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Philippines |
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Internet fever seizes Asia:
How do we catch up? |
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Source: Inquirer |
Author: Dennis M. Arroyo |
Date: 2000-02-14 |
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DID you know that the founder of
Hotmail is Indian? Sabeer Bathia sold
the e-mail service to Microsoft for
$750 million.
Other Asians are becoming multi-millionaires. They are
stampeding through the silicon rush catching fire across the
continent.
All over Asia
In Japan there are 20 million
citizens connected through
the Web. Sony is
reinventing itself, applying
the Net to varied aspects of
consumer life.
The giant is even entering
life insurance and on-line
banking. E-commerce from business to business deals is seen to
reach $650 billion by 2003.
Askul, Japan's market leader in supplying office products, is
watching its sales double as a result of its Internet marketing.
In South Korea, 7.8 million have access to the Internet. The
people are fascinated with smart phones and on-line trading. In
fact, the Koreans may be considered as ahead of the Japanese
in on-line trading--38 percent of trade volume is done over the
Net.
The market capitalization of the tech-rich Kosdaq market soared
thirteen-fold, hitting around $100 billion. Executives of the
chaebol or giant firms are leaving to form their Net start-ups.
One Internet service provider has seen the price of its shares
rocket ninety-fold.
In Taiwan, it's not surprising that 35 percent of households own
a personal computer. After all, the country is a leading source of
motherboards and laptops. Watch out: the Taiwanese want to
triple the size of their software industry.
In China, the national government is afraid of the Internet
because it can be used by pro-democracy forces. And yet there
are 10 million wired to the rapidly growing network.
In India there will be around 1,000 Net start-ups in 2000.
Successful entrepreneurs are pushing the government to make
investment easier for the tech firms. They want to set up a
venture capital industry that can raise even $3 billion a year.
Policies for riding the Net wave
The Internet revolution is roaring across Asia. The Philippines
must catch up and surf the wave of change. What policies
would help?
The Philippines should target to eventually catch up with India,
Asia's software leader. The software industry there is growing
at 50-60 percent a year.
We are a distant No. 2.
Government should set aggressive targets for information
technology investment as a percentage of GNP.
Drill the lesson to the private sector: corporations should
embrace the Net or turn into dinosaurs. This is urgently true for
service companies. They should get training on the new
technologies. Companies should become more flexible, more
lean and mean. "The old rules no longer apply as the world
shifts from hardware to software," says Sony president Idei
Nobuyuki.
Technology change is accelerating, so firms must learn to thrive
in a climate of relentless change.
Liberalize capital markets, allowing money to go to the most
promising Net enterprises. So far India has raised only $500
million for venture capital because of official restrictions. Banks
tend to shy away from lending to the Internet companies
because they don't have collateral.
Further deregulate the telecom and labor markets. The state
should not dampen high GNP growth by quickly raising interest
rates. Hiking rates can be a knee-jerk response to anticipated
inflation, as in the case of Europe's Central Bank. In the Net
economy, sizzling growth may occur with falling prices.
Set up and promote venture capital markets. A flood of initial
public offerings (IPO) is needed to multiply Net enterprises.
Shenzhen City in China has set up a $120-million venture capital
fund to develop its hi-tech industries. Other cities are copying
Shenzhen's example.
Tap expatriate Filipino talent, as the Indians are doing. When
Kanwal Rekhi visited India from his work in Silicon Valley, he
was mobbed as a celebrity. As he spoke in Bangalore on
venture capital technology he was besieged with 500 business
plans.
Upgrade the telecommunications system. I acknowledge the
point of reader Gene Arbatin that accessing a Pinoy website is
slow. Connections remind one of Manila traffic. There seems to
be much potential though in Internet connections via cable
networks.
Keep telecommunications costs low. Japan's growth in the Net
economy is being dragged down by its costly rates.
Entrepreneurs should focus on niche markets. Amazon already
dominates retail, eBay controls auctions. Pinoy creativity
should be put to use exploring new terrain. They can counter
large risk with great scope. It takes a giant market--international,
not domestic--to overwhelm the risk factor. Think global.
Insurance and pension companies should be allowed to invest
in the Net ventures.
The tech companies should be given a tax holiday of a few
years.
Venture capitalists should be allowed to maintain holdings of up
to 60-70 percent of the equity of Net companies.
Stress early literacy in information technology. In fact, India's
ruling party included in its electoral pledges the promise to make
the country computer literate.
Government should channel more manpower and funds into
engineering education. Indian universities produce 122,000
engineers per year. Around 40 percent of China's graduates are
engineers.
The Internet Era is a race in innovation. The usual traffic speed
will not do.
Write to darroyo@ic.pworld.net.ph for your comments on
Internet policy.
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