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Growing the Infocomm Industry: The Asian Way

Khaw Boon Wan, Senior Minister of State for Transport and Information, Communications & The Arts - Speech 19th ASOCIO General Assembly & Symposium, New Delhi, India ...

Khaw Boon Wan, Senior Minister of State for Transport and Information, Communications & The Arts - Speech
19th ASOCIO General Assembly & Symposium, New Delhi, India

7 December 2001

Mr Phiroz Vandrevala, Chairman of NASSCOM
Mr Harres Tan, Chairman of ASOCIO
Distinguished Guests
Ladies and Gentlemen

I am honoured for this opportunity to join you at your 19th General Assembly & Symposium.

Prospects for the Asian Infocomm Industry

We cannot find a more depressing time to meet. I do not have to remind you of your shrinking stock prices. And it is not just the IT and technology stocks. Sept 11 has probably tipped the global economy into a recession.

I flew into New Delhi last night from Singapore. I expected an empty flight, but was pleasantly surprised to find it full. I checked into the hotel and was again pleased to find it buzzing with many hotel guests.

But in my part of the world, the global economy looks sad. Our exports are down. Tourist arrivals have gone down. In Singapore, we are heading for negative growth this year, and are mentally prepared for another year of no growth next year.

But crisis is a good time to revisit past strategies and to formulate new ones going forward. Boom time is usually a difficult time to change course. Bad times throw up opportunities and strengthen the political will for the necessary re-engineering and re-making.

Doha Development Agenda

That was why the recent WTO Ministerial Conference in Doha was able to succeed where Seattle failed to deliver in 1999. At Doha, 142 Trade Ministers summoned their political courage, and collectively agreed to launch the Doha Development Agenda.

The Doha Agenda is unique in that it is the first trade round after the formation of the WTO. It is also the first, after the Cold War. Post Cold War, developing countries increasingly sense that they are being confronted with a 'take it or leave it' attitude of the developed countries. They could no longer manouver between superpowers for additional benefits and concessions. The Doha Agenda marks a new understanding between developed and developing countries to help poorer countries maximise the opportunities of global trade.

In this regard, I commend India for its role in shaping the Doha Agenda. At Doha, India was relentless in championing the cause of developing countries. As a result, there is a readiness to negotiate a stronger regime for protecting geographical indications on key products of interest to developing countries. A political solution was also reached to address the concerns of developing countries in dealing with epidemics within the TRIPS regime. There will also be more capacity building commitments from the developed countries.

IT Revolution

For us in the IT industry, we should also use the present downturn to look beyond the crisis and to re-position ourselves. It is certainly not a time to retreat or to unplug. While IT stock prices are down, I do not think the IT revolution has run its course.

First, IT as a tool to transform businesses and lifestyles has not yet been fully exploited. In the public sector, the use of IT to fundamentally change the way government services are delivered to the masses has hardly begun, especially in Asia.

Second, IT and telephone penetration rates remain low in the Asia-Pacific. That is why the Asia-Pacific will continue to be the fastest growing IT and telecom markets for many years to come. Right through the Asian financial crisis, the IT services business continued to grow. Five of the top ten Internet markets in the world are in the Asia-Pacific region. In mobile telephony, China and Japan are among the top 3 largest markets in the world.

Third, globalisation and technology will continue to feed on each other. The launch of the Doha Agenda signals the world's determination to remain plugged into the global economic grid. The alternative of disengagement merely means slower economic growth, less jobs, and a lower standard of living for all.

Technological Convergence

Technology will continue to surprise. In particular, convergence of telecommunications, IT and broadcasting is becoming more and more real. Already, we are seeing new convergent services, such as interactive TV applications that can be carried over various broadband platforms, ranging from DSL, cable modems to digital free-to-air broadcast networks. Over time, multimedia content and applications will be available over these different technology platforms and transmission mediums. They will be accessible via the PC, TV and other mobile devices, such as PDAs. This will enable players in the traditional industries of telecommunications, IT and broadcasting to compete in the new converged marketplace. Convergence will also make it feasible for industry players to offer new services and increase the channels of interaction with end users. Ultimately, all these will benefit consumers.

While it still remains unclear what the end point of convergence would look like, it is already apparent that we cannot realise the full potential of convergence if Governments continue to maintain the traditional regulatory lines of division between the telecommunications, IT and broadcasting sectors. Such an artificial demarcation is causing overlaps and fragmentation of policy and regulatory functions. It is impeding the pace of innovation and convergence by the industry.

For example, industry players increasingly see access to radio spectrum as an important component for network competition, and it may no longer be desirable to carve out spectrum as broadcast spectrum and telecommunications spectrum. That was why David Edmonds, the UK Director-General of Telecommunications1, talked about the possible introduction of widespread spectrum trading by telcos, broadcasters and other service providers in a convergent environment.

It is for similar reason that the Singapore Government has recently decided to transfer the Info-communications Development Authority of Singapore to the renamed Ministry of Information, Communications and the Arts, or MITA, so that all three converging industry sectors now come under one Ministry. Not only will this ensure better policy co-ordination and consistency in policy formulation, it will also sharpen Singapore's competitiveness as an info-communications hub.

