The development of e-commerce in Central Asian countries – powerful impetus for connectivity of economies

The President of Uzbekistan Shavkat Mirziyoyev, within the framework of the Consultative Meetings of the Heads of State of Central Asia, regularly draws attention to the development of trade and economic relations, which are a key driver of regional cooperation and integration.

During his speech at the regular fifth anniversary Consultative Meeting in Dushanbe, the Head of state initiated the adoption of a comprehensive regional Program that provides for the formation of sustainable trade and logistics chains in the region, the opening and expansion of cross-border trade and cooperation centers, the harmonization of legislation and the elimination of barriers to mutual trade, creation of unified electronic platforms for customs administration, sanitary and phytosanitary control, certification of the origin of goods, as well as the launch of a regional e-commerce platform.

To implement these initiatives, the Leader of Uzbekistan proposed launching a mechanism for regular meetings of ministers responsible for foreign trade activities.

A special place in the comprehensive regional Program proposed for adoption is given to developing electronic commerce.

In recent years, e-commerce has changed traditional ways of trade worldwide, making online shopping accessible, convenient, and safe, promoting entrepreneurship, and providing equal conditions for companies.

Thus, according to the research agency Global Data, over the past 10 years, the global e-commerce market has grown 5 times and in 2022, reached a volume of more than $6 trillion. More than 2 billion people are involved in e-commerce worldwide. Global e-commerce is expected to reach $27.1 trillion by the end of 2027.

Alibaba estimates its e-commerce platform has created over 30 million jobs in China. Amazon tripled the number of food delivery locations in the United States and saw a 200% increase in online sales.

E-commerce has become a unique tool that contributes to the economic development of countries. In developed countries, up to 5% of GDP is generated by B2B and B2C (business-to-consumer) e-commerce.

At the same time, Central Asia, due to its essential geopolitical location between Asia, Europe, and the Middle East, is increasingly seen as a market with high growth potential for e-commerce.

According to analysts, regional retail turnover in 2022 reached $60 billion, of which e-commerce accounts for more than 15%.

Uzbekistan, in turn, is the fastest-growing e-commerce market, which has enormous potential for expansion. According to expert forecasts, this sector’s cumulative average annual growth rate in 2023-2027 will be more than 40%.

Revenue in the e-commerce market is expected to reach $1.6 billion by the end of 2023. The number of active online users in the country currently stands at more than 10 million.

At the same time, the annual revenue growth rate will be 14%, leading to a market volume of $2.6 billion by 2027. By this period, the number of users in the e-commerce market will be about 16 million people.

It is noted that such accelerated growth can be achieved by strengthening key factors that were previously underdeveloped, such as the Internet (in 6 years, the number of Internet users increased 3 times and exceeded 31 million people in 2022), its speed and accessibility, smartphone penetration and improvements in mobile banking.

The predominant young population (48% of the younger generation aged 15 to 45 years) with an average age of 28 years is a decisive factor for further e-commerce development.

To support e-commerce participants, Uzbekistan has introduced special tax incentives, such as charging only 2% tax on online income, compared to 4% for traditional businesses. Large e-commerce companies like Uzum Market, Wildberries, ZoodMall, OLX, and others operate in the country.

In this context, creating a unified regional e-commerce platform will contribute to expanding multi-channel sales. It will give a powerful impetus to the development of online shopping in the region.

Active cooperation between the countries of Central Asia in this direction will generally stimulate business growth, create new jobs, increase company income, introduce advanced technologies, strengthen trade, economic, and investment cooperation, and contribute to the overall economic development of the region as a whole.

Shavkat Alimbekov,

Leading Researcher at the International Institute for Central Asia