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Developing Singapore as a Major E-Commerce Hub - Strategies & Benefits to Singapore

Mr Lam Chuan Leong, Chairman Infocomm Development Authority of Singapore Keynote Address - Forum

Mr Lam Chuan Leong, Chairman
Infocomm Development Authority of Singapore
Keynote Address - Forum
Singapore, 4 May 2000

1. I am honoured to be given the opportunity at this Forum to say a few words on behalf of the Infocomm Development Authority or IDA for short.

2. IDA was formed in December last year from the merger of the Telecommunications Authority of Singapore (TAS) and the National Computer Board (NCB), in recognition of the convergence of Technology, Media and Telecommunications.

3. As a result of the admirable work of TAS and NCB, Singapore is today one of the most connected country in the world. We have a fixed line penetration rate of 58%; mobile, 49%; paging, 36%; and Internet dial-up, 52%. In terms of household ownership of PCs and Internet access, Singapore ranks first in the world with 59% of our households owning PCs and 42% of our population having Internet access. Virtually every home can reach broadband capabilities through cable. Singapore, therefore, has very strong foundations to move rapidly into the Digital Economy.

4. To set the stage for developing Singapore as a key infocomm hub in the Asia-Pacific, IDA's liberalised the telecommunications sector on 1 April 2000. The effects of this step are profound and will have repercussions on the Technology, Media and Telecommunications industry for a long time to come. Already, more than 60 licences have been granted for new Facilities Based and Services Based Operators. With the increased competition, we expect lower prices along with a wider choice of services. Innovations in services and technology will also accelerate, thus providing new opportunities for service companies and the economy at large.

5. The Government has strongly promoted the use of IT in the delivery of its services. Almost every agency has a web site to offer information and for transactions, eg, e-filing of income tax. IDA is taking this further to promote the awareness and use of IT throughout the whole of the populace. We call this process "dotcoming the 3 P's". The 3P's refer to the Public, Private and People Sectors.

6. In our plan to dotcom the People Sector, IDA is setting aside S$25 million to assist the lower income, elderly and other special interests groups in getting connected. To ensure that we have adequate infocomm talent and skills, IDA has launched programmes to nurture a Net-savvy workforce; to attract and retain international talent; and establish Singapore as the e-learning hub in the region.

7. Next on the agenda is to dotcom the next P, the Private Sector. Our objectives are to make Singapore a trusted global e-commerce hub and to build a vibrant Online Business Economy. The Gartner Group's 1999 E-Business Country Opportunity Index ranked us third just after the US and Sweden. About 91% of our top 1000 companies have Internet access and 4% of the industry adopt e-commerce. In 1999, our B2B e-commerce generated S$1.4 billion in sales revenue and we expect this figure to grow rapidly.

8. Singapore is well positioned to be the e-business hub in the Asia-Pacific region, where e-commerce is poised to take off. Goldman Sachs has predicted that the growth in the number of Internet users in Asia is expected to far outstrip that in the US over the next five years. By 2003, the number of Internet users in Asia would grow at an annual rate of 40 percent, compared to 25 percent growth in the US. Gartner has forecasted that the Asia-Pacific's B2B market will grow from the current US$12 billion to more than US$1 trillion by 2004, accounting for a quarter of the global B2B market. IDA believes that to be the e-business hub in the region, we can leverage on our traditional strengths in the so-called "real-economy" sectors particularly in the manufacturing of electronic components and chemicals, financial services, international trading and logistics.

9. IDA has developed a 5 pronged strategy to develop Singapore into a major global e-commerce hub. First, the infrastructure services critical and strategic to the development of e-commerce must be in place and at a competitive cost.

10. Second, IDA's policy and regulatory framework are geared towards a pro-e-commerce environment. IDA is working very closely with other economic agencies under an E-Commerce Action Plan Committee to ensure that our national e-commerce efforts are well co-ordinated and efficient.

