Transnational Corporations Review

ISSN: 1918-6444 (Print) 1925-2099 (Online) Journal homepage: http://www.tandfonline.com/loi/rncr20

E-Commerce in South Asia

Badar Alam Iqbal

To cite this article: Badar Alam Iqbal (2012) E-Commerce in South Asia, Transnational
Corporations Review, 4:4, 104-118, DOI: 10.1080/19186444.2012.11658349

To link to this article: https://doi.org/10.1080/19186444.2012.11658349

Published online: 15 Dec 2015.

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 Transnational Corporations Review Volume 4, Number 4 December 2012
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E-Commerce in South Asia

Badar Alam Iqbal

Abstract: Globalization has transformed world economy and as a result, competition has become tougher
and throat cutting. The million dollars question is how to face such persisting trends and situation. Hence,
three fundamentals are required namely-saving time, reduce cost and improve quality. Therefore, the
application of technology in business especially in services has emerged as the need of the day. South
Asian Region is one of the growing regions of the world in general and Asia in particular. Hence, the
growth and use of technology (e-commerce) is sine-quo-non. But the emerging trends are showing a
different scenario wherein disparities in terms of usage of technology in commerce are persisting in South
Asian economies. With this back drop, the present paper deals with emerging trends in e-commerce and
challenges which South Asian economies have to deal for better growth and use of e-commerce in the
region.
Keywords: Communication technology, electronic commerce, interchange; computer network

 
 
1. Introduction

The man’s never ending exploring capabilities had led the world on the growth trajectory - that exhibits
distinct phases of human development. This human development resulted in development of various other
aspects. One of such remarkable achievements includes globalization of the world. The phenomenon of
globalization is underpinned by innovation, information and enterprise. It is largely supported and driven
by the development and use of Information and Communication technology (ICT). ICT is changing the
way the world works, and will continue to do so in future. By its unprecedented power to move and
process information, it is impacting on global trading partners, culture and governance; in fact ICT
impacts on every aspect of our society today. Without ICT, it is increasingly difficult to take advantage of
the opportunities and as well as minimize the threats of globalization. There is a real and growing fear of
being caught on the wrong side of a global digital divide, disconnected from global markets, knowledge
and ideas, or alternatively of being swamped by waves of global culture undermining one’s own identity.
(BIPS, July 2004)

ICT in today’s milieu is undoubtedly providing uncountable benefits not just to the individuals, but to the
business houses as well- through its different variants. One of such a service in this highly technological
era includes electronic commerce, popularly termed as “E-commerce”. Giving due impetus over
popularity of e-commerce in the world, the paper is an attempt to look around its present scenario in South
Asia. Initiating with an introduction, the paper includes concept of commerce; benefits of e-commerce and
e-commerce scenario in South Asian region. Further, the paper includes various opportunities generated
by e-commerce in the region, as also, various constraints that emerged as obstacles for its growth in the
region. Lastly, conclusions are drawn on the basis of the analysis.

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2. What is E-Commerce?

E-commerce has become a buzzword with the advent and advancement of technology around the globe. It
is increasingly discussed and written about in today’s knowledge-based economies. There had always
been conflicting views when it comes to defining of e-commerce. For example, for some people, e-
commerce constitutes only those transactions that take place over the internet and involve use of credit-
card. However for others, e-commerce is making use of any electronic device to conduct sale-purchase
process. The most practical definition is given by Mesenbourg (1999) who defined e-commerce as:

“The transactions completed over a computer-mediated network that involves the transfer
of ownership or rights of use of goods and services.”

The definition is comprehensive as well as restrictive. It is comprehensive because it will include

transactions such as those using the Automatic Teller Machine (ATM) and Electronic Data Interchange
(EDI) using proprietary protocols and private lines but it is also restrictive because it requires change in
ownership or rights of use excluding many partially computer-mediated transactions. As such, doing
online transactions is not very new. What is new is the use of the Internet, a public network, as a platform
where customers directly deal with producers/sellers and/or intermediaries offering a wide range of goods
and services. (Orbeta, Jr. 2000) The OECD (Organization for Economic Co-operation and Development)
defines e-commerce transactions as:

“The sale or purchase of goods or services, whether between businesses, households,

individuals, governments, and other public or private organizations, conducted over
computer-mediated networks. The goods and services are ordered over those
networks, but the payment and the ultimate delivery of the good or service may be
conducted on or off-line.” (Orbeta, Jr. 2000)

Thus, e-commerce pertains to trading in goods and services through the electronic medium, i.e. the
Internet or phone. On the Internet, it pertains to a website, which sells products or services directly from
the site using a shopping cart or shopping basket system and allows credit card payments. It involves
conducting business with the help of the electronic media, making use of the information technology such
as Electronic Data Interchange (EDI). In simple words, Electronic commerce involves buying and selling
of goods and services over the World Wide Web. Customers can purchase anything right from a car or a
cake sitting comfortably in his room and gift it to someone sitting miles apart just by click of a mouse
(Sharma and Mittal, n.d.).

