Yeo Cheow Tong, Minister for Communications & Information Technology - Keynote Address Asia Society Conference, Taj West End, Bangalore

Yeo Cheow Tong, Minister for Communications & Information Technology - Keynote Address
Asia Society Conference, Taj West End, Bangalore
India, 12 March 2001

Introduction: The New Economy is the Internet Economy

1 It is my honour to be with you this morning for this 12th Asia Society Corporate Conference. I am indeed happy that the conference is being held in this lovely garden city of Bangalore. The city has indeed developed and grown significantly since my last visit in 1996, and I must congratulate the government of Karnataka and all those concerned for this remarkable achievement.

2 It is appropriate that we meet to discuss Asia's technology future in the New Economy in this city that is now synonymous with information technology. However, we meet in a climate of economic uncertainty. The US economy, which has been a major engine of global growth, has slowed down. Since the crash of dotcoms in NASDAQ and other capital markets, there has been a constant stream of bad news for infocomm companies. But all this should not, and must not, change our views on the longer-term trend of technology and the Internet.

3 Make no mistake about it, the New Economy is here to stay. And the transformation of business, society and culture in Asia that the Internet has started will continue. Every Asian country, therefore, needs to think about how to move its society and its industry into the Internet age. As Cisco's CEO John Chambers said earlier this year, the Internet is "no longer nice to have, it is a matter of survival".

What about Asia?

4 How where does this leave Asia? As a region, we have a market of more than 3 billion people, which is more than half of the world's population. Asia is a huge, but diversified market, with multiple languages and cultures. The use of infocomm technologies varies widely throughout the whole region. Some Asian countries have the highest per population PC ownership, Internet penetration and mobile phone penetration in the world. Yet, there are also countries where the pressing challenge is to roll out a basic telecoms infrastructure to their rural areas.

5 Much has been made about Asia being far behind North America and Europe in infocomm development. But I am more optimistic. According to research firm NetValue, the percentage of households with Internet connections in some Asian countries is beginning to catch up with the US and European levels. In fact, the study found that the Koreans are the heaviest users of the Web in the world. There, an astounding 60% of the stock trading is conducted over the Internet. In Shanghai, some 90% of the apartments are connected via fibre optics. Indonesia has the largest satellite TV network in the whole world. And in my own country, Singapore, over 99% of our households have access to the nation-wide broadband network.

6 According to eMarketer and Dataquest, the number of Internet users and PC owners in Asia will account for more than one quarter of the world's total online population. So Asia may be very diverse in income levels and infocomm development, but there are already certain sectors where we occupy the leading edge. One good example is NTT Docomo, in the mobile phone sector.

7 Indeed, the International Telecommunication Union, or ITU, believes that Asia will be the world's mobile phone powerhouse. NTT DoCoMo, already leading the world in putting the Web on the phone, will become the first operator to roll out 3G services in the middle of this year. The ITU also predicted that by the year 2010, more than 50 percent of all mobile phone users in the world would reside in the Asia-Pacific region, up from the present 35 percent. In Singapore, we now have more mobile subscribers than fixed-line subscribers, and we will be auctioning our 3G licenses in April this year the next month.

8 As you can see, the winds of change have also been blowing across Asia. The question is what is driving these changes? And can we better harness the winds of change to help speed up our development? Every company and every Government across Asia wants to understand what developmental models will work for them. Do we emulate the approach taken by the US in the development of Silicon Valley? Is it possible, indeed, to re-create Silicon Valley? Asia is clearly different in how its markets are structured and in the make-up of its economies and society. Is the Asian technology business model for success different from that of Europe or the US?

9 I believe that Asia is already going through a huge business transformation. For the past few decades, many Asian economies, ex-Japan, served primarily as a manufacturing location for multinationals or as manufacturing sub-contractors. Very often, the intellectual property was created in the West. But that has been changing in recent years. Three factors have contributed to this change -- first the rapid growth of Asian economies and markets, rising education and skills levels, and the increasing recognition that countries must open up their markets and economies and plug into the global economy. As a result, we are experiencing the flowering of technopreneurship. There is a wave of high-tech start-ups driven by innovation. Meanwhile, traditional companies, like Tata of India and Hutchison Whampoa of Hong Kong, are also reinventing themselves and making waves on the global stage.

