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ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC
Fifty-sixth session
1-7 June 2000
Bangkok

I. Response to Resolution 55/3

1. This document contains the first of two annual reports requested in paragraph 8 of Commission resolution 55/3 of 28 April 1999 on strengthening the cooperation and support of nations in the Asian and Pacific region in addressing the year 2000 problem.
2. In adopting the resolution, the Commission was responding to the common concern and markedly improved awareness of the year 2000 (Y2K) problem since its previous session. For ease of reference, the operative paragraphs of the resolution are reproduced in annex I of the present document.
3. In response to the appeals contained in paragraphs 4-7 of the resolution, the Executive Secretary brought the resolution and its calls for action and regional cooperation to the attention of concerned members and associate members, United Nations bodies and specialized agencies, intergovernmental and non-governmental organizations, and the World Bank, the Asian Development Bank and selected multilateral organizations. The resolution was published on the ESCAP web site and in the ESCAP government computerization and statistical newsletters.
4. The implementation of activities called for by the Commission in paragraph 9 depended on the success in raising extrabudgetary funds within a very short time frame. After the Commission session, the secretariat approached several bilateral and multilateral donors for funding, but those efforts did not yield any results. Consequently, no action was possible.
5. As widely reported in the international media, an unexpectedly small number of serious Y2K failures occurred before and after the turn of the century. Thus, although the secretariat was not able to mobilize resources as requested in the resolution, sufficient impetus to tackle the Y2K problem had clearly been created earlier through various international, regional and national awareness programmes. Among them, the Y2K activities undertaken by the secretariat have been recognized as effective in terms of prompting corrective action.

II. ESCAP Survey on the year 2000 problem

6. To permit the secretariat to prepare the report requested by the Commission, and to obtain comparable information about the expenditure and efforts of governments in creating awareness and fighting the Y2K problem, the Executive Secretary sent a questionnaire to the regional member and associate member governments in February 2000. Unfortunately, despite two reminders, the response rate remained too low to generate a comprehensive picture of the regional response to the problem. Nonetheless, the information obtained in the survey supports the conclusion that the ESCAP region transited into the new century without any major glitches in computer and embedded systems.

A. Efforts exerted by governments

7. All responding governments had created a national task force or a dedicated agency to increase awareness about the Y2K problem and to coordinate the remediation work and contingency planning in the public sector (see table 1). Those bodies were usually also in charge of collecting information about Y2K problems that occurred in the public sector. 
8. The national coordinating agencies collaborated closely with private sector industry associations by organizing seminars and workshops and disseminating information. Some governments provided tangible assistance to private sector enterprises through help desks and dedicated consultants. Some governments created economic incentives for private sector action by allowing tax deductions on Y2K problem assessment and remediation or by providing financial support. The details of government assistance to the private sector are provided in annex II.

Table 1. Y2K problem-resolving efforts by selected governments*

* The table covers regional member and associate member governments that responded to the ESCAP survey.
- Two dots (..) indicate that data are not available.

9. Expenditure on the Y2K problem (see table 2) indicates that both awareness creation work and remediation efforts peaked in 1999, although many governments had started work in 1998 or earlier. The distribution of efforts (in person years) by year was consistent with the reported expenditure. The budget figures for the year 2000 indicate that remediation work was expected to continue in many countries, presumably targeting non-critical systems
10. Among the governments that provided information on their expenditure and budgets, Australia spent the highest amount on resolving the Y2K problem, followed by Turkey and Hong Kong, China. The data for many countries are not available
11. The expenditure figures in table 2, as well as the measures of effort exerted shown in table 1, must be interpreted and compared with great caution. Some governments indicated that they did not have a separate budget for the Y2K problem and that the costs were absorbed within existing allocations, typically from annual information technology budgets. Comparison is difficult also because of the differences in treating the cost of fixing non-mission critical systems and the replacement of equipment that was already at the end of its life cycle

Table 2. Central government expenditure or budget for Y2K work

* National currencies were converted to US dollars by using annual average exchange rates for 1998 and 1999, and 31 March 2000 rates for the year 2000. For data before 1998, the average exchange rate for 1997 was used.
- A hyphen (-) indicates the amount is nil or negligible.
- Two dots (..) indicate that data are not available.