3. Benefits of E–Commerce

E-commerce had emerged as a vital tool for business houses to explore and exploit, more effectively, the
markets in which they operate. In addition, it also provides bunch of benefits to buyers also. Various
benefits, as provided by E-commerce, can be enlisted under two broad categories, viz.:

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Fig. 1. Benefits of E–Commerce

From Sellers’ Perspective From Buyers’ Perspective

• World-wide Business ● Reduction in buyer’s sorting out time
• Rapid Business Transactions ● Support to Customers
• Immediate Problem-Solutions ● Better Buyer Decisions
• Business Activities ● Less time is spent in resolving invoice
• Streamlining and Connecting of Process and order
• Value-creation ● Multiple Searches
• 24x7 Operation
• Frequent Delivery of Merchandise
• Accuracy in Monitoring
• Ideal for Niche Products
• Cheapest Means of Doing Business
Source: by the authors themselves

3.1. From sellers’ perspective

Various benefits that are enjoyed by sellers this technological miracle includes:
• Overcome Geographical Limitations: Traditional commerce limited the scope of business houses
by the geographical area. With the advent of e-commerce the whole world has become playground
for business houses. Additionally, the advent of m-commerce, i.e., e-commerce on mobile devices,
has dissolved every remaining limitation of geography. (ecommerce.about.com)
• 24x7 Operation: Ecommerce business is open 24 hours a day, every day! One can sell to
customers from anywhere in the world, whatever time zone they live in. This is another one of the
major advantages of Ecommerce, your e business doesn't need to close at the end of day!
(ecommerce-web-hosting-guide.com)
• Cheapest Means of Doing Business: Another important benefit of Ecommerce is that it is the
cheapest means of doing business. (ecommerceeducation.com, 2012)
• Rapid Business Transactions: Ecommerce allows people to carry out businesses without the
barriers of time or distance. One can log on to the Internet at any point of time, be it day or night
and purchase or sell anything one desires at a single click of the mouse.
(ecommerceeducation.com)
• Business Activities: You can conduct e-meetings with co-workers and business partners
regardless of location, saving travel costs. (SLBDC, 2002)

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• Frequent Delivery of Merchandise: Integrated e-commerce solutions allow you to dispatch your
merchandise with speed and accuracy to your customers and to carry out backend tasks such as
inventory management and accounting with ease. (SLBDC, 2002)
• Immediate Problem-Solutions: E-commerce helps in assisting customers by answering their
questions in real time and solving their problems then and there thus improving the customer
confidence and loyalty towards your organization. (SLBDC, 2002)
• Streamlining and Connecting of Process: You can streamline and connect processes like product
discovery, negotiation, ordering, transaction fulfillment, delivery, inventory and accounting
irrespective of the physical location of the resource. (SLBDC, 2002)
• Accuracy in Monitoring: You can monitor customer preferences and behavioral patterns with
much accuracy and develop your marketing and sales strategies to suit your requirements. This
will result in less inventory management costs and obsolete stocks. (SLBDC, 2002)
• Value-creation: It is easy to create value around the business transactions by offering enhanced
order features such as order status verification, back orders information, immediate re-orders, etc.
(SLBDC, 2002)
• Ideal for Niche Products: Ecommerce is ideal for niche products. Customers for such products are
usually few. But in the vast market place i.e. the Internet, even niche products could generate
viable volumes. (ecommerceeducation.com, 2012)

3.2. From buyers’ perspective

From the buyer’s perspective also e-commerce offers a lot of tangible advantages. These may include:
• Reduction in buyer’s sorting out time: The fast paced internet technology had made possible the
sale-purchase transactions within no time. Even, buyers had to just click for searching the product
instead of seeking out here and there for the product.(ecommerceeducation.com, 2012)
• Support to Customers: You can support your customers by listing useful links on your web site
(sort of trade referencing) so that your customers may develop a brand loyalty with you. (SLBDC,
2002)
• Better Buyer Decisions: The facility to make before-hand comparisons by many websites, results
in better buyer decisions.(ecommerceeducation.com, 2012)
• Less time is spent in resolving invoice and order discrepancies: Online services through internet
had made possible frequent resolution to invoice and order discrepancies.
(ecommerceeducation.com, 2012)
• Multiple Searches: You can incorporate search features in your web site that allows multiple
searches so that your customers will benefit by always coming to your site. (SLBDC, 2002)

