Kazakhstan should take bold steps to grow e-commerce, catch up with global sector leaders

According to estimates, the global e-commerce market will grow from $2.8 trillion in 2018 to $4.9 trillion in 2023.

 

China is an indisputable leader with $672 billion in sales yearly, in big part due to the Alibaba group.  The share of e-commerce in the national retail turnover is 24 percent. Just the fact that Alibaba shares are seen as a proxy for the Chinese economy underscores the importance of e-commerce for a modern economy.

In Kazakhstan, e-commerce adds up to only 2.9 percent of national retail.

Nevertheless, the number of active buyers has nearly doubled in recent years to 2.3 million people from 1.3 million people. 

The market has more than 1,700 independent online stores and about 20 electronic trading platforms that enable more than one million business entities to sell their goods.

The structure of the e-commerce market in Kazakhstan consists of 68 percent of goods and 32 percent services trade.

Distrust of online shopping by the population, high financial and time costs for transport and logistics services and lack of skills to introduce a business in electronic commerce impede the development of electronic commerce.

Systemic and consistent trade policy to develop trade infrastructure and services, as well as to protect and advance Kazakhstan’s interest in the Eurasian Economic Union and the WTO are needed. 

The Ministry of Trade and Integration was established June 17. For the first time trade is at the cornerstone of the Government’s agenda. 

We see significant opportunities to grow the e-commerce market. 

To promote e-commerce our ministry has developed a roadmap for 2019-2025 consisting of 31 action items in 3 main areas.

The first area is promoting the growth of exports via e-commerce channels by reimbursing the costs of domestic small- and medium-sized businesses selling processed goods via international platforms like Taobao, E-bay, AliExpress and Amazon.

The second main focus is to involve domestic entrepreneurs in electronic commerce and infrastructure development by stimulating the creation of an electronic trading platform for small businesses in the B2C format and to establish a phased transition from state regulation to self-regulation based on voluntary membership. We also plan the introduction of training modules to create a culture of electronic commerce with novice entrepreneurs.

The final primary focus will be on strengthening consumer protection and promoting e-commerce by introducing an online platform on which consumers can file complaints about unscrupulous online stores and electronic trading platforms;

Successful implementation of the roadmap items will increase the share of e-commerce in retail, boost the country’s investment attractiveness, help SME’s export products  and increase tax revenues to the budget.

This is just the beginning. Some bold steps should also be taken to catch up with the leaders. 

First, we propose revising the financial mechanism to support electronic commerce. 

Russia and China are allocating more and more funds via special funds to support the growth of the sector.

Second, we need to enhance the business environment and achieve higher standards for digital trade.

Countries in the world are designing and implementing single window platforms to simplify the procedures for businesses. 

Third, we need vast and rapid digitisation of the goods we produce.

The digital services content of goods is increasing very rapidly. Take, for example, cars, which have bytes of data and lines of code more than any other consumer good.

Fourth, we need to carefully examine digital trade barriers. We live in the world of data localisation. But restricting data flows can be an enormous impediment.

Kazakhstan should move in line with global trends and take bold steps forward. The digital trade agenda should not be static.

 

The author is Vice Minister of Trade and Integration of Kazakhstan.