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Internet fever seizes Asia: How do we catch up?
Source: Inquirer
Author: Dennis M. Arroyo
Date: 2000-02-14
 
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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