4. E-Commerce in south Asia

The concept of electronic commerce (e-commerce) is not new to the world. However, the rapid rise of the
internet has made the potential of e-commerce more promising. It is now widely stated that the Internet

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and e-commerce will transform traditional business and consumer life. What does this mean for
developing countries? The rapid growth in industrialized countries could be argued to be widening the gap
between “information haves” and “haves not’s”. On the other hand, internet enhances the possibility for
developing economies to participate in the emerging digital economy. Even though the full impact of e-
commerce is still difficult to predict, internet-based electronic commerce is likely to significantly promote
economic growth and welfare in developing countries. New export opportunities should attract new
foreign and domestic investment and thereby enhance growth. E-commerce will not only enable
developing country businesses to participate as vendors in the global electronic market, but it will also
allow them to buy goods and services from the developed world in ways that were earlier impossible.
(Männistö, 1999)
South Asia, being a newly emerged market for e-commerce, holds enormous potential for its growth. The
existence of vast gap between internet users and the population of the country in specific, and region in
general, had resulted in very meager percentage population being penetrated by the “technology flu”. This
simply shows that majority of the population still remain out of the realm of ICT, and hence, e-commerce.
This can be explained by analyzing the country profile of South Asian countries with regard to internet
usage.

4.1. E-Commerce in India

The state-owned Videsh Sanchar Nigam Limited (VSNL) launched Internet Services in India in August
1995. For the first four years, VSNL was the sole provider of Internet Services in the Country. In the first
years, broadband usage in India was growing 20% per month, according to the Internet Service Providers
Association of India (ISPAI). Thanks to the progress in the penetration of ICT and especially, the
Broadband Policy announced in 1995, the term “broadband” entered the mass lexicon and most Internet
users were aware of faster Internet speeds.

In November 1998, the Government ended VSNL’s monopoly and allowed provisioning of Internet
Services by Private Operators. The Terms and Conditions of the ISP’s License were unusually liberal with
no License Fee and allowed unlimited number of players. ISPs could set their own tariffs and even their
own International Gateways. (internetworldstats.com)

Today E-commerce is a by word in Indian society and it has become an integral part of our daily life.
There are websites providing any number of goods and services. Then there are those, which provide a
specific product along with its allied services. (Sharma and Mittal, n.d.) Multi-product e-commerce- These
Indian E-commerce portals provide goods and services in a variety of categories. To name a few: Apparel
and accessories for men and women, Health and beauty products , Books and magazines, Computers and
peripherals, Vehicles, Software, Consumer electronics, Household appliances, Jewelry, Audio/video,
entertainment, goods, Gift articles, Real estate and services Single-product e-commerce. (Sharma and
Mittal, n.d.)

The table (Table 1) provides a brief account of internet usage in India. The data shows that in year 2000,
around 5,500,000 out of the total population of 1,094,870,677 were using internet. This was around 0.5%
as internet users of the then total population. The figures, however, in 2010 shows 100,000,000 internet
users out of the total population of 1,173,108,018, representing percentage penetration of around 8.5%.

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4.2. E-Commerce in Maldives (officially the republic of Maldives)

With the advent of Internet in the late 1990’s, we have seen a few but useful & noteworthy websites from
Maldives. The country registered 6,000 internet users out of the total population of 298,841, i.e., 2.1%
during 2000, which rose comprehensively to 87,900 internet users of the entire population of 395,650
(Table 2). Henceforth, the growth of Internet in Maldives is incredible; with more than 22% being its
users. With the huge growth in technology and development, came remarkable websites. The first online
news from Maldives, First Maldives soccer website, first online delivery service and the first online crowd
generated news website were some of the few examples. (limopalm.com, 2011)

4.3. E-Commerce in Pakistan (officially the Islamic Republic of Pakistan)

Delayed adaptation of the Internet and the prohibitive costs involved to have an access to it including
unaffordable prices of PCs, hardware, software and the internet connection itself are the major hindrances
to the development of e-commerce in Pakistan. In addition, poor service quality due primarily to the fact
that the state-owned Pakistan Telecommunication Company Limited's (PTCL) infrastructure is not geared
towards high quality Internet service and dearth of contents are also restricting development of e-
commerce in the country.(Aslam, 2001) Resultantly, out of the total population of 163,985,373, just
133,900 were found to be using internet during 2000. This constituted around 0.1% of the total population
being penetrated by internet usage. However, the number has gone up to 18,500,000 by 2010, making it
around 10.4% of the total population of 177,276,594. (Table 3)

