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IT and Telecom: Strategies for Growth

David Lim, Acting Minister for Information, Communications and The Arts - Keynote Address World Economic Forum - India Economic Summit ...

David Lim, Acting Minister for Information, Communications and The Arts - Keynote Address
World Economic Forum - India Economic Summit

India, 4 December 2001

Your Excellency, Minister Mahajan, distinguished guests, ladies and gentlemen:

Thank you for the opportunity to share with you some perspectives on the growth of the info communications industry in Singapore, India and Asia.

The Promise of Globalisation

The world is looking for a new impetus for growth.

Eleven years ago, the fall of the Berlin Wall signaled worldwide affirmation that market mechanisms were the most efficient and effective drivers of development and growth. International trade and investment flows increased as new markets, such as Eastern Europe and China, emerged. At the same time, technological advances in Information Technology and Communications spurred companies to re-engineer themselves to take advantage of data processing and electronic transactions. The Internet established itself as a new medium for commerce, and this has persisted even though the dotcom bubble has burst. The US economy boomed, and the world economy grew in tandem.

But the 21st century started tentatively. In Asia, we were just recovering from the 1997 Asian Financial Crisis, and we feared a second economic downturn. By early this year, the prospect of a double-dip had increased, as the US economy slowed. Then came the terrible events of September 11th, which dashed any hopes for a quick upturn in the global economy.

Despite the bad news, the outlook is not entirely gloomy. At the 4th WTO Ministerial Conference held in Doha, Qatar, Trade Ministers agreed to launch a Doha Development Round. This is a significant achievement, and reflected a clear recognition that the only way forward for growth and development in a globalised world is to co-operate and compromise. India showed leadership by supporting the Doha Development Round, and demonstrated its resolve to meet the challenges of the new century through pragmatic policies.

We cannot say when and how the global economy will recover. But we all agree that when the economy turns, a different global economic structure will drive its growth. Manufacturing activities today are already distributed on a worldwide basis to seek out the lowest cost for equivalent levels of productivity. And capital flows to wherever it can earn the highest returns for the same level of risk.

IT and Globalisation

The distribution and flow of such activities are possible and will increase because of advances in information technologies and telecommunications. These technologies will increasingly overlap. Info communications, by which I mean the IT, broadcast and telecommunications industries, will be important both as high growth sectors, and as enabling platforms that transform the way business is done in all other sectors of the economy.

Liberalisation and Competition in Singapore's Telecom Industry

Singapore has for some time now recognized the importance and primacy of the info communications industry in the new global economy. This is why we decided to fully liberalise our telecom market in April 2000. We lifted restrictions on the number of licences and foreign ownership. More than that, we also reviewed and updated our telecom regulations to facilitate the entry of new players and to ensure that they could compete fairly and effectively in the market.

This policy has paid off. As of October this year, we have issued 31 licenses for facilities-based operators and 605 licences for services-based operators. These projects will create 2,500 jobs, and bring in over S$3 billion worth of investments over the next three years.

Telecommunication costs have also fallen as a result of competition. IDD rates for consumers have dropped dramatically, in some cases by as much as 85 percent. For example, IDD rates to the US have fallen from 95 cents to as low as 9 cents a minute. Mobile penetration now stands at 76.7 percent, overtaking our fixed line penetration rate. Consumers also benefit from a wide range of innovative and high quality services that have been introduced into the market.

Lower costs and the liberalisation of the telecom market have also contributed towards Singapore's development as a hub for data centres, content aggregators, digital media industries, Internet networking companies and e-commerce transactions. This has created more jobs, and enhanced the competitiveness of other industries.

I am glad to see that India also supports the liberalisation and introduction of competition in its info-communications industry. I understand India has fully opened its domestic long-distance market, and announced plans to end earlier the exclusivity of its international carrier VNSL (Videsh Sanchar Nigam). These measures, and plans to introduce a Convergence Bill to revamp the regulatory approaches to support and facilitate innovations in the info-communications sector, reflect the foresight and vision of India's policy makers.

Human Capital and Globalisation

Globalisation is driven, however, not just by technology, but also by how cleverly we put technology to work. The fuel of the new economy is human capital and human ingenuity. Ideas, not just money, make the world go around.

When two persons sit down, for a game of chess or a glass of wine, they might well come up with a new idea or two. But when twenty people sit down for a board meeting, they can turn a company inside out. And if 200 people at a conference apply their minds to find new paradigms for development, they may very well shape the future and direction of an industry.

In short, Asia needs new ideas and approaches to tap the potential of the global economy. We can do this if we can get people who have ideas and experience to come together to share their thoughts and ambitions, and to learn from each other.

One place where we can start is in the IT industry. This was what my Prime Minister, Mr Goh Chok Tong, had in mind when he mooted the concept of an Asian Belt of IT Cities. Instead of seeing Asia's diversity as a stumbling block, we should view it as a marvelous opportunity to leverage our complementary strengths. Asia need not always be a follower or adapter. We can also be an innovator and initiator of new ideas, products and services.

