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Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : THE PALACE OF GOLDEN HORSES HOTEL,
KUALA LUMPUR
Tarikh/Date : 13/02/98
Tajuk/Title : THE ECONOMIST ROUNDTABLE ON
ELECTRONIC COMMUNITIES IN ASIA
1. First of all, I would like to thank the Economist
Conferences for inviting me to speak at this roundtable
on electronic communities in Asia. This discussion
could not be more timely with the rapid advance of the
`digital economy', where electronic commerce
(E-Commerce) will most certainly play an ever increasing
role. I am pleased that some of the members of the
International Advisory Panel for the Multimedia Super
Corridor (MSC) -- representing some of the best minds on
the topic -- are able to take time off to contribute to
this discussion.
2. The convergence of technologies is forcing the
convergence of industries through a common `electronic
business system' which promotes and facilitates
borderless businesses. Although still in its infancy,
E-commerce represents the new frontier that will
revolutionise the way business is transacted globally.
The Internet has matured substantially as the medium for
E-Commerce, evolving in size, global reach and
accessibility.
3. Already, the Internet has become an effective
conduit for commercial transactions, with total annual
sales of US$1.2 billion in 1996. Although small in
relative terms, this figure is expected to grow as
issues involving security, business laws and practices,
taxation, common technical standards and accessibility
to the Internet continue to be resolved. Analysts have
predicted that total annual sales over the Internet will
grow to more than US$7.3 billion by the year 2000, and
in excess of US$186 billion by the year 2005. The
magnitude and impact of this growth will have
far-reaching implications, not only in the commercial
world, but also in governance.
4. Developments in E-Commerce, which is a
manifestation of the `digital economy', bring to the
surface many related issues which challenge common and
established practices, laws and systems. In this new
`digital economy', business activities will be possible
with minimal physical movement of people, money and, in
many cases, products. Contracts and the transfer of
value and accumulation of assets will be conducted by
electronic means. Information technology, which is the
foundation of this new economy, will continue to develop
at a rapid pace and will continue to influence the
volume and the direction of economic activities. As
such, many of the existing rules which apply in today's
economy can no longer be applied in the `digital
economy'. Whether we like it or not, statistics show
that E-Commerce will become part of our lives -- very
soon in the future. We should all prepare ourselves to
embrace it, or we will be left behind and loose out as
increasing portions of the economy and world business
will be electronically transacted.
5. Here in Malaysia, we have taken the pragmatic
approach. We prefer to experiment and try out in near
real life situations rather than be swept along by
transient technologies and fads. Where possible, we
have also chosen not to merely ride the waves, but to
master them. That is why we have kept abreast with
global trends, conducted trials to study their
implications to the nation, cooperate in research and
seek to develop the appropriate strategies.
6. It is in this context that we have developed an
Information Technology (IT) Agenda to support our Vision
to become a fully-developed nation by the year 2020.
Among others, the I.T. Agenda outlines various
strategies which will help us achieve a knowledge
society through the development of people,
infrastructure and applications. We have started
building the foundation to support this knowledge
society, and this is in the form of the huge Multimedia
Super Corridor, or the MSC, which is our first major
investment in the future.
7. Some critics have labelled the MSC as an
`ambitious, grandiose mega project'. I will admit that
it is an ambitious project but it is not for us
Malaysians to implement alone. We will participate
actively of course but the MSC is for the whole world.
We conceived it as a giant test-bed for everyone to use,
everyone from everywhere. We will invest mainly in the
infrastructure, both hard and soft. The policies and
laws that we have formulated and put in place cost us
nothing, nor are the practices we have designed for the
MSC. The hard infrastructure such as fibre-optics and
other communication facilities will be put in by private
companies as part of their investment, in which they
naturally expect to make a return. Even the land will
be parcelled out and sold to investors wishing to set up
their facilities and make use of the soft and hard
infrastructures we have provided.
8. Admittedly we have to spend some money, quite a
large amount in fact, but well within our capacity. The
devaluation has eroded some of our capacity but we can
still carry on. So the MSC will go on. And it must go
on simply because the demand for the facilities we offer
is very great and very real. It is a great project not
because it is our vision alone, but it is everybody's
vision and it is they who will make it great. If I may
say so, nowhere is there a project to make full use of
Information Technology that has benefited from inputs by
the best I.T. brains currently available in the whole
world. This project is truly benefiting from the
International Advisory Panel set up to tap the ideas to
make this giant test-bed truly capable of testing out
new ideas and technologies which need a real-life
environment to prove the concepts work.
9. I am pleased to inform you that the MSC is
progressing well ahead of schedule. Response has been
beyond our expectations and to date, we have given MSC
status accreditation to 110 companies, out of which 78
is already in operation. We have, since April last
year, received 178 applications for MSC status, out of
which 39 percent are from foreign companies, 35 percent
from Malaysian companies, and 26 percent from joint
ventures between Malaysians and foreign companies.
