Policy coordination can boost e-commerce across the Asia Pacific region

With high economic growth, 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 and is projected to reach nearly $6.2 trillion by 2030. In 2022, the region accounted for around 58% of the global retail e-commerce market. India saw a surge in online consumers, with 101 million new shoppers using the internet between 2020 and 2022, while registered micro, small and medium enterprises (MSMEs) tripled from 5.1 million in 2021 to 15 million in 2023. Indonesia witnessed a similar trend, with over 20.2 million MSMEs joining online platforms in 2022. This boom is driven by the internet’s ability to expand market reach, reduce costs and provide new channels.

The APAC region is experiencing a confluence of factors that are creating a ‘perfect storm’ in favour of e-commerce growth. A burgeoning middle-class with rising disposable income, projected to reach a staggering 3.5 billion by 2030, forms a massive consumer base eager to shop online. MSMEs are joining the wave, with 72% of them in the region leveraging e-commerce platforms and vulnerable groups like women entrepreneurs adapting fast to e-com platforms thanks to the efforts of governments and organizations like UN Economic and Social Commission for Asia and the Pacific (ESCAP). Fast internet penetration, having exceeded 58% in 2022 and expected to surpass 70% by 2030, coupled with a mobile-first population of over 4.8 billion users, creates a ready online audience. India exemplifies this trend, boasting the second-highest number of smartphone users globally (659 million in 2022), with a significant shift witnessed towards digital wallets based on platforms like the Unified Payments Interface. This growth in digital wallets is a regional phenomenon, with their share in e-com transactions doubling between 2018 and 2023. Advancements in technology, such as faster telecom networks and big data, are further fuelling the boom. Apart from speed, these advancements offer personalized experiences and improved logistics to the benefit of businesses as well as consumers.

Despite the boom in APAC e-commerce, hurdles still exist for MSMEs and other vulnerable groups in the region as they look forward to global expansions and exports. High logistical costs, stiff customs rules and complex clearance procedures complicate cross-border trade. Cash on Delivery (CoD), though preferred by many in Southeast Asia, creates logistical challenges and limits access to credit. Further, cybersecurity threats, data privacy concerns and the presence of counterfeit products on some platforms can deter consumers and businesses. Unlocking APAC’s full e-commerce potential requires infrastructure improvements, regulatory harmonization and robust cybersecurity measures to ensure a secure and trustworthy online environment.

E-commerce regulation across the region is a complex patchwork at the moment. While some countries (like Singapore with its 2014 E-Commerce Act) have established specific regulations, others rely on broader consumer protection laws. Data privacy and the government’s ability to regulate technology are key concerns for many policymakers. Meanwhile, AI policies remain in their early stages, with China reportedly focusing on ethical development and responsible use.

At the same time, several countries in the region are implementing policies to aid MSMEs in using e-commerce to enhance their domestic and global reach. India’s 2020 Digital Shakti programme exemplifies this, offering MSMEs subsidies and training on how to embrace online marketplaces. Consumer protection typically falls under existing laws, focusing on areas like returns, warranties and dispute resolution. The commitment level of nations to cross-border digital trade varies, with Singapore actively pursuing e-com-friendly free trade agreements. In contrast, others have a more cautious and selective approach. Social media regulations are also evolving, with Vietnam imposing restrictions on harmful or offensive content.

While regulations evolve with technology, there is a need for discussions, sharing of best practices and partnerships to facilitate trade and exports, even as emerging policy concerns are addressed. An APAC policy forum, with India taking the lead, could help forge partnerships and lead to regional cooperation and policy harmonization that can benefit businesses (especially MSMEs and women entrepreneurs) and consumers by fostering a more predictable and secure environment for online trade.

The APAC region is a hotbed of e-commerce activity, supported by a growing middle class, widespread internet and mobile adoption and a digital payments revolution. This confluence of economic and technological forces propels the region to the forefront of online retail. However, to unlock its full potential, greater regulatory cooperation among APAC countries through a policy forum is the need of the hour. A collaborative approach would streamline operations for businesses and expand their market reach. Consumers would also benefit from a wider selection of products and a more secure e-shopping experience.

These are the authors’ personal views.