x Abu Dhabi, UAESaturday 22 July 2017

Electronic services show the way ahead for start-ups

The Telecoms Regulatory Authority plans to bolster its regulatory framework to further encourage the growth of e-Government and e-Commerce services in the UAE.

The Telecoms Regulatory Authority plans to bolster its regulatory framework to further encourage the growth of e-government and e-commerce services in the UAE.

"We're studying both the opportunities and challenges inherent in the provision of electronic services, both in the government and private sector," Hamad Al Mansouri, the deputy director general of information and e-government at the regulator.

"We're trying to encourage the growth of the sector, and increase Emirati participation in it."

To this end, the TRA is in discussions with the Ministry of Justice and key industry stakeholders, including telecoms operators and e-commerce vendors, to develop a clear framework to cover the delivery of government services and private sector transactions over both fixed and mobile networks, he said.

E-commerce sales in the Middle East are forecast to reach nearly US$15 billion by 2015, according to the regulator.

Mr Al Mansouri was speaking on the sidelines of the first Electronic Transaction and Commerce Summit, held yesterday in Dubai. The event, which will be held annually, will provide an interface between the regulator and other participants in the sector such as telecoms operators, vendors and payment gateway providers.

The regulator is in particular hoping to increase the take-up of m-government and m-commerce services, building on the high penetration of smartphones in the country, said Mr Al Mansouri.

The UAE has a smartphone penetration rate of 73.8 per cent, according to the industry analyst Mashable, the highest in the world. A TRA survey conducted in 2011-12 found that 6 per cent of the population use their mobile phones for online banking, while 7 per cent use their phones for online shopping.

To that end, the regulator this year established a working group with telecoms operators and other stakeholders to establish a trusted service manager system to provide an interface between operators, government, payment gateway providers and third party e-commerce retailers that would provide a reliable basis for online transactions.

The regulator's emphasis on mobile follows an increasing trend towards payments via mobile phone both globally and in the region, said Elias Ghanem, the general manager of PayPal in the Middle East and North Africa.

"In 2012 around 10 per cent of our global sales volume was via mobile," he said. "We expect this to increase to 50 per cent by 2015."

The proportion of mobile sales in the Middle East may rise even higher than that, given the penetration of smartphones in the region, he said.

Key to the growth of e-commerce in the UAE is the availability of cost-effective payment gateways to start up companies, said Mr Ghanem.

"In theory payment gateways are open to everyone, but you need to have a deposit, a bank account and financial statements.

If you're a young entrepreneur you may struggle to provide one or more of these three," he added. There are positive signs of change however, with new payment gateways emerging that will provide greater options to young entrepreneurs, he pointed out.

While the environment for e-commerce start-ups in the UAE has improved considerably in the past two years, simple issues of funding still remain, according to Michael Ghandour, the chief operations officer of the online retailer Mumzworld.

"The legal work to set up an online business here is quite straightforward, but it's still quite cost-prohibitive setting up in Dubai compared with setting up in a market like Jordan," he said.

"Renting offices is expensive, especially if you're based in a free zone, and this could be a barrier to entry for start-ups."

 

jeverington@thenational.ae