Mr Lam Chuan Leong, Chairman Infocomm Development Authority of Singapore Speech - e-Symposium 2002, Ritz-Carlton Millenia
Mr Lam Chuan Leong, Chairman
Infocomm Development Authority of Singapore
Speech - e-Symposium 2002, Ritz-Carlton Millenia
Singapore, 4 September 2002
In times such as these, the most closely watched and talked about topic is the outlook of the world economy. There are signs of bottoming out. There is talk of a "double-dip" recovery. But most people are hopeful of an eventual recovery.
Source: MAS Report - "Recent Economic Developments in Singapore" - 17 Jun 2002
This chart from the Monetary Authority of Singapore shows signs of the global electronics industry bottoming out in recent months. As for the Singapore economy, the Ministry of Trade and Industry has recently revised its forecast upwards to a 3% to 4% range of growth for the year 2002. These positive trends are reinforced by the turnaround in our exports.
Source: MAS Report - "Recent Economic Developments in Singapore" - 17 Jun 2002
Looking further ahead, the prospect for growth in the global IT sector is still promising.
From the Gartner Dataquest forecast published in 2002, worldwide IT spending over the next two years is projected to grow from US$2.5 trillion to US$3 trillion, a compound annual growth rate of 10%.
In the Business Expectations surveys conducted by IDA in 2001 and 2002, the telecom sector has been steady and healthy over the last year, while the software and IT services sector has been more volatile on a quarterly basis. Given the state of the economy as a whole, these growth figures are creditable.
Source: IDA Business Expectations Survey 2001, 2002
The growth in total infocomm revenue, which includes hardware retail and digital/online media services, has shown an upward trend in the growth rate in 1H2002. This is an encouraging sign if it continues.
Source: IDA Business Expectations Survey 2001, 2002
IDA's role
It may be asked: What is the role of IDA in all these?
IDA is both a regulator and a promoter of the ICT industry. That may sound self-contradictory in principle, but it is not necessarily so. There are pros and cons in separating the two roles just as there are pros and cons in putting them together. For us, a small nation, it makes better sense to keep the two together. There are other agencies in Singapore that have successfully kept the two roles together. In fact, there are advantages in doing so.
The responsibility of promoting the industry guards against over-regulation. Similarly, the regulatory responsibility guards against adopting policies which may yield short term benefits, but are detrimental to the longer term interest of the industry and consumers as a whole.
IDA has adhered to a sensible free-market driven approach in both its regulatory and promotion efforts. In a perfectly free market, Adam Smith's invisible hand would have worked; no regulator would be needed; as in the frictionless, perfect world of empty space, an object will forever travel in a straight line. However, in the real world, there is friction, there are bumps and unevenness and forces such as barriers of entry that would prevent the invisible hand from working, just as it prevents objects from travelling forever in a straight line.
IDA's role as a regulator is not to change that economic world into one of its own choosing. Rather, it is to reduce the friction, the bumps and the barriers of entry to let market forces work as best as they can.
IDA came into being at an exciting time. The conventional wisdom that telecommunications services are best provided by monopolies was being challenged by dramatic shifts in technologies. Shortly after IDA's formation, Singapore liberalised the telecommunications sector in a fairly big-bang.
Significant rewards have flowed from that change. For example, we now have 33 facilities based operators compared to 15 pre-liberalisation. There is a net increase of about 90 services based operators to 621 as of August 2002. The minimum capital investment by FBOs and SBOs amounts to about S$2billion over 5 years since 1 April 2000. Prices of services have dropped significantly as in the case of IDD rates (by up to 80%), international leased circuit rates (by up to 65%) and local leased circuit rates (by up to 35%).
IDA has promoted the industry in line with this same free-market driven approach. We wanted a framework that will produce the least distortion in the industry and the economy at large. There are no predilections for a particular technology or product.
Instead, our promotional efforts are targeted at developing capabilities. At the individual level, efforts are aimed at improving skills, all the way from basic IT literacy amongst our population to specialised professional training. Over the weekend, IDA just launched the Infocomm Literacy month, the target is to train 15,000 on basic computing and Internet skills within this month. On the professional front, the Enhanced Critical Infocomm Technology Resource (CITREP) programme have upgraded the skills of 3,900 Infocomm Professionals in emerging technology areas like bioinformatics, Linux and XML. Launched since September 2001, we believe that an IT savvy society and workforce will hasten the spread of IT adoption, which in turn, will lead to a healthier IT sector.
Other than Professional IT training, IDA also supports the setting up of Competency centres led by key technology companies together with Institutes of Higher Learning and Research Institutes to transfer leading technologies and best practices, build manpower capability and conduct proof of concept projects in new technology areas such as Java for wireless, web services, IP convergence and ASP services.