12. The ESCAP questionnaire also asked respondents to relate the Y2K expenditure or budget to the total annual information technology budget. That information was provided by a few governments, but again the figures are not comparable due to varying budgeting methods and to differing concepts as to what constituted Y2K expenditure. For instance, if the information technology budget was small and replacement was the main mode of remediation, the ratio could easily be 100 per cent or higher. The Government of India had given an indication to departments to spend 1-3 per cent of their annual information technology budget on Y2K remediation. Overall, the information provided was not considered suitable for tabulation

B. Problems encountered

13. In spite of a high level of advance attention, problems were encountered in critical sectors, such as nuclear power plants, the power grid, telephone systems, and banking services and equipment. However, none of the problems was classified as major. The embedded chips caused far fewer problems than anticipated. Consequently, the national emergency centres that had been set up by many governments to monitor the rollover had very little to report. Annex III contains a list of minor problems reported in the ESCAP survey and in other sources. It is likely that the list has a proportionate overrepresentation of Y2K problems in sectors that were subject to prudent monitoring of the incidents
14. The most typical problem was equipment or software displaying or printing a wrong year for the year 2000, but without any impact on the core functionality of the system. Many organizations were prepared for such incidents and did not consider them as problems. Many system failures or malfunctions were reported without a detailed identification or description of rectification of the problem. In some cases, however, it was indicated that the problem could be fixed quickly

III. CONCLUSIONS AND ACTION BY THE COMMISSION

15. During the first months of the new century only minor problems were reported and the likelihood of major problems appearing remains small. The governments in the ESCAP region can congratulate themselves for passing the Y2K challenge. The remediation of less important systems continues in many countries. In addition, the systems that were kept in operation by backdating the system clock or that were fixed temporarily will require attention in the future.
16. Although the existence of two-digit years in programming was known in advance, it was difficult to predict how much the remediation would eventually cost. For instance, it was widely anticipated that the unit cost of Y2K programming would rise significantly towards the end of 1999 due to a shortage of competent programmers. In reality, the cost of fixing a line of code dropped because of the emergence of automated tools and alternative fixing methods.
17. The full cost of fixing the Y2K problem will never be known because of estimation difficulties. Apart from the direct programming and replacement expenditure, a comprehensive analysis would need to consider opportunity costs. What were the costs incurred because of non-optimal and premature timing of equipment or software replacement? Were costly mistakes made because of the last minute rush to become Y2K-ready? Would the technological improvements that had to be deferred because of the need to concentrate on Y2K work have made better economic sense? Were the efforts in creating awareness proportionate to the problem? These and other questions would need to be answered before a full analysis of Y2K costs can be made.
18. The eventual success in overcoming the Y2K problem can be attributed to the substantial and persistent efforts to rectify critical systems in countries and sectors that were the most vulnerable. As expected, many small and technologically less advanced members and associate members were largely spared Y2K problems because their computing environments were PC-based and relatively new. Moreover, automation had not penetrated into all aspects of the production and distribution chain.
19. The costs and efforts involved in tackling the Y2K problem, considerable though they certainly were, have been, in the secretariat's view, outweighed by several positive results of a long-term nature:
    • Better and more productive information technology systems have been put in place. In addition, the importance of setting strict deadlines for information technology projects and of clearly documenting information technology systems was underlined;
    • Better information technology management tools have been developed. For example, information technology inventory records have been updated, forming a basis for continuous record keeping. The contingency planning experience gained with Y2K will be useful for other types of emergencies. Critical infrastructure protection is likely to receive higher priority than before. Moreover, more attention will almost certainly be paid to careful evaluation during procurement of hardware and software;
    • Top management became involved in critical information technology issues. Chief executives have been made more aware of the integral role that information technology plays in the organization. Many were for the first time forced to respond to related challenges in a systematic way, having to quantify their information technology problems and their probable impact. The efficient management of high-technology organizational assets was also brought into sharp focus;
    • Regulatory and monitoring authorities were forced to pay attention to how information is generated, stored, transmitted and protected;
    • The benefits of information sharing through the Internet were proven regionally and globally.

