Poverty and Development Division
last updated : 20 December 1999
Many countries in the region have now recognized the importance of the production and use of ICT for competitiveness and growth, and ICT has become a major focus of national investment strategies.14 Developing countries are increasing their spending on ICT significantly, but they have a long way to go compared with developed countries like Japan and the United States. In the United States, business spending on computers alone rose by 86 per cent during the period 1994-1998, compared with a 40 per cent increase in other types of investment.15 Several developing countries in the region have developed ICT plans for the next century which they expect will attract domestic and foreign investment for development, production, transfer and application of ICT. Examples are the Three Gold project of China; Malaysia's ICT plan and Vision 2020; the National Information Technology Plan 2000 (NITP 2000) of the Philippines; the Korean Information Infrastructure of the Republic of Korea; Singapore's IT2000; and Viet Nam's national programme on IT2000. Such plans usually also include national information infrastructure initiatives aimed at sustaining and expanding the competitive advantage of the economies.
The essence of the Singaporean programme is the synergistic development of a well-integrated and extensive national information infrastructure based on advanced ICT. Its implementation is expected to help Singapore to become a leading information society. The National Computer Board will be the government's chief information office and will outsource computer services. New flagship projects worth $200 million have been initiated in eight key sectors: education, construction, manufacturing, distribution, leisure and tourism, health, library, and public services. The Board will help to meet the requirements for ICT professionals needed for the next phase of the plan, but will rely upon universities and the private sector to train them.
Hong Kong, China has very sophisticated, advanced telecommunications at relatively cheap rates. In a workforce of 3 million people, there are already 1.1 million pagers and 800,000 mobile phones, constituting very high penetration per person. Hong Kong, China has a fibre optic infrastructure and most buildings will be fibre-cabled by 1998. Value-added networks and services are to be delivered over these conduits, including electronic commerce, electronic trading, electronic delivery of services, video-on-demand and government services. A government computer network links major government departments and will be the basis for providing bilingual public access to government databases such as the land registry, legislation, court cases and trade. Perfecting Chinese language input, character recognition and voice recognition on computers will be important for achieving greater use of computers and telecommunications.
The Government of the Republic of Korea is building its information infrastructure by implementing the Korea Information Infrastructure initiative over a period of 15 to 20 years. The government has created a steering committee at the interministerial level. In addition, a subcommittee for coordination among participating ministries has been actively working on a superhighway project. The country realizes that the future information society primarily depends not only on how efficiently the high-speed communications networks are constructed, but also on how effectively they are utilized.
The National Information Technology Plan 2000 of the Philippines provides an overall strategy to create a population that is ICT-knowledgeable. The broad objective is to harness the full potential of ICT to maximize social economic development. Some of the elements are currently being implemented. Viet Nam has spent the last several years getting ready for the information revolution. Central administrative arrangements have been set up and policies and plans created for the development of a computer industry and to promote information technology throughout the country. The steering committee for the national programme for information technology has issued two key documents on policy on information technology development in Viet Nam up to 2000 and on a master plan up to the year 2000. However, the country still has some way to go in putting in place the requisite hardware, software and systems.
An example of a thriving national focus on the development of ICT to boost national competitive advantage is Malaysia. The ICT industry in Malaysia is being concentrated along the Multimedia Supercorridor that stretches 50 kilometres south from Kuala Lumpur. The development of the supercorridor includes participation by leading TNCs in ICT through FBI and substantial investment by the government. It is based on the use of the most modern technology at a relatively low cost of connection. The Multimedia Supercorridor boasts two of the world's first "smart cities", Putrajaya and Cyberjaya, and it will eventually lead to full electronic government, a totally automated hospital system, smart schools (all of Malaysia's schools are projected to have Internet access in the near future), research and development clusters consisting of universities and corporate centres, and multipurpose smart card systems. The computer services market, including data entry, systems integration, custom programming, data processing management and maintenance, outsourcing services, and virtual reality systems represents approximately 30 per cent of the current ICT market in Malaysia. The country has already introduced the legal and regulatory reforms necessary for the implementation and effective functioning of the supercorridor, including a full body of cyberlaws for ICT applications governing electronic transfers, electronic signatures and other technological features. Intellectual rights legislation will also be expanded to fully cover ICT products.16
Many least developed countries and island developing countries have particular difficulties in developing their information infrastructure because of lack of funds, experience and expertise, and the unavailability of qualified human resources. In this regard, active participation of the private sector acting in close cooperation with the government could be an effective tool for information infrastructure development. Such an approach is used in Maldives.17 Prior to 1988, domestic telecommunications were operated by the Department of Posts and Telecommunications, which was unable to meet the level of funds necessary to realize the country's development potential. A joint venture company was set up between the government and Cable & Wireless, with the government maintaining the majority share, to encourage further investment and to ensure the availability and use of the latest technology. The new company was granted exclusive rights of operation for 10 years and, in return, the government was able to impose certain regulations, including the requirement that a national network permitting access to the whole population should be set up.
