Role of Government Regulation for Developing Countries

The ‘Information Age’ represents a clear opportunity for increased intra-regional trade. Information technology and telecommunications are regarded as essential to the economic success of countries and expenditure in this area is continuing in spite of the economic difficulties. Better communication leads to better business relationship.

Competition is essential to reduce costs and accelerate the introduction of new technology. Governments should stimulate this by promoting increased liberalization, harmonization of regulations and standards for the best practice. On a general level, the stability of political, social and economic condition is the very important pre-equisite for the better competition.

The more transparent and non-discriminatory regulation will stimulate the competition rate in this sector. 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.

A regulatory challenge in increasing the competition rate 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.

Small and Medium Enterprises is the important part of economic structure that support other multinational company (MNC). One issue the SMEs face is the lack of time and resources to easily access information, assistance and business partners. An ICT network aim them to increase business information flow and it can provide them with consultancy ad business-matching services.

Create a culture and infrastructure which supports the use of modern ICT applications, will stimulate the better business climate and bigger opportunity, including for SMEs. Clear and transparent regulation, as well as legal certainty is important to give private sector the confidence to make long-term investments.

The protection of investment should be assured under applicable bilateral agreements in addition to far reaching transparency of the existing legal system, including legal provisions and regulations of proven confidence.

A comprehensive official web site is needed for both transparency and facilitating investment. It will include information or links to information concerning the promotion agencies, investment climates, key industrial sectors, recent investment news and bilateral investment treaties in force.

Tax reducing for high technology equipment and also promoting Internet café will stimulate the investment rate and accelerate the ICT penetration program, particularly to rural area.

Procedures and legal framework to protect Intellectual Property Rights (IPR), copy right and customers, that avoid disputes concerning the reach of national laws take on a new dimension and also challenge the potential effectiveness of Internet Laws.

Effective interconnection regulation is key for bridging the digital divide. It is cited as vital to ensure the goals of maximizing the productivity and efficiency of rapidly growing networks and extending those networks. Effective interconnection frameworks also provide benefits to a host of other key actors. Network operators benefit from increased demand. Workers benefit from increased employment. Economies expand, and governments benefit from the tax revenues. Societies overall benefit from new applications that would increase their welfare.

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.


In generally the role of government:
- Improve the better education program to fulfill the demand of ICT operators / investors of skilled employee.
- Increase private sector participation.
- Open up the basic telecommunication to the wider range of players and investors.
- Open up the competition climate.
- Monitor the tariff structure that must be cost oriented.
- Ensure reasonably priced access for schools, universities, libraries, and other public service institution.
- Consider providing grants and demonstration projects to aid local content production at initial stages.
- Prepare the legal framework to protect IPR, copyright and domain name.
- Set up the legal framework for disputing problem.
- Promote the legal framework to protect the customer.
- Reduce tax for high technology equipment.
- Extend the ICT infrastructure and access to rural area.
- Extend the connectivity with other countries.
- Promote dissemination of Internet café by private players to strengthen the ICT presence.
- Reduce some bans, such as call back ban and IP telephony restriction.
- Promote the development of ICT access for SMEs, in particularly to offer better connectivity to global market and resources.
- Set up the effective interconnection regulation.



prepared by Indarti Primora Barlianta Harahap
Medio 2002
for ICT Seminar at Antigua (Guatemala)
organized by NAM organization
presented by Indarti Primora Barlianta Harahap