In the light of the small number of Y2K failures and the sharply reduced interest among member and associate member governments in the topic as evidenced by the response to the secretariat's questionnaire, the secretariat proposes that the Commission reconsider the need to follow up on the Y2K issue with a further report to its fifty-seventh session in 2001. The Commission may, instead, wish the secretariat to devote the modest resources that would be utilized for this task to activities which would capitalize on some of the more positive outcomes of the Y2K episode, for the benefit of the developing countries of the region

Annex I

EXCERPT FROM COMMISSION RESOLUTION 55/

20. The Economic and Social Commission for Asia and the Pacific
1. Expresses appreciation of the initiative of the Philippines in promoting international cooperation in information technology by sponsoring the Second Global Year 2000 Summit at Manila in March 1999;
2. Urges all members and associate members to take early and effective action to bring their countries to the highest possible level of year 2000 (Y2K) readiness, not only for their own benefit but also to minimize adverse Y2K effects on vital sectors of other countries;
3. Calls upon members and associate members to practise open disclosure policies and enhance the sharing of information across borders with regard to Y2K readiness, best practices, lessons learned, embedded systems, and Y2K failures and successes;
4. Appeals to all members and associate members to forge regional and global cooperation to ensure a timely and effective response to the Y2K challenge and to work together to address the threats that the problem poses globally;
5. Urges all member States to expedite the remediation of their systems to guarantee the continued availability of basic infrastructure services, to use public information channels to urge the private sector to become Y2K-compliant and to disclose its readiness status, and to develop contingency plans to address the possibility of large-scale failures in the public and private sectors;
6. Calls upon all concerned United Nations bodies and specialized agencies, intergovernmental and non-governmental organizations and other members of civil society to enhance and combine their efforts to support regional and national Y2K initiatives;
7. Calls upon the World Bank, the Asian Development Bank and other multilateral organizations to review and increase their level of combined support for national and regional Y2K efforts;
8. Requests the Executive Secretary to report to the Commission annually until the fifty-seventh session on the progress achieved and the difficulties encountered by members and associate members in addressing the Y2K problem;
9. Further requests the Executive Secretary to seek extrabudgetary resources:
   • To monitor closely actual and potential sources of funding to support the efforts of the developing countries, in particular the least developed and landlocked countries, and the economies in transition, to address the Y2K problem and to facilitate the dissemination of relevant information on those funding possibilities to members and associate members;
   • To continue to facilitate the exchange of national experience on the Y2K problem, and the sharing of information and expertise available with various members and associate members, including through the use of the Internet, before, on and beyond 1 January 2000;
   • To collaborate fully with all concerned United Nations bodies and specialized agencies, and intergovernmental and non-governmental organizations, in facilitating the provision of support and technical assistance for members and associate members that find difficulty in addressing the Y2K problem;
   • To ascertain from United Nations bodies and specialized agencies, by 30 September 1999, the state of Y2K readiness in the region in their respective areas of competence.

Annex II

CENTRAL GOVERNMENT SUPPORT TO THE PRIVATE SECTOR IN ADDRESSING THE YEAR 2000 PROBLEM 

________________

Source: ESCAP survey on the year 2000 problems in computers and embedded systems: preparations and incidents.

Annex III

YEAR 2000 FAILURES IN THE ESCAP REGION

_______________________

Sources: "Y2K aftermath - Crisis averted. Final Committee report. Summary of Committee findings 29 February 2000". The United States Senate Special Committee on the Year 2000 Technology Problem <http://www.senate.gov/~y2k/documents/final.pdf>; "International Y2K glitch report". International Y2K Cooperation Center <http://www.iy2kcc.org/Glitches2000.htm>; and "ESCAP survey on the year 2000 problems in computers and embedded systems: preparations and incidents"