4.4. E-Commerce in Sri Lanka (officially the Democratic Socialist Republic of Sri Lanka,
known as Ceylon before 1972)

The development of e-commerce in Sri Lanka can be seen from the performance of sites that started out
with a good intention and then their customer base just lost interest. There is the other group of sites that
initially start off with a strong approach but due to lack of foresight, follow up or general mismanagement
have to shut down. (lankan.wordpress.com, 2006) However, since the recent past, Sri Lanka is also
reaping the dividends of ICT. So much so that ICT industry has become the 5th largest revenue earner for
the country. Whilst Sri Lanka rose significantly from 79th rank (2009/10) to 62nd rank in the Global
Competitiveness Index (2010/11), Sri Lanka is also ranked 16th amongst the top 50 countries in the AT
Kerney “Global Services Location Index”, making it a viable destination for the IT/BPO industry. Sri
Lanka’s ICT growth potential in the post conflict era is very promising. (Fernando, 2010)

Sri Lanka’s ICT Development agenda is driven by the e-Sri Lanka Development Project, implemented by
ICT Agency of Sri Lanka (ICTA). e-Srilanka is an integrated ICT development initiative, with strategies
and programs spread across, Government, theprivate sector and also addressing the needs of the rural
communities. It has also provided the framework for policy and regulatory reform, paving the way for a
hive of B2B, B2C, G2B as well as G2C activities to take off. Some of the achievements under e-Sri Lanka
project have received international awards, the most recent being the 3 awards received at the “Future
Government Summit”, where Sri Lanka had the good fortune to share the stage with the Republic of
Korea, matching the same number of awards for ICT innovations. (Fernando, 2010)

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The table below exhibits a brief scenario of internet usage in Sri Lanka. Accordingly, the number of
internet users in 2000 was registered to be 121,500 out of the total population of 19,630,230, showing an
internet penetration of 0.5%. The percentage penetration rose to 8.3% in 2010, as the number of internet
users increased to 1,776,200 in the total population of 21,513,990. (Table 4) Most of the recent ICT
Development achievements of Sri Lanka were made possible mainly because of the underlying enabling
legislative framework manifested in the Electronic Transactions Act No. 19 of 2006 (annexed). This Act,
which was brought into operation with effect from 1st October 2007, was prepared consequent to a
decision of the Cabinet of Ministers, dated 22nd October 2004, which required that legislation on
Electronic Transactions be prepared with legal and policy from the ICT Agency of Sri Lanka (ICTA).
(Fernando, 2010)

4.5. E-Commerce in Iran

Since 1995, Iran has enjoyed a dramatic increase in IT adoption. This development has fostered an
excellent environment for expansion of IT in the country. However, E-Commerce expansion rate was
moderate or low. In other word E-Commerce is lagging behind and need to invest more for development
of E-Commerce. The country invests heavily on spread of internet and Electronic Banking (e-banking)
among governmental institutions and private sectors in compare with other middle-east countries.
(Mohanna et al. 2011)

A research in 2008 was shown that incomparable managerial decision and luck of unique vision among
the organizations in Iran are one of barriers of the progress of E-Commerce in the country. Empirical
findings show that, the concern of E-Commerce implementation in Iran is not the same as the case in
developing and undeveloped countries. The finding shows that technical infrastructure and managerial-
organizational factors almost support E-Commerce in Iran, although the cultural and the social
background of the citizens lags in term of accepting E-Commerce in Iran. Among cultural and social
factors, IT literacy takes the lowest score and e-trust also is next to the last so the government and the
private sectors working in the commercial activities needs to invest in special training programs. Finally,
modification of the law toward supporting E-Commerce activities is a key increasing e-trust. (Mohanna et
al. 2011)

The table highlights the growth of internet usage in Iran. The table shows that there were 250,000 internet
users out of the total population of 69,442,905 during the year 2000. Thus, around 3.8 % were been
successfully penetrated by internet mania. The number raised in year 2010. As such, the country in 2010
registered 33,200,000 internet users in the total population of 76,923,300, i.e. internet penetration rose to
the level of 43.2 %. (Table 5)

