aiming to support the United Nations Centre for the Facilitation of Procedures and Practices for Administration, Commerce and Transport. Pakistan is a member of the Asia Pacific Council for Trade Facilitation and Electronic Business, a non-governmental organization that promotes trade facilitation, electronic business policies and activities in the Asia–Pacific region, as Economist Intelligence Unit states. 

Pakistan still has a number of barriers to electronic commerce, including inadequate infrastructure relatively low Internet penetration level, and lack of security for online transactions. Though, the government is working to overcome these problems and has already succeeded in this business. And, importantly, in order to encourage the development foreign investors are allowed by the Pakistani government to invest up to 100% in software companies, and foreign interest in Pakistan’s technology sector has been increasing. So, possibly in the nearest future "Next Eleven"’s Pakistan would surprise the world with its newest electronic commerce solutions or enhanced ICT infrastructure as it’s a big deal when the government participates so actively heartening and upholding the businesses.