However, convergence is not limited to hardware and equipment, such as interactive set-top boxes. More importantly, convergence is about content, services and applications. The impact of convergence is thus not merely economic, but also socio-political. The content delivered will therefore have to be sensitive to the cultural and religious context in each society. In Singapore, it is MITA's role to find the right balance between these different policy considerations in a convergent environment.

The Asian Way

This afternoon, the question I would like to pose to the Symposium is how can we use the current slowdown to reposition the Asian infocomm industry so that when the global economy recovers, we will be at the right place to surge ahead.

The Asian market for infocomm is huge, but unfortunately greatly fragmented. Unlike the US or the European market, the Asian market is really a collection of numerous small markets, with significant market entry barriers between them.

As a result, the Asian infocomm industry is not yet as competitive as its American or European counterparts. To realise its full potential, we have to work towards one single Asian market for the infocomm industry.

What do we need to do to achieve this? Among many things, we would need to establish interconnectivity and technical interoperability among our telecommunications systems and equipment. We would need to free up the trade in infocomm products and services. We would need mutual recognition arrangements for our infocomm products. We would have to harmonise our e-commerce laws and regulations to the global standard. We would need to facilitate the free flow of IT workers across borders.

Creating one single market is easier said than done. The Americans and the Europeans took decades to reach their current state. Asians are likely to take even longer, given the vast diversity of culture, history and languages.

Rome was not built in one day. But several important pieces are being put in place.

Topping the list is the recent decision by the Leaders from China and ASEAN to achieve the ASEAN-China Free Trade Area in 10 years. This will form the biggest FTA in the world with a market size of 1.8 billion people. When this FTA is realised, East Asia will become an even larger magnet for investments, not just to China, but also to South East Asia. China and ASEAN are naturally complementary - China is a temperate and huge land mass; ASEAN a tropical region surrounded by the sea. The FTA will lead us to readjust and re-focus on our comparative strengths. It will bring us back to the historical norm, when ASEAN and China prospered side-by-side.

Second, closer economic partnership between India and Singapore. Singapore's link with India went back to the earliest periods of history. Those early influences, including legal and administrative traditions, still exist today. Economically, Singapore can in some way be to India what Hong Kong is to China. We can serve as a gateway into India, as well as an outpost for Indian businessmen, scholars and scientists to explore South East Asia. It is little wonder that our economic relations are strengthening. Singapore's investment into India increased by 5 times in the last 5 years. Bilateral trade grew by 8% last year to reach over US$ 3 billion. Recently, the Indian Commerce and Industry Minister Murasoli Maran was in Singapore to inaugurate the Indian Centre - a physical facility to help Indian companies expand and globalise through the Singapore connection. I hope that India and Singapore can formalise our various economic co-operation initiatives into an umbrella Closer Economic Partnership framework. This can form the basis for us to achieve further quantum leaps in economic integration and liberalisation.

Third, PM Goh Chok Tong's idea of an Asian Belt of IT Cities, which I hope to discuss with you at this Symposium.

This initiative seeks to pool together the various Asian cities to create a global infocomm powerhouse. The key is to break down barriers of distance, cost, connectivity and standards among these cities, so that as if they were all co-located in one single market.

In such an Asian Belt, a web-designer in Singapore and his counterparts in Bangalore and Shanghai would be "next door" to one another even though they are geographically thousands of miles apart. Through the Asian Belt, these designers would not only be able to communicate with one another, they would also find it easier to generate new and exciting ideas, and co-operate in driving its development and implementation. Together, they would then be able to market their new concepts and products to the world.

Is this a realistic dream?

Asian cities have complementary skills. Together we have the necessary ingredients to be an infocomm powerhouse. We have the vision, the capital, the technology and the skills. But they are scattered over distances, over regulatory regimes, over nationalistic aspirations. Instead of being world-beaters by being united, we have been weakened through separation.

Silicon Valley grew because it was able to bring together all the ingredients necessary for developing an infocomm powerhouse. As a result, much of the world's infocomm expertise congregates at Silicon Valley, benefiting the US economy. If we can create an Asian Belt, we can hope to retain these Asian expertise here in Asia, thus benefiting ourselves.

Imagine an Asian Belt which will allow us to pool together India's software expertise, with Korea's broadband capabilities, Japan's wireless innovations, Malaysia's Multimedia Supercorridor and Singapore's infrastructure capabilities. This would greatly enhance our infocomm industry and ensure Asia's strong position in the global economy.

My colleague, Acting Minister David Lim was here just 3 days ago for the World Economic Forum. He discussed this idea with the Indian Minister of IT and Communications Mr Pramod Mahajan, who readily supported it. We now look forward to the active support of the other Asian Governments. At the same time, we should recognise that the vision of the Asian Belt can only be realised through strong industry participation across Asia. At this ASOCIO General Assembly and Symposium, the Singapore IT Federation have already sought your support and advice on how to make the idea more practical and better. I am glad the ASOCIO has taken upon itself to drive the idea.


Despite the current gloom, I see a bright future for the Asian infocomm industry. But we would have to work hard together, to realise its potential.

I would encourage ASOCIO, being the leading IT industry association of Asia, to be a major catalyst in realising this vision of the Asian IT Belt. Thank you.