4.6. E-Commerce in Bangladesh

Despite being an under developed country, selected segments of the Bangladeshi business community has
embraced technology with reasonable success. The Facsimile in the 1980’s and mobile
telephones in the 1990’s popularized modern technology in the mass market. Personal computers and
the Internet are also emerging as day-to-day business tools. These positive indicators are
favoring the prospects of e-commerce in Bangladesh. (scribd.com) Bangladesh is in the worst position
among the South Asian countries with regard to internet usage. Table below shows that number of internet

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users in the country in 2000 was 100,000 out of the total population of 134,824,000. This shows that
internet penetration was 0.1 % of the total population. However, in 2010 the country recorded percentage
penetration of 0.6% with 995,560 internet users in the total population of 158,065,841. (Table 6)

4.7. E-Commerce in Afghanistan

In Afghanistan Ministry of Communications has raised Telecom Development fund, which will be used to
expand the telecom infrastructure to rural areas where the private sector is not willing to go. The use of e-
commerce in Afghanistan is not common, but there are certain afghan owned online services, which
provide facility to buy and sell afghan handicrafts. Ministry of Commerce and Communications of
Afghanistan had planned to start a joint project for establishment of Electronic Certification Authority and
development of e-legislation. The Government portal project will be linked to this project in order to start
the e-services. (beonlinesolutions.com, 2011)

Due to some very serious internal issues, the country had been found to be debarted, for years, from
internet usage. In addition to this, there had been for long an uncontroversial dominance of English
language over the internet, so much had it had been started recognized as the language of e-commerce"
and almost 94% of pages pointing to secure servers (sites capable of doing e-commerce) are in English.
Since most people in Afghanistan don’t possess knowledge of English language, they had not been able to
participate in e-commerce activities. (beonlinesolutions.com, 2011) Due to these reasons the country
registered just 300,000 internet users over a population of 27,089,593 in 2006, representing 1.1%
population being penetrated by internet. The numbers of internet users registered in the country were
1,000,000 in the total population of 29,121,286 in 2010, representing corresponding penetration of 3.4%.
The country, thus, registered a growth of around 2% in internet users over a period of four years. (Table 7)
Even Afghanistan government has also felt the need to address this issue and has initiated a project for the
UNICODE of official languages of the country, which will enable the development of the local content
which will contribute to the usage of the ICT in the country. (beonlinesolutions.com, 2011)

Concerning the e-payment systems, Afghanistan doesn’t have its own services, but citizens use the
international payment systems, such as PayPal or WebMoney, Moneybokers. But the usage is not on an
advanced level and definitely has to be improved. Concerning the online shopping it’s not widely used in
a country as well. (beonlinesolutions.com, 2011) However the enactment of Telecom Law (addressing
issues such as IP, digital signatures, e-commerce, e-government, Intellectual Property Rights (IPRs) and
cyber security in the country) shows that the country is on the road to recovery and is making great
progress in different areas including ICT sphere. Thus, the country is hopeful that the development of ICT
and other online services will lead to the advancing of e-commerce in Afghanistan that will let it to
participate more actively in the process of the global e-commerce. (beonlinesolutions.com, 2011)

4.8. E-Commerce in Nepal

The internet has had an uphill struggle in Nepal. A thriving Internet requires complementary
telecommunication infrastructure, trained technicians, demanding users, and networking and end user
equipment, but these are not abundant in Nepal. (som.csudh.edu) Poor telephone infrastructure, and its
concentration in and around Katmandu, the capital city, came as a major constraint in internet
development in the country, and thus, E-Commerce. The Nepalese Internet got off to a later start than

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most developing nations, with initial UUCP connectivity in 1994, the licensing of ISPs in 1997, and
VSAT licenses in 1999. (som.csudh.edu) Nepal's late start with the Internet has left it with relatively little
business activity. The internet usage scenario in Nepal is not indifferent to that of Afghanistan. The data
shows that there were 50,000 internet users in the country out of the total population of 23,151,423 in year
2000. The number rose to 625,800 in 2010 in total population of 28,951,852. Nepal, thus, registered a rise
of around 2%, as the percentage penetration rose from 0.2% of 2000 to 2.2% of 2010. (Table 8)

4.9. E-Commerce in Bhutan

Though enclosed by many problems, the country reveals some pacifying scenario regarding progress
registered in internet usage over a decade long period. Registering population of just 500 internet users
over a total population of 812,184, the percentage penetration was almost non-existent. The country,
however, made remarkable development with regard to internet usage. As such, the country registered
50,000 internet users over the total population of 699,841, in 2010 thus showing internet penetration of
around 7.1 %. (Table 9)

5. Opportunities generated by E-Commerce

Since the advent of internet in the commercial activities, popularity of e-commerce had reached new
zenith. This is due to the various benefits it provides and various opportunities it generates. The world is
making use of internet very extensively and exclusively for distinct purposes. According to World Bank
Data Series, in 2010 there were almost 31 users per 100 people around the globe (Table 10). When
compared to this, South Asia, with certain exceptions, registered very meager number of internet users.
This shows that in South Asia there exist a huge exploitative market.