Fortunately, there is widespread appreciation of the usefulness of IT adoption. The government, in particular, is a great champion in the use of "e-govt".
Another promotional prong has been the provision of infrastructure. One key example of this is the broadband infrastructure that has largely been put into place through the efforts of IDA and its predecessor organisations such as the National Computer Board. This may be called the supply-side facilitation.
It has been asked whether supply-side facilitation is better than demand-side stimulation. I believe that it is not a question of one or the other. Both are needed because it is an iterative process that feeds into a virtuous circle of re-inforcement. During the earlier phases of a new technology, the supply side is most effective. Many of the products, without which life seems impossible today, came from the supply side and not the demand side. If someone was asked twenty years ago, if he needed a personal computer, he probably would say no or don't know. Similarly, the world wide web was supply side induced. It was there first, and its value was realised by the mass users later. It would not have been possible for a consumer survey to come to the conclusion that the world needed a world wide web, and then for some technologists to come forward to supply that need.
As a result of our supply-side efforts, we now have some of the key strengths that make Singapore an attractive site for companies to be here. We have 21 Tera bps submarine capacity and direct internet connectivity to over 30 countries, we have nation-wide broadband availability for the population with more than 950,000 users, we have an extensive implementation of e-govt that has earned us the ranking of number 2 in e-govt worldwide Source: Accenture 2001 (behind Canada), and one of the top seven "intelligent communities" in the world Source: World Teleport Association 2002. The BBC even coined the term "intelligent island" to describe the state of development in Singapore.
In recent months, as we go through some of the more difficult economic challenges in Singapore, a great deal of thought is given on what we need to change or to prepare for the times ahead.
I believe that for IDA, the basic thrust will remain the same. We have chosen to carefully balance the need between regulation and promotion, to ensure that the industry grow but without undue distortions, and to facilitate its growth in generic ways for the common good. These will not change.
But the low-lying fruits have been harvested. More efforts are needed to reach out to the higher fruits. Regulation will increasingly get more sophisticated as we enter into more complex issues that require deeper analysis of the effectiveness and impact of competition. Promotion of broadband digital media and connectivity must be stepped up because the need of communication and higher bandwidth for sophisticated use of IT continues to escalate.
The theme of this symposium is "Connect - Innovate - Unleash". It could not have been more timely or appropriate. I believe the key word is "connect". The history of personal computing started with the individual in front of his desk. Even telephony was person-to-person. So is email. But the pieces of connectivity were there. In almost no time at all, the human need to communicate and connect is so great that telecommunications, the internet, computers, and the media got wedded together into one great community. It gave rise to the word "convergence" which became a by-word.
Going forward, we should therefore see more exploitation of this connectivity. E-govt, and in particular e-filing of income tax, is a good example. The value of this service is not in the desktop computer, not in the govt's servers, nor in the telecoms cables. These are the enablers. The true value to the user is the connectivity that allows him to connect and communicate without having to wait for his salary slip and the income tax form to come and to return it.
In this regard, our efforts in providing infrastructure, e-govt and stimulating IT literacy have provided the key ingredients for Singapore to exploit the value of "connectivity". Singapore has become an ideal test bed for new IT ideas and connectivity solutions. The projects can be community based, can be more e-govt initiatives, can be in e-commerce or e-procurement but they share the same characteristic of being driven by connectivity. The growth phase of standalone applications is clearly limited.
This represents a golden opportunity for companies here, whether big or small, foreign or local, to participate either individually or collectively in our Calls for Collaboration. So far we have issued 6 such calls. In the Mobile Payment CFC, we brought together several mobile handset manufacturers, banks, and service providers to develop a first-of-its-kind payment system in Singapore. This effort resulted in an unprecedented collaboration by our three mobile operators to provide a common infrastructure for mobile payments.
IDA supports these initiatives with both facilitation and grants. These Calls-for-Collaboration are a useful means of developing new applications and new services. Where the projects are eventually chosen for wider adoption, it is a good opportunity for companies to provide services to those projects. That is where the demand side sets in. For in developing the supply side, there is always a corresponding demand side. For example, the govt spends an average of S$400 million annually on IT projects, with 3 to 4% of its operating budget on maintenance of such systems. These expenditures translate into demand for goods and services in the IT sector.
I hope therefore that the companies represented here today and those planning to come to Singapore will be able to take advantage of what Singapore has to offer, both on the supply side and the demand side. I have spoken a little on the first word "Connect", and a little on the state of the economy, especially with reference to the infocomm sector. With the economy showing signs of an eventual recovery, with all the ingredients present here for new exciting projects, I hope you will, to borrow the other two theme words from this Symposium, move forward to: Innovate and Unleash!
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