Lim Swee Say, Minister of State for Communications and Information Technology - Speech IDC Asia Pacific IT Forum, Suntec Singapore
Lim Swee Say, Minister of State for Communications and Information Technology - Speech
IDC Asia Pacific IT Forum, Suntec Singapore
Singapore, 20 February 2001
Mr Kirk Campbell, CEO, IDC
Mr Piyush Singh, Managing Director, IDC Asia Pacific
1 This year's IDC Asia Pacific IT Forum focuses on the "Challenges and Opportunities in Asia Pacific". This topic is especially pertinent today in year 2001. Not so long ago, "dot-com" was probably the most talked-about word. B2B meant Business-to-Business and B2C meant Business-to-Consumer. Today, some people say tongue-in-cheek that dot-coms are now dot-gones, B2B stands for Back-to-Banking and B2C Back-to-Consulting.
2 The April 2000 NASDAQ correction created shock-waves in the global development of the e-economy and information society. The correction is timely and necessary. After all, the growth of an e-economy and information society is a structural change that does not happen overnight. The sky-high valuation of dot-com stock was clearly not sustainable. Now that the hype has come and gone, we are seeing a return to normalcy.
3 The Asia Pacific Rim is a market of more than 3 billion people. This represents more than half the world's population. The International Telecommunications Union projects that Asia Pacific will account for half of the world telecommunications market by 2010, up from the current one-third market share. IDC, in its most recent estimates, projects that e-commerce revenues for this region will grow at a compounded annual growth rate of 56% from US$120 billion in year 2000 to US$1 trillion in year 2005.
4 There are valid reasons for this optimism. I would like to mention just three today.
5 First, the healthy growth of venture capital and equity markets in Asia for hi-tech start-ups and industry. In several Asian economies such as Japan, South Korea, Taiwan, Hong Kong and Singapore, both venture capital and equity markets have evolved considerably in the past two years.
6 Equity markets in many Asian economies used to have very strict regulatory requirements for IPOs. But in the past two years, rules and regulations have evolved to make them more supportive to innovative start-ups. We also see the emergence of new equity markets such as NASDAQ Japan. In Singapore, we have taken steps to evolve the equity market. We have relaxed the rules for IPOs, and enabled innovative start-ups to leverage on the Employee Stock Option Scheme to encourage entrepreneurship in Singapore.
7 Other than equity markets, we have also witnessed the strong growth of venture capital in Asia. Take Singapore for example, we now have about S$11.5b worth of venture funds operated by about 90 VCs (Figures from EDB's Technopreneurship and VC Group). Some 50 incubator centres have been set up to provide professional advisory, marketing support, strategic networking, and financing services for start-ups. Some of the highly reputable VCs in Silicon Valley such as Draper Fisher Jurvetson have set up operations in Singapore. As a result, the number of IPOs has increased by 4 times over a short period of 4 years, between 1996 and 2000. We believe that the rapid development of venture capital has made, and will continue to make a huge difference to the growth of innovative start-ups in Asia.
8 Second, the continued deregulation of the telecommunications market in Asia. In the past two years, some Asian economies have taken gradual steps to deregulate their telecommunications markets. It has resulted in a more innovative and competitive landscape for the entire e-economy ecosystem in these Asian economies. Singapore is one of them.
9 We decided to bring forward the liberalisation of the telecommunications sector by two years to April 2000. To date, we have more than 200 telecoms licensees. The space devoted to data hosting and co-location is expected to increase more than six times in two years, from 200,000 sq ft in 1999 to 1.5 million sq ft by the end of this year.
10 In Taiwan, the government effectively ended Chunghwa Telecom's monopoly on the market by granting operating licenses for its fixed line telephone market to three other consortiums (Datafile of Asia Pacific Telecommunications - Taiwan, June 2000, CIT Publications). India has liberalised its local loop and long-distance markets, while China has introduced limited competition into the fixed telephony market (Datafile of Asia Pacific Telecommunications - China, Nov 2000 and India, Dec 2000, CIT Publications). It is evident that Asia is slowly but surely liberalising the telecommunications markets.
