Information Technology - Building Global Networks in the New Economy

Yeo Cheow Tong, Minister for Communications & Information Technology - Address Forbes Global CEO Conference, Raffles City Convention Centre ...

Yeo Cheow Tong, Minister for Communications & Information Technology - Address
Forbes Global CEO Conference, Raffles City Convention Centre

Singapore, 20 September 2001

I am very happy to join you at this Forbes Global CEO Conference. This morning, the distinguished speakers before me shared their thoughts and insights on globalisation, and on leadership and strategies in the new economy. Let me now focus some of these ideas on the Infocomm sector.

Technology Slowdown and Globalisation

Today, the short-term outlook for the telecom and IT sectors appears to be very sluggish. Many dot-coms have disappeared, while most technology companies are plagued by depressed profits, and are retrenching staff and restructuring. Likewise, telecom companies are faced with huge debts and are scrambling for fresh funding. In addition, there is considerable uncertainty clouding the US and global economic outlook as a result of last week's massive terrorist attacks in New York and Washington, and the potential US response to these attacks. A positive development is that the US stock markets re-opened smoothly this week, and the world financial markets have continued to operate normally.

However, despite the sluggish near-term outlook, the good news is that growth and development of the infocomm industry in the Asia Pacific region has only slowed down, and is not coming to a complete halt. According to the eMarketer report published in July this year, Asia's e-commerce revenues will continue to grow to about US$338billion in 2004. Of course, the recent events may reduce this forecast somewhat. But what is important, is for us to recognise that there is a significant infocomm sector in Asia, and that this translates into attractive business opportunities. Companies in the infocomm sector should therefore be looking into expanding their market reach in Asia, so that they are well positioned in the region when economic recovery takes place. They will of course have to do so judiciously and with the necessary due diligence.

On the issue of globalisation, I would suggest that despite the current economic slowdown, we will continue to see technology speeding up the process of globalisation rather than impede it. Let me explain. As we all know, many pure e-commerce intermediaries have faded away and disappeared. However, corporate e-transformation efforts have continued and amplified. Companies have realised that they need to understand the process of e-transformation and urgently transform themselves in order to survive in this tough and competitive environment! In Asia, conglomerates such as Sony and Samsung have built B2B businesses, to serve, and at the same time leverage on, their strong networks with suppliers, partners and customers.

With increasing cost pressures during the present slowdown, companies have also realised that they need to shift their assets worldwide to push production to the most cost-attractive locations. One company that had realised this is Boeing. The company leveraged heavily on infocomm technology when designing the Boeing 777. The design was done by more than 230 design teams, using 2200 computer terminals located around the world. Although the teams were spread around the world, infocomm technology enabled them to exchange ideas and send the design drawings through the Net with a mere keystroke. In doing so, Boeing took advantage of globally distributed centres of excellence in the design, development, and production value chain.

The Singapore Experience

Let me now share some of the infocomm-related strategies that Singapore is pursuing in recognition of such a trend. They may be encapsulated in three broad areas, namely:

  • linking regional centres of excellence;
  • reinventing global infrastructure and systems; and
  • establishing global frameworks for business.

Linking Regional Centres of Excellence

Let me elaborate. Firstly, Singapore's strategy lies in linking regional centres of excellence. As I have highlighted earlier, companies now assess capabilities on a global or regional basis, and distribute components of their work to the most suitable places. Neighbouring countries must realise this and learn to work together. Each country may not have all the necessary elements. But by working and co-operating together, they create a regional cluster with the full range of required capabilities. This then transforms the region into an attractive investment proposition to companies.

Within Asia, my Prime Minister has proposed the idea of an Asian Belt of IT Cities to achieve this. The Asian Belt hopes to link up centres of excellence in Asia with complementary strengths and capabilities. For example, Japan is good at designing mobile phones; China is a large manufacturing centre for electronic devices; and Singapore is an excellent development centre and test market for innovative mobile applications because of our sophisticated user-base and compact size. Put them all together, and you get a region that is very attractive to a mobile phone company that wants to develop and test next-generation mobile technologies. With such integration, we will then be able to enhance the overall growth and competitiveness of the region.

Reinventing Global Infrastructure and Systems

The second strategy is reinventing global infrastructures and systems. The key challenge is how to reinvent existing systems to capitalise on new infocomm technologies. Let me give you an example of what Singapore has done. Sea and air transport are the traditional global linkages that remain important to this day. However, the way we handle them today is vastly different when compared to just ten years ago. Manual systems have given way to faster and highly efficient electronic processes. For example, the whole process of trade documentation and customs clearance is speedily handled by our TradeNet system. TradeNet is the world's first electronic data interchange or EDI system for the integrated processing of trade documentation. To complement this, our port operator, PSA Corporation, has a single portal that allows ships to book port resources online. This has increased the productivity and efficiency of our port services dramatically. Shipping companies, and importers and exporters also benefit considerably.

Going forward, this will not be enough. In this seamless and interconnected world, ports are also transforming rapidly. Instead of relying on their natural geographic advantage, port operators will have to become global end-to-end logistics service providers. PSA Corporation, for example, offers a suite of online services that allow users to track their cargo worldwide. Customers can also use a PSA system to match empty slots on board container ships with cargo that they want to ship out. With this, PSA is establishing itself as a global logistics provider of the future, serving the transport and communications needs of clients regardless of where they are in the world.

Likewise, TradeNet is being improved to serve clients better, for example, by using the application service provider or ASP model. The new global infrastructure will contain new components such as data centres, ASPs, and operators that offer global services out of Singapore. This will heavily involve infocomm services. Singapore will have to continue to enhance our connection to the global information infrastructure, and to think about our new value proposition in the changing face of communications.

Establishing Global Frameworks for Business

Let me now move on to the third strategy, establishing global frameworks for business. This is equally important to ensure a conducive environment for cross-border economic activities. This includes putting in place policy and regulatory frameworks for e-commerce, as well as standards for online security and authentication. Many of these have to be harmonised across borders.

But increased global interdependency also means that economies become more vulnerable to changes in other parts of the world. A single computer virus can rapidly spread worldwide and cause much destruction. The recent Code Red worm virus was estimated to cost more than US$8 billion in damage!

As e-commerce activity becomes more commonplace, businesses may encounter uncertainty when doing cross-border e-transactions. This will happen if countries have different positions with regard to what is legal and what is not, how disputes are resolved, and so on. Hence, governments will have to work together to address cross-border jurisdiction issues in order to provide a conducive and secure environment for businesses and consumers. As an illustration, the ASEAN Heads of Government had, in Nov 2000, signed the e-ASEAN Framework Agreement. In the area of e-commerce, a common legal framework has been developed to facilitate the legal recognition of digital certificates issued by the certification authorities or CAs of Singapore, Malaysia, Thailand, Philippines and Brunei. Concurrently, a CA Forum has been initiated to work out common technical standards to enable the cross-recognition and cross-certification of digital certificates.


Let me conclude by observing that economies today have already become increasingly integrated through trade and investments. This interdependency has no doubt increased collective vulnerability as goods, services, ideas, culture and even computer viruses cross borders. Despite this, the cost of exclusion from global networks is going to be higher than the risk of vulnerability. Governments, businesses and individuals must tap into global networks and engage in global partnerships, and turn these around to their advantage. Governments must reorient their approach to regional collaboration and cooperation, and businesses must reach out across borders to extend their market reach and access to physical and intellectual resources. Infocomm technology is an enabler and tool that will help us along the way.

On this note, I wish all participants a successful and insightful panel discussion that follows.