- A WB report cites taxes, trade barriers among main challenges stifling full potential
- SL leads in most ranking almost on par with India in certain areas
- But region as a whole lags behind in online sales as a share of total retail sales
In a survey to find out if an enabling environment is available for cross-border e-commerce sales, Sri Lanka leads South Asia in most rankings, almost on par with India in certain areas, but the region lags far behind the rest in online sales as a share of total retail sales.
A recent report by the World Bank’s Trade, Investment and Competitiveness unit, on the potential and constraints on e-commerce in the South Asian region, the multilateral lender said while 31 percent of the surveyed firms reported selling and buying online, another 27 percent reported only selling online and about 31 percent reported neither selling nor buying online.
While Sri Lanka leads India in criteria such as firms’ capacity to engage in cross-border e-commerce, connectivity and IT infrastructure, regulatory environment in other markets and access to trade finance, it trails behind India by a small margin in areas such as e-commerce and digital regulations in other countries, online cross-border payments and e-commerce-related cross-border logistics.
None of the other countries in the region could match Sri Lanka’s and India’s ranking in these criteria while Bangladesh came slightly ahead Sri Lanka in online cross-border payments.
The report cited Sri Lanka’s online market places Daraz, Takas and oDoc, an electronic doctor consultation platform, as three of the firms that came under its watch during the survey.
However, South Asia as a region stands woefully low in fully capitalising the benefits of e-commerce, compared to the other regions and countries, said World Bank Global Director Trade, Investment and Competitiveness Caroline Freund.
“In South Asia, e-commerce can play a much bigger role than it has thus far. While it has grown substantially in recent years, e-commerce in the region is still very small: even in India, online sales as a percentage of total retail sales were only 1.6 percent, versus over 15 percent for China and around 14 percent globally,” Freund said.
However, India’s e-commerce is projected to grow at 18 percent every year during the five years to 2023 – the fastest growth of any country in retail e-commerce.
While logistics, digital regulations and connectivity are often cited by the survey respondents as constraints, irrespective of their size, online payments and IT infrastructure are cited by small firms in particular as their pressing issues.
Meanwhile, specific to Sri Lanka were the barriers in taxes and other trade barriers.
The report suggests a practical approach toward developing cross-border e-commerce in South Asia, building on formal and informal cross-border trade.
The suggestions focus on the simplification of tariff, payment and logistical barriers to e-commerce, which were found to be the most immediate constraints on e-commerce firms operating across borders.
The report also pointed out that most of the cross-border e-commerce is conducted with extra-regional partners, such as China, the United Kingdom and United States. But it highlighted the potential to strengthen commercial linkages within South Asia to bring gains to consumers and small players.
The evidence also indicated that the Internet increases trade in physical goods and digital services, the authors of the
According to an e-commerce survey conducted previously, it had been found that if the top three hurdles to e-commerce in the South Asian region are resolved, there would be significant gains in exports and employment.