We have the necessary ingredients for success. China has a strong electronics manufacturing sector. India is acknowledged as a powerhouse for software development. Korea has broadband capabilities and Japan leads in many wireless innovations. Singapore too can contribute its infocomms infrastructure as a test-bed for new business models, products and services.

Together, we have the capital, skills, infrastructure and operational experience to create an info-communications ecosystem across Asia to compete in the global digital community.

Singapore-India Partnership for the Asian Belt

I am happy to note that the Indian Government and the various industry bodies such as the Confederation of Indian Industries have been very supportive of our vision for an Asian Belt of growth cities. On a bilateral basis, we are already collaborators.

For example, bilateral trade has risen steadily, with robust growth averaging 9.6 percent per annum over the past 10 years. The total trade value between Singapore and India for the year 2000 amounted to US$3.7 billion. For the first six months of this year, total trade was US$2.2 billion, up 10.1% over the same period last year.

A significant part of this growth came from India's booming IT sector. Strong consumer demand for electronics saw an astonishing 269 percent growth in Singapore's electronics exports to India in 2000. Singapore is now India's top import source of electronics, accounting for 21 percent of India's total electronics imports.

Likewise, investments have grown. Singapore is India's 8th largest investor, with direct equity investments amounting to about $1.3 billion USD. India's investment into Singapore has also grown by an average of 14 percent over the past decade, and more than 300 Indian IT enterprises have set up software development operations in Singapore.

We can build on our strong bilateral trade and investments ties in IT to give substance to the concept of the Asian Belt of Growth Cities. For a start, I would like to suggest 5 ways in which we can further collaborate. These are:

  • e-infrastructure
  • e-talent
  • e-ideas
  • e-capital and
  • e-markets

Let me take you through each of these 5 ideas briefly.

Firstly, e-Infrastructure

We can build infrastructure to support our info-communications industries. For example, we can work towards expanding and interconnecting the various broadband networks that are already built or being planned across key Asian cities. Singapore Telecom's investment of US$650 million in the Bharti Group is a good example of such a high value and high impact project. At the same time, we can also work together to develop soft infrastructures, such as the cross-recognition of public key infrastructure, alternate dispute resolutions for e-commerce and the development of trustmarks, all of which will help to boost e-commerce in the region.

Secondly, e-Talent

We can also collaborate to develop talent for the info-communications industry. Silicon Valley owes much of its success to the talents that it attracted from all over the world. Similarly, for the Asian Belt, we must leverage on the talent pool that exists in the region. One practical way we can do this is to facilitate the movement of info-communications professionals through the mutual recognition of IT skills. I am happy to note that Singapore and India have started discussions to cross-certify some training programs for project managers.

Another idea is to link our top IT universities and institutions together to facilitate cross collaborations in R&D, and to help them promote their technical services to the Asian business community. Again, I am pleased to note that Singapore and India are already pace setters in this area. This year, Singapore signed a number of co-operation pacts with the Indian IT Institutes in Bangalore and Chennai, and some exchange programmes have started.

Thirdly, e-Ideas

We can help to generate new ideas for growth by fostering greater interaction. Asia can and should demonstrate its capacity and capability for thought leadership on key technology issues. We need to get our businessmen, economists, academics and political leaders together to exchange and initiate new ideas. Singapore plans to work with our partners to bring together thought leaders in Asia to discuss the growth of the IT sector in Asia.

Fourthly, e-Capital

We can tap Asian capital markets for resources to invest. For example, Singapore hosts a number of venture funds that have been created to invest in promising startups. This includes the US$27 million Startup EnterprisE Development Scheme (SEEDS) which provides equity financing for startups in the seed stage of enterprise formation. I would like to encourage more collaboration between the entrepreneurs and venture capitalists in Singapore and India to boost the overall growth of infocomm in Asia.

Finally, e-Markets

We can grow our IT companies by combining our strengths, and finding new markets and applications for our products and services. For example, Singapore's IDA, is facilitating several interesting proposals to match Singaporean and Indian companies to co-develop products for and jointly enter the Chinese market. This would enable Indian software companies to tap Singapore's marketing and cultural links with the Chinese market. Conversely, many Indian companies have wider experience and contacts in doing business with the US and Europe, which can be useful to Singapore companies.


Ladies and gentlemen:

I began by saying that the world is looking for a new impetus for growth. I believe that the info-communications sector in Asia will contribute significantly to this growth, both as an industry by itself, and also by boosting the productivity and innovations in other sectors.

India and Singapore enjoy significant complementarities in the development of the info-communications sector. At the same time, we will gain even more if we can bring together the resources of businesses in Asia, by fostering greater collaboration across an Asian Belt of IT Cities.

I hope that through this conference, some if not many of you, will be energized to seek out new ways for Indian and Singaporean companies to collaborate, to enter and build new markets together, and to make Asia a vibrant growth region in the global economy