ICT is a new method of communicating and improving the welfare. It should be treated like any other industries and should be regulated, but if possible it should operate and function without high government intervention. A regulatory challenge is to develop consistent and relevant regulation that can promote growth of the sector, actively encourage innovation and serve the best interest of community.
Regulatory monitoring is desirable to remove barriers to ICT development, which is including the cost of service, basic infrastructure, service and transmission supply. ICT media, in particularly Internet Protocol (IP) based is likely to form the backbone for integrated voice & data service in the future that will create some added values.
The main issues for every developed country to attract FDI and increase this sector are:
- Not to defend the certainty pricing / tariff scheme.
- Serve the best interests of community.
In general, the world is moving from an industrial to an information economy. The evidence is the rising of the ‘new economy’, drived by the information network.
The ‘new economy’ is a world in which:
- People work with their brains instead of their hands.
- Communication technology creates global competition.
- Innovation is more important.
- Investment buys new concept rather that new machines.
- Rapid change is a constant.
- ‘Light touch’ of government intervention.
- Privately owned and operated.
- IP based network.
To take the more advantages from ICT media, developed countries which have e-readiness condition, have to develop a good investment climate and strong network. Sometimes policy reviews must be done to perceive information exchange for extending the universal access.
Major challenges to e-readiness countries:
- Strong infrastructure.
- Competitive price.
- Legal system.
- Government endorsement.
- Efficient Custom, taxation & natural resources usage fee.
- Simple & transparent administration procedure.
- Security.
- Strong protection for IPR, copy rights and domain name.
- Content.
- Equal treatment of investment regulation.
It is indisputable that Small and Medium size enterprises (SMEs) as group forms an important part of the business structure of any economy. It provides an essential structure supporting the bigger organization in providing all sorts of high value added services and intermediate products as well as supplying specialized product to meet specific niches of the market. While large companies are able to develop by themselves cross-border trade and investment, SMEs lack information, financial and manpower resources and tend to focus on their domestic markets.
There is potential for more trade and investment between these economies SMEs are encouraged to develop cross-border activities. To express this potential, there is a need for a deliberate and voluntary effort be undertaken by government and private sectors in order to implement practical and effective measures. To promote the SMEs development, the usage of Internet networks is needed to improve the relevancy and quality information. E-commerce usage also can give advantages for business community, in where business community can reach bigger market, more efficient resources and other opportunity.
Lack of manpower with required skill and expertise should be taken to set up more and strong education system, including training institution geared toward the specific needs. Improved educational and health standards in developing countries contribute to foster a positive investment climate.
Besides that, promoting cultural understanding from business perspective, such as building Culture Briefing Centers that can be accessed virtually provide a good basis. An official world wide home page would enhance availability of information, encourage transparency and provide a forum for business people to explore opportunities and to communicate with other potential partners.
Lack of information about domestic market, opportunity and culture can reduce the interest level of foreign investor. Better communication leads to better business relationship.
Competition is essential to reduce cost and accelerate the technology adaptation. Some policy instruments to support private investment are needed. Government should stimulate this by promoting increased liberalization, harmonization of regulation and equal treatment with non-discriminatory policy. These includes better dissemination of information about investment opportunities, protection for IPR, non-discriminatory licensing arrangement and equal treatment of natural resources usage such as frequency usage.
The rule of law and the protection of IPR are underpinning a good investment climate. The adherence to the principals of transparency and non-discriminatory treatments by governments are essential conditions to attract FDI.
Foreign Direct Investment plays an essential role in strengthening and stabilizing the economies, including the ICT industry. It can improve the better competition rate. An investment regulatory policies should be implemented to develop a good investment climate. Stable legal, political and security framework is acknowledged to be a prerequisite to attract FDI flow.
Business community recognizes the importance of co-operating with governments to promote economic development based on sound and sustainable environment conditions. Political risk insurance schemes to encourage investment need to be further promoted by government as well as by private entities.
New and more effective programs for long-terms capital investment should be considered within existing international financing organizations. Bilateral and multilateral assistance programs could become more effective through a process of consultation and co-operation with the private sectors.