Framework for An Asian Ecosystem to Compete in New Economy

10 Ladies and Gentlemen, we are moving in the right direction. But I believe that Asia must do more if we are to realise the full potential of our economies and substantially raise the standards of living of our people. Asia needs to create an environment of opportunities that would attract talents from afar and retain indigenous talent in the region.

11 Globalisation is now a fact of life, and unstoppable. More and more, competition is becoming global in nature. Technology now allows competitors to breach previously closed geographic borders. Companies striving to compete successfully in this globalised environment will gravitate towards locations with the required economic infrastructure, an adequate pool of well-trained workforce, a stable and conducive investment environment, and a sound system of public governance.

12 Talent, likewise, is passport and nationality-blind. They will go where the best opportunities are. If in fact, we are all in a global war for talent. In the US, recognising the shortage of IT professionals, Federal Reserve Chairman Alan Greenspan called for the easing of immigration rules for such talent. The passing of a Congressional Bill, which vastly expanded the quota for imported IT talent, quickly followed this. To compete globally, Asia must therefore actively participate in this talent contest with the developed countries of the west.

13 At the same time, we face the disadvantage of having relatively small domestic markets. Even large countries like India and China have relatively small domestic markets compared to Europe and the US, because of our different levels of economic development. Other than perhaps Japan, no single country in Asia can hope to compete alone with the EU and US. But we need not stand alone. Asia can be more competitive if we collaborate closely, encourage closer economic ties between our companies and remove regulatory and other barriers to individual markets.

14 In the infocomm sector, several proponents, including my Prime Minister Mr Goh Chok Tong, have called for the creation of a pan-Asian IT grouping. PM Goh referred to this as the Asian IT Belt during the ASEAN Informal Summit in November last year. This Belt would harness the strengths of complementary pockets of IT excellence in the region to enhance Asia's competitiveness in the infocomm domain. Asian cities that are ready can join together and build an IT community. They can then facilitate their private sectors getting together to co-operate, and share expertise and experience. Other cities can join in as and when they are ready. A strong IT community would also help project Asia's interests in the growing global debates on issues such as security of e-commerce transactions and cross-border data flows.

15 I am glad that the linkup within the Asian IT community is already beginning to happen. In Northeast Asia, South Korea is actively discussing with Japan and China, on ways to co-ordinate and standardise future developments in IT, mobile telephony and the Internet.

16 Between Singapore and India, we have strengthened bilateral ties through our Memorandum of Understanding for infocomm collaboration that was signed last year. Since the signing of this MOU, there has been a series of trade missions and visits, leading to strategic alliances among some of our infocomm companies. An example is Network i2i, a joint venture between Singapore Telecoms and Bharti of India. Network i2i will build and operate a 8.4 Terabits-per-second submarine cable network that will link Singapore, Chennai and Mumbai.

17 In addition, the ten ASEAN nations have put in place an e-ASEAN framework. Projects to realise e-ASEAN include the recent proposal between Singapore and Malaysia to implement an e-passport system for the smooth flow of frequent travellers.

18 But, can we do more? Will the current efforts be sufficient to create a Silicon Valley of the East? The Valley's innovation buzz is driven by a free marketplace, free flow of capital, talent and ideas. The Asian IT Belt concept is in essence, the cultivation of a similar ecosystem. By creating an environment where talent, venture capital, e-commerce, e-business and ideas can flow easily, the Asian IT belt can catalyse Asia's leap into the big league. Let me now talk about five of the possible components of this IT Belt.


