Need for policy coordination to boost Trans-Asia Pacific e-commerce

Source – This post on Need for policy coordination to boost trans-Asia Pacific e–commerce has been created based on the article “Policy coordination could boost trans-Asia Pacific e-commerce” published in “Live Mint” on 13 March 2024.

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Context– The Asia Pacific (APAC) region, with over 50 diverse countries, is currently experiencing phenomenal economic growth. Need for policy coordination to boost trans-Asia Pacific e–commerce

What is APAC Region?

The Asia Pacific (APAC) region has 50 diverse countries. It is home to more than half the world’s population (52% in 2023). The region’s GDP (35.4% of the worlds in 2023) has surpassed that of North America and Europe.

What is the status of e-commerce in the region?

The APAC region has become the world’s largest market for electronic commerce. According to a 2023 study by Data Bridge Market Research, the e-commerce sector of the region was valued at $2.9 trillion in 2022.

By 2030, it is projected to reach nearly $6.2 trillion.

In 2022, the region accounted for around 58% of the global retail e-commerce market.

Read more– E-Commerce

What are the reasons behind the APEC region becoming a hotbed of e-commerce activity?

1) Rise of middle-class– The region has an increasing middle-class with rising disposable income. It is projected to reach 3.5 billion by 2030 which will form a massive consumer base eager to shop online.

2) Enhanced participation of MSMEs – Around 72% of MSMEs in the region are leveraging e-commerce platforms for their businesses and vulnerable groups like women entrepreneurs are adapting fast to e-com platforms.

3) Better connectivity– There is fast internet penetration in the region coupled with a mobile-first population of over 4.8 billion users. This creates a ready online audience.

For ex- India has the second-highest number of smartphone users globally (659 million in 2022). A Significant part of these users is using digital wallets based on platforms like the Unified Payments Interface.

4) Advancement in technology-Rise of advanced technologies like faster telecom networks and big data, offer personalized experiences and improved logistics for businesses and consumers. This is contributing to the rise of e-commerce in APAC region.

What are the challenges in the e-commerce sector in APAC region?

1) Lack of adequate support to MSME’s- MSMEs face issues of high logistical costs, stiff customs rules and complex clearance procedures. It restricts their global expansion and complicates their cross-border trade.

2) Logistical issues-Many countries in Southeast Asia still prefers Cash on Delivery. This creates logistical challenges and limits access to credit.

3) Cybersecurity challenges– Cybersecurity threats such as data privacy concerns and the presence of counterfeit products on some platforms can discourage consumers and businesses from adopting an e-commerce path.

4) Issue of E-commerce regulation-The regulations are not uniform across region. For ex- countries (like Singapore with its 2014 E-Commerce Act) have established specific regulations, whereas others rely on broader consumer protection laws.

What should be the way forward?

1) Collaboration-There is a need for discussions, sharing of best practices and partnerships to facilitate trade and exports among countries.

2)Robust infrastructure– There should be infrastructure improvements, regulatory harmonization and robust cybersecurity measures to ensure a secure and trustworthy online environment

3) Enhanced role of India– An APAC policy forum, with India taking the lead, could help forge partnerships and lead to regional cooperation and policy harmonization. This can benefit businesses (especially MSMEs and women entrepreneurs) and consumers by fostering a more predictable and secure environment for online trade.

Question for practice

Highlight the potential of e-commerce in APAC region in boosting trade and businesses. Also enlist some of the challenges to realize its true potential?