Liberal regulatory environment is needed to remove the obstacles of capital flows such as FDI transactions. Transparency and policy predictability is very important at the pre-investment decision stage. It is of vital importance that the prospective investor has complete confidence in the transparency and the policy predictability of the host country.
There should be greater enforcement of non-discriminatory laws, including:
- Equal access information.
- Common standard.
- Transparent regulation.
Measures should be taken to facilitate international trade and investment are including market access, streamlining of custom procedures, and encouraging co-operation in technology exchange. Further deregulation and liberalization of financial markets also have a vital role play in restoring the confidence of foreign investors.
Opening of investment regimes and removal or reduction of burdensome requirements and obstacles will attract more FDI. A variety of incentives, including tax breaks, R&D grants will facilitate better investment climate. An effective court-system with independent jurisdiction to which foreign investors have equal and impartial access is an important role for ensuring transparency and predictability. A well-educated labor force (including foreign language skills), low corporate taxes, tariffs and indirect taxes is needed to promote the perfect competition market structure.
The very first challenge is to expand access to the ICT media at affordable tariff. The high cost of service in many developing countries remains one of the main barriers to Internet diffusion in addition to that of the shortage of phone lines. Legislative or regulatory measures as well as suitable pricing / tariff policies must be adopted so that the ICT media can be made available for all segments of society. The tariff monitoring system should be developed to keep the reasonable tariff that is based on cost orientation.
Low cost Internet access should be provided to schools, universities, libraries, multipurpose community tele-centers or public service institutions to stimulate wider usage and ‘wire’ rural communities.
Strong programs should be developed to increase technology and computer skills among young people to fulfill the demand of ICT operators. Besides that, access to education will determine the wealth of nations and individuals.
In the digital economy, people who do not know how to use electronic information networks and services will have difficulty facing the high competition, no matter what other skills they have.
Greater awareness of the benefits of on-line access to information, especially in this information and globalization age must be actively pursued throughout society and in particularly SMEs. Using the Internet access, traditional economic activities can be made more efficient and more profitable cause people can sell their product or service directly to other countries.
No government intervention on tariff in perfect competition market structure will increase the good competition climate among the player. Perfect competitive market will decide the reasonable tariff that always figures out the balance condition between demand and supply. The high competition rate will give many choices to end customer and the other side it will be improving the quality of product or service offered.
In generally the role of government:
- Develop liberal regulatory environment.
- Implement equal and non-discriminatory treatment.
- Deregulation measures in ICT industry.
- Develop good competition system in domestic ICT market.
- Develop better investment climate to attract Foreign Direct
Investment (FDI), especially in ICT sector.
- No government intervention in tariff structure. The market should decide it.
- Open up all ICT market to a wider range of players and investors.
- Promote competition in Internet service provision market.
- Develop the strong ICT education program in all education level.
- Set up high quality human resources program to attract FDI.
- Develop the strong foreign language program in all education level.
- Implement and enforce the legal framework to protect IPR, copyright and domain name.
- Implement and enforce the legal framework for disputing problem.
- Implement and enforce the legal framework for customer protection.
- Promote a public awareness campaign for high usage of e-commerce.
- Reduce tax for high technology equipment.
- Reduce tax for importing end user (household) ICT equipment, such as Personal Computer.
- Set up a good incentive for private players that develop R&D activities.
- Promote investment promotion and protection program.
- Provide ICT access to all productive citizens.
- Simplify the licensing procedure.
- Implement the efficient procedure for natural resource usage.
- Promote the development of local part of ICT equipment.
- Promote production of local content.
- Develop transfer of technology program.
- Promote growth of Internet access market.
- Promote universal access.
- Develop the strong legal framework and international standardization for electronic signing for electronic agreement (documentation).
- No bans at all.
prepared by Indarti Primora Barlianta Harahap
Medio 2002
for ICT Seminar at Antigua (Guatemala)
organized by NAM organization
presented by Indarti Primora Barlianta Harahap