Internet commerce can substantially improve productivity by lowering transaction, production and
distribution costs, facilitating market entry, improving customer service, extending geographical coverage
and increasing competition. This should lead to lower prices, improved quality and innovative new
products and services, which should further increase economic growth and welfare. Some of the benefits
associated with commerce over the Internet includes: (a) better availability of information; (b) global
reach; (c) reduced transaction costs; (d) lower barriers to entry; and (e) new sources of revenue. (Männistö,
1999)

• Better availability of information: Online commerce enables better access to product and price
information to all. Facility to search for the lowest prices around the world is already in existence.
Now, a new breed of ‘inform diaries’ has emerged that base their operations on bringing more
complete product information to customers. (Männistö, 1999)

• Global reach (production, distribution and customer service): As e-commerce has demolished the
constraints leading to delay in sale-purchase transactions, distance and time has become less
relevant.Companies are able to reach their business partners across the globe and serve their
customers quickly and around-the-clock. E-commerce had given producers freedom to choose a
place for production and customer service much independently from the location of their
customers. Specially, companies and individuals in low income countries are able to reach

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information and get contacts in ways which were difficult earlier— either due to the nature of
voice communication and/or its very high cost. (Männistö, 1999)

• Reduced transaction costs: Realization of the fact that e-commerce will result in massive
reduction in transaction costs; it became one of the main motivation for early adoption of the
Internet. E-commerce, since then, had also facilitated in improved transaction management
through automated order, payment and logistics processing systems. In addition, systems like
Cisco had reported reduction expenses by US$ 500 million. (Männistö, 1999)

• Lower barriers to entry: The capital cost of entry to establish a presence online is low compared
to conventional outlets. The cost of establishing a reputation on the Internet can also be lower than
in traditional established markets. A modest investment in a brilliant idea can eventually lead to
good results. (Männistö, 1999)

• New source of revenue: E-commerce had emerged as a new source of revenue generation.
Revenue in this field can be generated through web-designing, website management, etc.
(Männistö, 1999)

6. Challenges to E-Commerce

Although Internet commerce potential appears promising, many challenges still remain. Barriers to
Internet commerce are to some extent the same as those affecting the diffusion of Internet in general. In
developing countries, in particular, the scarcity or absolute lack of communication infrastructure and the
high cost of both services and hardware pose real and sometimes insurmountable barriers to the
development of ecommerce. (Männistö, 1999) But, aside from these “common” problems faced by all
Internet-based services and applications, there are several challenges that are specific to electronic
commerce developments. Some of the key ones include:

• Acceptability: In many developing countries, like those of Asian region, e-commerce faces legal
challenges. Such challenges includes, for instance, adapting commercial codes to the online
environment, or dealing with such issues as intellectual property/copyright and trademarks,
domain names, privacy and security). These issues hinder the acceptability of e-commerce for
business purposes. Even corporate houses in such countries doesn’t rely too much on electronic
documents (e-documents) — such as EDI and e-mail documents for business dealings and
transactions, as they are not treated official. (Männistö, 1999)

• Electronic payments: A major obstacle in the way of Internet commerce is the perceived security
problems of online transactions. E-payment system, through which e-commerce generally
operates, most of the times is seen with suspicion as buyers had faced incidences of fraud.
(Männistö, 1999)

• Lack of Adequate Financial Infrastructure: A more immediate barrier to developing countries is

the lack of adequate financial infrastructure to conduct online commerce. Credits cards—the
prevalent online payment method today—is only used by a small part of the population. In some

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countries—such as India—credit card payments are authorized only with a faxed or hardcopy
signature. (Männistö, 1999)

• Delays in Physical delivery of goods: Through e-commerce one can purchase product(s) with just
a click. The main problem in e-commerce transactions starts from here as purchaser may have to
wait for quite long time for getting physical delivery of the product. In developing countries, like
India, lack of proper infrastructure facilities creates difficulties in ensuring timely settlement of
electronic transactions. (Männistö, 1999)