19 First, the creation of an Asian cyber-marketplace will make us very attractive to infocomm companies because individual country markets are difficult to break into. How do we create a shared e-Marketplace? As a start, the various Asian cities that are already wired up and infocomm-enabled could jointly develop the soft infrastructure. This includes the building of a common secure Public Key Infrastructure, or PKI, the creation of e-business standards and appropriate regulatory regimes on e-transactions and consumer protection. In this respect, Japan has initiated the formation of an Asian-wide PKI Forum to discuss issues of cross-recognition and cross-certification of digital signatures this will facilitate seamless and secure e-transactions. There are also plans to create a regional federation of trust mark bodies to promote public trust and confidence in e-commerce transactions.


20 Second, in order to create a thriving Asian IT marketplace, we require a strong capital market support from both Asian and foreign investments. Harvard Business School Professor Joshua Lerner noted that the "impact of venture capital on innovation is four to five times greater than corporate research and development". Whilst the dotcom shakeout has spooked VCs, the fact is that investments are still being made at high annual rate of US$80 billion, which is about four times the amount that VCs invested in 1998 VCs put in US$22 billion in 1998.. Smart money will continue to chase innovations that change the way businesses work and which are commercially viable.

21 Hence, it is heartening to see Asian countries such as Japan, South Korea, Singapore and Hong Kong experience strong growth in venture capital and equity markets. In Singapore, we now have US$6.7 billion of venture funds, operated by some 90 VCs. There are also some 50 incubation centres, which offer advice, marketing support, strategic networking and financial services for start-ups. We have aggressively courted and brought some of the best-known VCs in the Silicon Valley to open offices in Singapore, because we believe that they will make a difference to the growth of innovative start-ups in Asia. If we can now create mechanisms to enable companies across Asia to tap these pools of capital more easily, all of Asia will benefit.


22 The third critical piece in building the Asian IT Belt is the need to grow and retain talent within Asia. In the New Economy, talent is the catalyst for growth. All the key infocomm economies are short of talent, including India. As Mr Narayana Murthy, chairman and CEO of Infosys, rightly pointed out, "the greatest constraint of India's growth will be the number of high-quality people available".

23 Asian countries can do more by expanding our talent pool. India's software strength today is the payoff from a generation of investment in education. In Singapore, we have estimated that we need about 10,000 new entrants every year into the infocomm industry. To build up the quality of the talent pool, we have also started exchange programmes between institutes of higher learning. One example is the one between our National Technological University and the Indian Institute of Technology Chennai for post-graduate students.

24 Within Asia, we need to help talent move more easily between countries, especially on short-term visits for project assignments and so on. What countries could explore together is the possibility of allowing infocomm professionals to travel freely within the region without the need for visas.

25 It is also important that we publicise our successes. Our population of indigenous talents who are making their presence felt on the global stage is growing rapidly. For example, I recently read about four academics from the Indian Institute of Science here in Bangalore starting one of India's first bio-informatics companies. These individuals, who are successfully competing against the best in the world, serve to inspire other technopreneurs. They will form Asia's base for competing in the New Economy.


26 Finally, to lead and compete in the New Economy, Asia must be seen as a credible thought leader for the various issues in the infocomm sector, whether it is legislative, policy, standards or innovation. This is really what we are doing here today at this Conference.


27 So, ladies and gentlemen, will Asia rise to the challenge of the New Economy? I truly believe we stand a very good chance if we can replicate the positive characteristics of the Silicon Valley: a common market that sees a free flow of talent, ideas and capital. I am greatly excited by all the new business opportunities within the region. I am also deeply encouraged by the increasing pace of economic deregulation taking place in many parts of Asia. This is crucial, as it will lead to enhanced competitiveness and economic growth. .

28 One example is the telecom sector. Several Asian countries, including India, have already taken bold steps to open up the telecom markets. Similarly, in Singapore, we have fully deregulation our telecom market since April last year. We also removed all foreign ownership limitations and enforced open access not just for basic telecom infrastructure but also broadband services.

29 We are therefore heading in the right direction. And we can accelerate the process by working closely together, collaborating even as we compete at the global level. I hope that my suggestions of how the Asian IT Belt concept might achieve this will stimulate some discussions and positive actions.

30 With that, let me close by thanking the Asia Society for allowing me to share with you my thoughts. I wish all of you an interesting and fruitful conference.

Last updated on: 13 Mar 2023