11 Third, the growth of innovation and entrepreneurship in Asia. The globalisation of the Internet and its community, content and services has led to the widespread emergence of innovators and entrepreneurs. In Asia alone, we have seen shinning examples of world class innovators and entrepreneurs: Keiji Tachikawa who transformed NTT Docomo into a $225 billion cap company (Fortune Magazine, Jan 22 2001, pg. 46); Li Ka Shing who made $31 billion profits from Orange and Voicestream Wireless (Fortune Magazine, Jan 22 2001, pg. 49); Narayana Murthy who transformed Infosys into a global software powerhouse; and nearer to home, Sim Wong Hoo who has captured 75% of the PC sound-cards market (Fortune Magazine, Jan 22 2001, pg. 52). They have no doubt inspired and given rise to a new breed of entrepreneurs as well as a societal mind-set change towards innovation and risk taking in Asia.
12 In short, the dot-com hype has not occurred in vain. The rise of entrepreneurship, the progressive liberalisation of telecommunications markets, and the evolution of risk capital and equity markets are structural and mind-set changes that will bring long lasting positive effects. Now that much of the dot-com hype has passed, it is time to focus and proceed with the next stage of development here in Asia.
13 In the case of Singapore, we are adopting a three-prong strategy towards the development of e-economy and information society in Singapore and in our region.
14 Our first strategy is to e-power the economy through National e-Commerce Initiatives. In September 1998, the Government unveiled the E-Commerce Masterplan to develop Singapore into a leading e-Commerce hub in Asia. We have updated the Copyright Act to align it with international standards, and enacted the Electronic Transactions Act and the Computer Misuse Act.
15 A year ago, a National e-Commerce Action Committee involving various ministries and economic development agencies was established to co-ordinate and facilitate the e-transformation of all major sectors of the economy. These include manufacturing, tradeable services, finance and banking, SMEs and traditional businesses, tourism, commerce and international trading, transport and info-communications - practically all aspects of the economy.
16 The national objective of the Committee is to promote innovation in the economy, and encourage broader adoption and faster uptake of e-business. It also updates public policies and infrastructure to support business process re-engineering so that we can move more quickly towards the vision of an e-economy, e-Government and e-Society.
17 Our second strategy is to bridge the digital divide in the region through eASEAN. Even though the ten member nations of ASEAN are at various stages of economic development, ASEAN recognises the need to strengthen regional collaboration so that member nations will have a greater collective presence in cyberspace. To this end, we launched the ASEAN Information Infrastructure (AII) initiative in 1999, and jointly initiated eASEAN last year.
18 In time to come, we will see member nations of ASEAN working together to harmonise our cyber-rules and regulations, develop infocomm manpower, and undertake cross border networking of e-Government, e-Business and e-Community initiatives. The recent proposal by Malaysia to introduce e-passport between Malaysia and Singapore is a good indication of the kinds of initiatives we can expect to see under eASEAN in future.
19 Our third strategy is to lay the foundation of digital Asia through the Asian IT Belt. The Asian economies are not homogenous. Even within certain larger countries, such as in India and China, there are different regions that are developing at different rates. Clearly, it will take some time before we see the realisation of digital Asia covering all corners of Asia. But as a first step towards digital Asia, we can link up leading cities in Asia into an Asian IT Belt to serve as the backbone of digital Asia. The linkage should not only be in terms of physical broadband connectivity, but also in "softer" areas such as the harmonisation of rules and regulations, and the inter-networking of applications and services. Once established, over time, we can expect to see more cities and regions joining the Asian IT Belt as and when they are ready. In this way, Asia as a whole will be better positioned to keep up with the rapid development in other parts of the world such as e-Europe and the digital revolution in North America.
20 In conclusion, past the dot-com shakedown, the structural change towards an online economy and information society will continue in a more sustainable fashion in the years to come. The e-Revolution is here to stay. The potential for economic transformation in Asia is tremendous as the old economy embraces new technologies and a new mindset, while the new economy synergises with the strong foundation of the old.
21 I would like to thank the IDC for this opportunity to share our thoughts on the development of IT in the Asia Pacific. I wish you all a fruitful conference ahead.