11. Third, IDA will promote world-class e-commerce companies to hub their regional e-commerce activities in Singapore. These include major B2B Exchanges and Portals, infrastructure players and e-commerce solution providers. Towards this end, investment promotion missions will be conducted to countries such as the US, China and India. We will leverage on the recent Information Communication Technology (ICT) MOU signed between Singapore and India to jointly collaborate on e-commerce projects.

12. Fourth, IDA will work closely with our start-ups to identify market opportunities in the region and facilitate their entry into the regional market through assistance schemes and mission trips. These assistance schemes cover the various activities such as overseas marketing, branding, overseas offices and financing. IDA will also look into partnering the private sector to set up incubators in countries such as India and China to enable our dotcom companies to expand into these countries and quickly start doing business there.

13. And last but not least, we want the Singapore brand name to be synonymous with e-commerce buzz in this part of the world. We want to make Singapore the dotcom haven in the Asia-Pacific region through the availability of a ready pool of skilled e-commerce workers, venture capitalists, legal experts and angel investors. For example, IDA is working closely with industry and institutions of higher learning to develop curriculums to train students to be infocomm specialists and application developers with multidisciplinary skills in emerging areas such as e-commerce, Interactive Broadband Multimedia, Infocomm Convergence and Knowledge Management.

14. In implementing these strategies, IDA has the benefit of using the assistance schemes developed by other agencies. Examples of these are the EDB's Innovation Development Scheme, NSTB's Technology Development Fund and Technology Incubator Programme, TDB's Trade Development Incentive (E-Commerce). IDA also has its Local Enterprise Computerisation Programme (E-Commerce).

15. Although there are multiple assistance schemes, IDA can serve as your one-stop centre for all information relating to e-commerce including the incentive schemes. Companies looking for grants and incentives could come to IDA which would be able to advise which schemes are most relevant to them.

16. To build a vibrant Online Business Economy, IDA will identify and promote strategic e-commerce projects and enhance the existing assistance schemes such as the Local Enterprise Computerisation Programme (Electronic Commerce) and the Critical IT Resource Programme (CITREP) to drive the new wave of e-commerce adoption. Our target is to increase the value of e-commerce transactions from S$1.4 billion currently to S$4 billion by 2003.

17. One key sector is the financial service industry. The potential market for the e-financial service field in Singapore is immense. According to the Boston Consulting Group, the number one Business-to-Consumer (B2C) service consumed by Internet users in Singapore is on-line financial services, accounting for US$10.2 million, or half the total amount spent on B2C business in Singapore in 1999. In the Asia-Pacific region, financial services generated US$700 million in B2C revenue, just behind computer hardware/software in the region's on-line retail market. The MAS expects Internet banking in Singapore to grow from 3.4% to 20% of retail and corporate accounts in the next few years.

18. With the liberalisation of commission fees for online trading by January 2001, the environment for e-commerce in securities trading is expected to receive a substantial boost as commissions come down to match the lower costs of trading over the Internet. In addition, MAS is supportive of the setting up of e-bond trading and cyber-bond exchanges.

19. The outlook for the financial sector is even more promising when one considers the entry of mobile commerce into the Asia-Pacific market in the coming year or two. Mobile phone penetration in the region is amongst the highest in the world and many countries here will see higher mobile telephony penetration than fixed lines. Financial services offered over the mobile phone rather than standalone PCs would make a greater impact in the coming years to the people of these countries. Singapore is poised to be a centre of this new development with the recent setting up of the world's first incubator centre here devoted solely to the development of products and services for wireless Internet and mobile commerce. The centre will work on the technology for mobile banking and e-stock trading using the wireless Internet.

20. But the financial sector will not be the sole beneficiary of the application of IT. The whole service sector will benefit as well. We are beginning to see a whole slew of companies offering new and innovative ways of delivering traditional services from education to grocery shopping. Even the manufacturing sector will turn towards e-commerce, e-procurement and so forth to lower its costs and raise its efficiency. Indeed, only the imagination can limit what this new wave of technology can bring about. We are at the beginning of this wave and the time ahead promises both exciting challenges and immensely rich rewards for those bold and imaginative enough to exploit it. That is the role of the private sector and I wish you all the best in your discussions today and your future ventures.

21. Thank you.