IT in Asia: bridging the divide

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Although some Asian countries are world leaders in IT, not everyone is reaping the benefits, says Damon Bristow

Fresh from fretting about the impact on their economies of the 1997 economic and financial crisis, East Asia's leaders have quickly found something new to worry about: the growing gap between those within the region that have access to the latest information and communications technology (ICT), and those that do not. Known as the 'digital divide', the subject barely got a mention two years ago. But today it's all that Asia's leaders can talk about.

Witness the fact that at last July's Group of Eight (G8) summit in Okinawa, the Japanese prime minister, Yoshiro Mori, unveiled a $5bn aid package to 'help developing countries catch up with new technologies such as computer networking'. Three months later, the Japanese government brought together 35 ministers in charge of IT from across Asia and the Pacific in Tokyo to discuss the matter further. The issue of the digital divide was also a major topic of discussion at last November's Asia Pacific Co-operation summit, and the subsequent meeting of the Association of South East Asian Nations.

Asia's new-found interest in the issue of ICT has been prompted by the growing belief that the latest phase of globalisation, powered by rapid advances in technology, will have major economic, social and political impacts on Asia.

The International Labour Organisation (ILO) supports this view, stating in a recent report that: 'In the knowledge-driven economy, better global communications will increase competition between existing producers and enable new competitors to enter the market.' It also reckons that, in this new world order, countries that embrace this revolution may be able to 'leapfrog' a whole stage in their development. Those that do not, in the meantime, will find themselves falling further behind. The catch, however, is that in order to take full advantage of what ICT has to offer, policymakers and businessmen will have to change the way they look at the world.

However you look at it, the task facing the region is certainly a daunting one. To be sure, after experiencing an explosion in economic growth throughout the late 1980s and early 1990s, a similarly rapid expansion in the use of communications and information technology is now underway in Asia. A quick comparison between the 1994 United Nations World Development Report (UNWDR) and the 2000 version, for example, shows that the average number of lines per 1,000 people among 13 selected Asian nations (see table 1) has risen from 37 in 1990 to about 153 in 1998, or almost a fourfold increase. Likewise, while there were so few mobile phone users in Asia a decade ago that the UNWDR didn't even bother to use it as a development indicator, by 1998 the average figure was close to 100.

Access to personal computers is Asia is rising. And the numbers of people going online are increasing by the day: according to the latest figures over 18% of the world's 319m registered internet users are already in Asia; and this figure is expected to rise to about 24% by 2005. E-commerce - or trade between businesses (B2B) rather than between businesses and consumers (B2C) - is also taking hold in Asia, with the International Data Corporation (IDC) recently estimating that it will account for 25% of total worldwide e-commerce revenues by 2003.

Not a level playing field

The problem is that, despite these generally impressive figures, the spread of modern communication and computers throughout the region has been uneven. By way of an example, the UN estimates that, while there were an impressive 562 fixed telephone lines per 1,000 people in Singapore, 503 in Japan, and 433 in South Korea, over in Myanmar only five people per 1,000 have a phone line.

Things aren't much better when it comes to mobile telephones - only one in 1,000 people owns a handset in Laos. In China, surprisingly, only 19 in 1,000 people possessed a handset (see table 1), although the market is now growing at an impressive rate; indeed the country is expected to have the largest number of mobile phone users in the world by the end of the decade.

Access to personal computers also varies considerably, with countries such as Singapore and Japan topping the list and others such as Myanmar and Laos bringing up the rear. Asia's success at producing ICT has also been varied. According to the ILO report, much of the growth in this area has thus far been focused on China, Malaysia, Thailand, the Philippines and Taiwan, which by 1997 had become the world's third largest computer hardware supplier after the US and Japan. The rest of Asia lags far behind.

Internet access is equally patchy (see table 2); as is growth in e-commerce. It is expected that by 2005 the value of business-to-business e-commerce transactions will reach $125bn in China; $77bn in South Korea; and $55bn in Taiwan. The combined total for Indonesia, Singapore and Thailand will be $11bn. Between them these countries will account for the majority of e-commerce transactions in the region, while the rest of the region's nations will remain on the periphery.

Education may help

What to do? According to the ILO one strategy is to encourage countries to develop their ability to embrace the information revolution through better education. A number of Asian nations are doing this already. For example, Singapore provides a 70% subsidy against the cost of continuing education for software developers. The growth of India's software industry, meanwhile, has largely been based on its education system, which turns out more than 100,000 software professionals a year.

