PACIFIC BASIN ECONOMIC COUNCIL
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Additional Info: Policy Statements Speeches Photos Speakers & Noted Participants Featured Biographies Registration Media Information Conference Statement Regional Vitality in the 21st Century April 6-10, 2001 — Tokyo, Japan Mr. Roberto Romulo Chairman of the Board Equitable Card Networks, Inc. When East Asia Meets ICT I. The rise of the global information economy-where information generation, processing and transmission are the fundamental resources of productivity and power-embodies the convergence of two reciprocal processes: globalization and technological change, in particular the so-called Internet Revolution. (REFER TO SLIDE 2.) Both processes challenge and break down boundaries-of time, space, political territory, social class and culture. II. From a global perspective, the Internet Revolution, subsumed under the broader process of globalization, is changing in fundamental ways the way business is being done and governments are being run. (REFER TO SLIDES 3 and 4.) In Asia, this transformation has been accelerated by the Asian financial crisis, which to a large extent was exacerbated by the lack of preparedness by government and the business sector to deal with the consequences of globalization. III. Indicative also of the impact of the new and emerging technologies on Asian economies and society is the growth of overall IT spending and e-commerce. (REFER TO SLIDE 5.) A. In e-commerce for example, while the US leads with total online transactions in 1999 estimated at US$80.5 billion, followed by Japan, a distant second at US$13.5 billion. IDC predicts a significant drop, however, in the US share of e-commerce spending, from 62% in 1999 to 48% in 2001. By 2003, global e-commerce spending is expected to hit an astonishing US$1.3 trillion, with Asia becoming a major player. IV. But there are important differences in how the Internet revolution is unfolding in Asia compared with the developed world, particularly the U.S., and one that governments and business, in and out of Asia, must recognize. a. In terms of the infrastructure itself, the spectacular rise of NTTDoCoMo in Japan and the phenomenal uptake of SMS in the Philippines point to a growing trend in Asia-wireless as opposed to PC based access to data networks. The absence of legacy networks have forced companies to go for less expensive ways of connecting to the information superhighway. (i) Two years after launching the I-Mode, NTTDoCoMO has over 21 million users, growing by over 50,000 per day, and claiming more than half of the total cell phone subscribers in Japan. (ii) The wireless phenomenon takes a similar form in the Philippines, where telephony is underdeveloped, computer penetration is low, Web access is limited, and broadband availability is marginal. Furthermore, the average cost of a PC, a phone line and Internet subscription is US$625. In contrast, millions of Filipinos have been able to afford a cell phone, which can go for as low as US$66, to transmit both voice and data on the go. (REFER TO SLIDES 6 and 7.) Manila has earned the distinction of being the short messaging system or SMS capital of the world, its total daily texting traffic exceeding that of the whole of Europe. b. In terms of who is leading it, when the Internet Revolution meets "Asian Capitalism", the result looks much like Jeffrey Koo Junior and Richard Li. Their respective careers involved not so much the disavowal of one way of doing business to make way for another, but a hybrid of the old and the new. (i) Unlike the American corporate model, the family corporations of Asia make it easier for the second- or third-generation to reorient the company with minimal distortion of the traditional ownership structure and organization. The resiliency of Old Economy networks are also fed by the relative thinness of venture capital in the region; thus, much of the money that go into e-commerce and e-business come from traditional sources. (ii) So while the New Asian Economy has created a competitive space for small Internet entrepreneurs with big ideas - like Creative Laboratories and Pacific Internet - family corporations will not go away and guanxi relationships will continue to have currency. c. In terms of technological leadership, analysts who have examined the IT development paths of Asia suggest that the region would do well to lead in mobile communications, software development, developing localized content, language integration, and innovative services. (REFER TO SLIDE 8.) d. In terms of enabling factors, including infrastructure, policy environment and human resources, Asia still has a long way to go. A recent study on e-readiness conducted by McConnell International deemed the region not yet prepared to fully participate, and derive the benefits from, the global information economy. (REFER TO SLIDE 9.) (i) In the developing countries of Asia and the rest of the world technology transfer, adoption and innovation are hobbled by underdevelopment and by entrenched forms of social and economic inequality. Poverty, illiteracy, political instability, lack of access to basic services, poor infrastructure, etc. continue to preoccupy the developing world. (ii) Indeed, as long as half of the world's population-almost all of which are in the developing world-live on less than US$2 a day, have no access to health care or education, are functionally illiterate, and are miles away from the nearest telephone, the widespread uptake, much less command, of ICTs is highly improbable. (REFER TO SLIDE 10.) V. The Digital Divide, whether between the region and other regions in the world, between countries in the region, and within individual countries, is as much a function of pre-existing economic divides, and unfulfilled development goals, as it is a consequence of rapid technological change. The challenge is in how to integrate ICT development into the wider development agenda, given the many competing demands for scarce resources in developing countries. Only then can Leaders commit to this effort and sustain it. Recognizing that ICT is an enabling tool rather than the panacea for lack of growth or pervasive poverty would certainly help. a. These challenges can, with innovative strategies and the full commitment of all stakeholders, be turned into opportunities for growth. (i) The steady downward trend in the cost of Internet access - and indeed of ICT - in the region is an encouraging sign. (REFER TO SLIDE 11.) (ii) The private sector should look to the magnitude of the requirements for ICT development as a major growth and investment area. (iii) Government, for it's part, should play the role of catalyst and enlightened regulator, and indeed in cases where market forces may be shy, as investor. b. Above all, there must be cooperation between government, the private sector and civil society groups.