The role of the Department of Posts and Telecommunications changed from operator to regulator with the following main duties: to issue operating licences, including transmission station licences; to monitor the quality of service provided by the operator; to regulate tariffs; to consider public complaints and take necessary action; to implement government policy on telecommunications; to allocate and control the radio frequency spectrum; to set technical standards and ensure compliance; and to represent the country in regional and international telecommunications organizations. The growth of the Internet in Maldives has increased the use of computers for information gathering, processing and dissemination. The private sector, particularly the tourism industry, which is the second largest industry after fisheries, has started using the Web as a cost-effective way of advertising and maintaining contact in a dispersed island economy. Small businesses have started to provide Web page publishing, e-mail servicing and also, to some extent, voice and facsimile servicing through the Internet. The government now intends to evaluate the need for the liberalization of the sector in order to achieve its target of basic telephony access to all the inhabited islands of Maldives by the turn of the century.
While national efforts have been stepped up to upgrade the availability and utilization of ICT in many countries, the success of such upgrading is dependent on supportive regulations, and government policies with regard to the free flow of information. As several governments have restricted Internet access for various reasons, the effective utilization of this information tool will be constrained. However, it is recognized that proper regulation will have to be established to ensure stability and orderly use of ICT, consistent with such considerations as protection of privacy and respect for cultural morals.
The new and still evolving applications of ICT have further spurred globalization of production systems, especially through FBI by TNCs, and has induced companies, big and small, worldwide to invest in these applications to sustain and strengthen their competitiveness. ICT is enabling SMEs to enter the international business environment either as subcontractors for larger companies or as partners with other SMEs. Some of these may grow into the TNCs of the twenty-first century. ICT is an effective tool for skills development as well. The componentization of production, facilitated by ICT, also increases the possibilities of an increased number of developing countries attracting investment. As such, its role is pervasive.
In this light, it is necessary for governments to consider the new vulnerabilities facing their domestic industries in an ICT-intensive world. In this context, three risks appear to be of immediate concern. First, the role and position of foreign TNCs in the production structures of many industries are likely to become stronger and more pervasive. There is thus a risk that it will be more difficult to stimulate the development of local entrepreneurship. In addition, under the WTO Agreement on Trade-related Aspects of Investment Measures, governments are constrained in supporting their domestic enterprises as they did in the past by using such measures as local content requirements or trade-balancing requirements. Modalities for addressing the stimulation of local enterprises such as programmes for the provision of credit, infrastructure and transportation facilities, and training/retraining will need to be strengthened in order for these entrepreneurs to become competitive or to be able to develop cooperative relationships with foreign TNCs. Second, there are balance-of-payments risks in that the inflows of capital from FBI do not necessarily match outflows of remittances of profits and interest, and there are likely to be periods of unanticipated deficits on the capital account and sometimes even prolonged deficits. One way of addressing this is to try to encourage FBI flows more into tradeable sectors rather than non-tradeables such as property, construction and provision of infrastructure, from which there are no foreign exchange receipts. In this regard, the use of electronic commerce over the Internet will make it more difficult to keep track of inflows and outflows of funds. Third, the use of ICT means that companies are not having to invest in large factories so that their production units become more footloose and can be moved from one location or country to another more easily. This implies that a government cannot count on the presence of a TNC over the longer term as part of its development strategy unless it maintains the locational attractiveness of its economy. There is a risk of destructive competition whereby governments offer more and more inducements to TNCs to invest or stay in their country, unless there are some agreed rules of the game. As the growing application of ICT is an ongoing phenomenon, these increased vulnerabilities of developing countries should be addressed collectively through regional and international cooperation.
14 See "Regional economic cooperation as a means for developing and promoting new advances in information technology for industrial and technological applications in Asia and the Pacific" (E/ESCAP/SREC(9)/2).
15 "The twenty-first century economy", Business Week, 31 August 1998.
17 The information on Maldives was provided by the Ministry of Communication, Science and Technology of Maldives (22 December 1998).
Please contact the webmaster with questions or comments about this web site.
For any queries concerning the substantive content of the page, please contact PDD homepage.