• High Delivery Charges: Incidences are also found that where a buyer purchases products and
services online, he had been charged with huge delivery charges for the goods purchased. Such
incidences had also acted as constraints hindering the growth of e-commerce in developing
countries. (Männistö, 1999)

• Taxation: Taxation poses another formidable challenge. Since tariffs are going down with
liberalization, governments are looking for new forms of tax base. E-commerce poses the
challenge of rapidly growing but largely “invisible” transactions. This is particularly true for
goods that are “digitally” delivered. Confusion that may arise due to the nature of e-commerce
transactions may lead to inappropriate taxation that can inadvertently stifle the growth of e-
commerce. (Orbeta, Jr. 2000)

• Credit Card Ownership: Credit card ownership, which is the prevailing form of payment for
electronic transactions, is said to be low in South Asian region. If credit card ownership cannot be
increased, some other electronic forms of payment need to be developed. Without electronic
payments, much of e-commerce will be difficult to consummate. Without electronic payment
facilities, websites will remain to be information booths rather becoming venues where business
transactions are consummated. (Orbeta, Jr. 2000)

5. Conclusion

The discussion made so far reveals that E-commerce can create lots of opportunities through internet. It
provides a hi-tech form of doing business. However, at the same time, being a public network it is also
accompanied with risks. These risks demands for proper understanding and proper handling. After gaining
immense popularity in the developed country, e-commerce is expecting to gain the similar popularity and
success in South Asia. South Asia holds great expectations for e-commerce, but at the same time great risk
too. South Asia, though registering increased number of internet users, found to be resistant towards
buying products through internet. This is because of the various doubts that people have regarding use of
internet for the buying purposes. For entering such a suspicious market, it is required to make early
preparations to resolve various suspicions prevailing regarding e-commerce transactions. If it could have
been made possible, then e-commerce can exploit South Asian market fairly well.

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References

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Ibid. P-3.
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Maldives & Web: State, Growth & Future. Accessed on: Dec. 22, 2011. http://limopalm.com/blog/maldives-web-
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Scribd.com; Assignment on E-commerce in Bangladesh. Accessed on: Jan. 6, 2012.
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Sharma, S and Mittal, S. (n.d.); Prospects of E-Commerce in India.
SLBDC (June, 2002); Survey on E-Commerce Implementation In The SME Sector Of Sri Lanka; Conducted By: Sri
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Som.csudh.edu; A Case Study of Electronic Commerce in Nepal. Accessed on: Dec. 22, 2011.
http://som.csudh.edu/cis/lpress/articles/nepalcase.htm

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Tables

Table 1. Internet usage and population statistics: India

YEAR Users Population % Pen. Usage Source

2000 5,500,000 1,094,870,677 0.5 % ITU
2005 50,600,000 1,112,225,812 4.5 % C.I. Almanac
2007 42,000,000 1,129,667,528 3.7 % IWS
2009 81,000,000 1,156,897,766 7.0 % ITU
2010 100,000,000 1,173,108,018 8.5 % IWS
Source: www.internetworldstats.com/asia/in.htm; Jan. 2, 2012.

Table 2. Internet usage and population statistics: Maldives

YEAR Users Population % Pen. GDP p.c.* Usage Source
2000 6,000 298,841 2.1 % N/A ITU
2005 19,000 298,841 6.4 % US$ 2,390 ITU
2007 20,100 303,732 6.6 % US$ 3,056 ITU
2009 71,700 396,334 18.1 % US$ 3,932 ITU
2010 87,900 395,650 22.2 % US$ 4,230 ITU
Note: Per Capita GDP in US dollars, source: International Monetary Fund.
Source: www.internetworldstats.com/asia/mv.htm; Jan. 2, 2012.

Table 3. Internet usage and population statistics: Pakistan

YEAR Users Population % Pen. GDP p.c.* Usage Source
2000 133,900 163,985,373 0.1 % N/A ITU

2006 12,000,000 167,806,831 7.2 % US$ 821 ITU

2009 18,500,000 174,578,558 10.6 % US$ 1,017 ITU

2010 18,500,000 177,276,594 10.4 % US$ 1,068 ITU

Note: Per Capita GDP in US dollars, source: International Monetary Fund.

Source: Pakistan, www.internetworldstats.com/asia/pk.htm; Jan. 2, 2012.