10. Barely a year since we first launched the MSC, we
are already beginning to see the value created from the
Information Age business. Multimedia Development
Corporation (MDC) statistics on the MSC-Status Companies
show increased investment in high value-added
activities, with revenue to investment ratio of
approximately 3 to 1.
11. There are also signs showing the formation of new
service-based industry clusters, specifically in
software development, content creation, animation and
broadcasting, and telecommunications. For all the
companies which have applied for MSC status, the
combined revenue projected by the fifth year of
operations is around 13 billion Ringgit, while projected
profit for the same period is close to 5 billion
Ringgit. This is on the back of an investment of around
4 billion Ringgit.
12. Additionally, based on all the MSC applications
received, knowledge worker requirement by the fifth year
of operations stand in excess of 23,000. Recognising
this need, we have recently extended MSC status
accreditation to institutions of higher learning as one
of the measures to help fulfill the companies' human
resource needs.
13. As many of you would be aware, in order to
spearhead the development of the MSC, seven Flagship
Applications have been identified, one of which is to
create the necessary framework and infrastructure to
support E-Commerce initiatives under the Borderless
Marketing Flagship Application. Although the growth of
E-Commerce is essentially private-sector driven, there
is a need to monitor and regulate its development in
order to create the right environment for E-Commerce to
flourish.
14. Many issues need to be examined and traditional
barriers have to be overcome. One crucial element,
however, is absolutely necessary to support the growth
of E-Commerce -- the right telecommunications
infrastructure. This is where the MSC will be
especially well equipped. With a high-bandwidth
communications infrastructure to support the most
demanding of E-Commerce applications, the MSC is an
ideal base for companies wanting to develop cutting-edge
technologies and innovative business models to unleash
the full potential of E-Commerce. The possibilities are
endless. While technology developers can develop tools
to facilitate E-Commerce, such as security software and
payment systems, content developers can harness
Malaysia's multiple cultures to develop localised
content for the region and for the world.
15. Apart from bringing many exciting opportunities,
E-Commerce also presents many challenges, not only to
countries like Malaysia, but all countries wanting to
take the right steps into the 21st century. The right
approach to governance is therefore necessary in order
to ensure that laws and policies are sensitive and
responsive to technological developments.
16. The fundamental requirement for the successful
take-off of E-Commerce is trust, and the guarantee that
transactions can take place safely and securely. This
is especially true when intangible information goods and
services become economic resources and products which
are transmitted and transacted across borders. It is
therefore imperative to develop a proper system of
governance to manage this movement of information - and
knowledge-based resources with the growth of electronic
commerce globally.
17. Among the prevalent issues associated with
E-Commerce are finance-related issues such as Customs
and Taxation, Electronic Payment Systems, Internet
Banking and Internet Stockbroking. These need to be
reviewed within the context of each country's existing
financial, regulatory and legal system.
18. Others include legal issues such as having a
uniform commercial code and international harmonisation
of legal frameworks to address different business
practices and commercial codes existing in different
countries. Cyberlaws, for instance, need to address
issues relating to the assignment of liability of those
involved in E-Commerce transactions -- including
consumers, network service providers, solution
providers, and various intermediaries. The issue of
consumer protection and privacy in cross-border
transactions also needs to be addressed.
19. An effective legal framework in copyright, patent
and trademark protection is required to prevent misuse
and abuse of intellectual property and to protect
content providers and content service providers.
Intellectual Property Protection laws should also
address the issue of trademarks used in cyberspace, the
relationship between domain names and trade marks,
jurisdictional limits of registered trade marks or
copyright in data bases.
20. Another important issue is that of international
co-operation in technical standards and platforms, which
will pave the way for a common platform for smart cards,
common standards for inter-connection and
inter-operability, as well as cross-certification of
public key infrastructures.
21. Countries with established infrastructure to
support E-Commerce in terms of human resource and
quantity of service suppliers, as well as a bigger
market share and better access to the market, will no
doubt have an edge over the others. However, the
opportunity to develop E-Commerce also presents itself
to other countries in the ASEAN region which are in a
good position to leapfrog into the Information Age.
22. As such, a regional initiative may be necessary to
address the prevalent issues brought about by the
`digital economy' and E-Commerce, some of which I have
highlighted earlier. An ASEAN Framework on E-Commerce,
for instance, may provide the platform for a collective
vision of the emerging digital market place and outline
the key issues as we enter the new electronic age of
commerce. This framework will also provide the basis
for discussions to facilitate the development of an
ASEAN position to catalyse the growth of E-Commerce.
23. On that note, I'd like to reiterate the Malaysian
Government's commitment to support the growth of
E-Commerce. Through the MSC, we are dedicated to the
development of multimedia technologies that will remove
the barriers for doing business and promote borderless
marketing. We'd like to invite our ASEAN neighbours as
well as everyone interested in ironing out possible
wrinkles in the progress towards the electronic world to
join us in this endeavour.
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