The ILO also suggests that governments should take a fresh look at their approach to 'trade policy'. It recommends that tariffs on imports of hardware and software should be kept low.

The ILO also suggests that laws should be relaxed in order to encourage foreign firms to invest money in establishing information technology production facilities, as has been the case in countries such as Malaysia. Connected to this, it advises that countries put in place laws and regulations aimed at ensuring information security, and facilitating the use of e-commerce.

The ILO's last recommendation is that any country interested in participating in the information revolution should look at ways to develop its communications and information infrastructure. So those countries that have not already done so should privatise and break up their existing state-run telecommunications monopolies. This, it is argued, will help to reduce costs, expand network (both fixed-line and mobile) coverage, and encourage growth in new areas, which the state simply cannot afford to do. With this in mind, the ILO also suggests that governments should provide guarantees for those foreign investors looking to take a stake in the process of infrastructure development.

Asia's leaders are well aware of the importance of education. Helping to establish ICT training facilities and sending Japanese IT experts out into Asia to teach locals how to use computers and the internet, for example, lies at the heart of Tokyo's proposal to tackle the digital divide in Asia. Both APEC and ASEAN have also emphasised the importance of education in their proposals. A number of individual initiatives are also underway in many of Asia's most underdeveloped countries - even the self-styled 'hermit kingdom' of North Korea has plans to establish a series of 'computer education bases' across the country.

For some governments in the region, however, measures such as liberalising trade policies and breaking up state-owned companies are a step too far at this stage. They fear that loosening control of state-owned enterprises will result in unemployment and social tensions, which in turn may undermine their grip on power. They also view the internet with alarm, recognising its potential; but believing at the same time that unfettered access to information may under-mine their grip on society.

They have consequently attempted to regulate its use. Take the example of Vietnam. In 1997 the country granted five licences to sell internet access to businessmen and consumers. However, it only allows the state-owned Vietnam Post and Communications Corporation to connect to the outside would. This allows the state to monitor data traffic and block anything that it deems to be subversive. The Chinese government has also passed reams of legislation on what people can and cannot do while they are on the internet.

Opportune time to invest

Despite these challenges, developing Asia's rush to embrace the information revolution is certain to result in plenty of new investment opportunities for foreign investors. Those companies able to provide IT training and support, for example, are certain to be popular with most governments across the region as they wake up to the need to educate their populations, as well as private companies. English language training companies may also benefit, because English is the primary language of the internet.

However, when it comes to seeking out opportunities to beef up Asia's infrastructure, most foreign companies will probably find themselves doing business in those countries such as Japan, Singapore, South Korea, and Taiwan, which have already woken up to the information revolution, or China, which is alive to its potential.

Sadly, investment opportunities in those countries that need it most will remain limited - the gap between rich and poor that already exists within the region will grow as a result.


1: Use of telephone and mobile phones - 1990 to 1998
Country
Telephone mainlines per 1,000 people (1990)
Telephone mainlines per 1,000 people (1998)
Mobile telephones per 1,000 people (1998)
China
-
70
19
India
6
22
1
Indonesia
6
27
5
Japan
411
503
374
Korea
310
433
302
Laos
-
6
1
Malaysia
89
198
99
Myanmar (Burma)
-
5
0
Pakistan
8
19
1
The Philippines
10
37
22
Singapore
385
562
346
Thailand
24
84
32
Vietnam
-
26
2

: United Nations World Development Reports, 1994 and 2000

2: Internet usage in Asia 1997-2000
Country Number of users 1997 Percentage of population 1997 Number of users 2,000(m) Percentage of population 2,000
China
200,000 (July)
0.0001
16.9m (July)
1.34
India
80,000 (July)
0.01
4.5m (March)
0.45
Indonesia
80,000 (December)
-
400,000 (July)
0.01
Japan
8.6m (September)
6.80
27.06m (May)
21.38
Korea
700,000 (February)
1.53
15.3m (July)
32.31
Laos
2,000 (July)
0.04
Malaysia
30,000 (February)
0.15
1.5m (July)
6.88
Myanmar (Burma)
500 (July)
--
Pakistan
1.2m (May
0.85
The Philippines
84,425 (August)
-
500,000 (July)
0.62
Singapore
500,000 (September)
14.7
1.74m (May)
41.91
Taiwan
1.06m (June)
5
6.4m (July
28.84
Thailand
131,000 (January 1998)
-
1m (March)
1.65
Vietnam
6,000 (June)
-
100,000 (July)
0.13

Source: Compiled from various sources by Nua Internet Surveys, http://www.nua.ie

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