Table 4. Internet usage and population statistics: Sri Lanka

YEAR Users Population % Pen. GDP p.c.* Usage Source

2000 121,500 19,630,230 0.5 % N/A ITU
2007 428,000 19,796,874 2.2 % US$ 1,623 ITU
2008 771,700 21,128,773 3.7 % US$ 1,972 ITU
2009 1,163,500 21,324,791 5.5 % US$ 2,041 ITU

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2010 1,776,200 21,513,990 8.3 % US$ 1,807 ITU

Note: Per Capita GDP in US dollars, source: International Monetary Fund.

Source: www.internetworldstats.com/asia/lk.htm; Jan. 2, 2012.

Table 5: Internet growth and population statistics: Iran

YEAR Users Population % Pen.. Usage Source

2000 250,000 69,442,905 3.8 % ITU
2008 23,000,000 65,875,223 34.9 % ITU
2009 32,200,000 66,429,284 48.5 % IWS
2010 33,200,000 76,923,300 43.2 % IWS

Source: www.internetworldstats.com/me/ir.htm, Jan. 2, 2012

Table 6: Internet usage and population statistics: Bangladesh

YEAR Users Population % Pen. GDP p.c.* Usage Source
2000 100,000 134,824,000 0.1 % N/A ITU

2007 450,000 137,493,990 0.3 % US$ 466 ITU

2009 556,000 156,050,883 0.4 % US$ 574 ITU

2010 995,560 158,065,841 0.6 % US$ 624 FB

Note: Per Capita GDP in US dollars, source: International Monetary Fund.

Source: www.internetworldstats.com/asia/bd.htm; Jan. 2, 2012

Table 7: Internet usage and population statistics: Afghanistan

YEAR Users Population % Pen. GDP p.c.* Usage Source
2000 N/A 22,853,500 N/A N/A ITU
2006 300,000 27,089,593 1.1 % US$ 289 ITU
2010 1,000,000 29,121,286 3.4 % US$ 572 ITU
Note: Per Capita GDP in US dollars.
Source: International Monetary Fund. www.internetworldstats.com/asia/af.htm; Jan. 2, 2012

Table 8: Internet usage and population statistics: Nepal

YEAR Users Population % Pen. GDP p.c.* Usage Source

2000 50,000 23,151,423 0.2 % US$ N/A ITU
2005 175,000 25,408,817 0.7 % US$ 165 ITU
2007 249,400 25,874,519 1.0 % US$ 377 ITU
2010 625,800 28,951,852 2.2 % US$ 522 ITU

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Note: Per Capita GDP in US dollars, source: International Monetary Fund.

Source: www.internetworldstats.com/asia/np.htm; Jan. 2, 2012.

Table 9. Internet usage and population statistics: Bhutan

YEAR Users Population % Pen. GDP p.c.* Usage Source
2000 500 812,184 0.0 % US$ N/A ITU
2007 30,000 812,184 3.7 % US$ 767 ITU

2009 45,000 691,141 6.5 % US$ 1,881 ITU

2010 50,000 699,841 7.1 % US$ 2,042 ITU

Note: Per Capita GDP in US dollars, source: International Monetary Fund.

Source: www.internetworldstats.com/asia/bt.htm; Jan. 2, 2012.

Table 10. Internet users (per 100 people)

Area/Country 2006 2007 2008 2009 2010
World 17.7 20.8 23.6 26.8 30.5
Source: World Bank Data Series, 2012.

About the Author

Badar Alam Iqbal, Ph.D., is a Full Professor of International Business, Department of Commerce at
Aligarh Muslim University, India. He has been with the DAAD, Germany (Academic Exchange Service);
Ford Foundation, USA; Institute of Developing Economies; Tokyo; Fulbright Visiting Professor; USA.
Adjunct Professor; Monarch Business School; Monarch University; Switzerland; AIMA (All India
Management Association) Accredited Management Professor; New Delhi; International Accredited
Organization’s Professor; USA; Chief Associate Editor-in-Chief; International Journal of Management and
Innovation; Taiwan; Member Advisory Board, Africa and Brazilian Studies; Editor-in-Chief, Advances in
Arts and Social Sciences; Nigeria; Member, Global Council of Peer Reviewers; USA; Chief Reviewer,
Global Journal of Strategy and Governance; Canada; Reviewer of World Finance Congress; Brazil.

Contact Information
Prof. Dr. Badar Alam Iqbal, Department of Commerce, Aligarh Muslim University, ALIGARH (UP) India,
badar.iqbal@fulbrightmail.org; Adjunct Professor, UGSM Monarch Business School, Monarch University:
Switzerland, Dr.iqbal@ugsm-monarch.com

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