at the launch of the report Connecting with Asia's Tech Future
Melbourne, 26 November 2002
Emerging Opportunities in East Asia's ICT and E-Commerce Markets
Distinguished guests, ladies and gentlemen.
It gives me great pleasure to welcome you here today to launch the report Connecting with Asia's Tech Future: ICT Export Opportunities.
I congratulate Dr Frances Perkins and her team in the Economic Analytical Unit of the Department of Foreign Affairs and Trade for producing this timely report.
I want to thank Austrade for their generous sponsorship of this report.
And I particularly want to thank BHP Billiton for their valuable corporate sponsorship of EAU research.
I'm delighted to have this opportunity to talk with you today about the strengths of the Australian information and communication technology (ICT) industry and its export potential.
In particular, I'd like to focus on how business and government can maximise the opportunities available in East Asia's promising ICT market.
A New Trade Complementarity with East Asia
A new trade complementarity is emerging between Australia and East Asia in the ICT industry.
Australia's strengths in supplying advanced ICT services and producing specialised ICT equipment and software closely complement East Asia's competitiveness in mass produced ICT equipment.
For now, East Asia's demand for ICT services and software is relatively small and focused on more developed regional economies.
But this is changing as ICT investment and uptake surge throughout the region.
Australia, for its part, is a rapid adopter of ICT and e-commerce and has developed a world-class ICT services sector.
Along with microeconomic reforms, Australia's ability to apply ICTs quickly and effectively throughout the economy has boosted productivity, growth and living standards.
Australia is now the fastest growing economy in the OECD, outstripping even the pre-eminent 'new economy', the United States.
Australia's experience shows that a country does not have to be a major ICT equipment producer to achieve these gains.
Applying ICT broadly throughout the economy is, in many respects, more important.
Indeed, our ICT industry output and income have grown strongly, and ICT employment has increased twice as quickly as in the economy overall.
In the ICT services sector, ICT companies account for almost three quarters of total ICT industry value-added.
So, having developed a world class ICT industry, Australia is well placed to leverage this experience to apply and adapt ICTs to East Asia and other international markets.
The figures speak for themselves.
Since the mid-1990s, Australia's ICT services exports to East Asia have grown a strong 10 per cent per year, while globally they have grown by 6.5 per cent per year - with a considerable 30 per cent per year surge in Europe .
Australia's ICT equipment exports to East Asia have grown at a more modest rate of 6 per cent per year over the 1990s and early 2000s as labour-intensive ICT manufacturing processes moved off-shore.
Nevertheless, exports of some advanced ICT equipment - often products in which Australia has intellectual property - are doing well.
Australia's ICT Industry Growing Strongly
The healthy growth in Australia ICT exports is underpinned by a dynamic ICT and e-commerce sector that now accounts for 4.6 per cent of gross domestic product - more than agriculture, forestry and fishing.
Since the mid-1990s, ICT production revenue has risen about 10 per cent per year, with the computer services segment growing even faster at 14 per cent.
Small, cutting-edge firms, particularly in computer services, have been particularly dynamic.
Indeed, while many large ICT multinationals have operations in Australia, small firms now dominate Australia's ICT sector.
The Government is working hard to help this important and dynamic sector reach its full potential.
A recent example is the Government's Backing Australia's Ability statement, which provides a comprehensive support package worth A$2.9 billion over five years to encourage investment in technology development, including ICT.
Another example is the Government's Business Entry Point and government on line programs to reduce red tape and support e-commerce.
My own agency, Austrade, offers a range of programs to assist ICT exporters, as a part of the Government's effort to double the number of exporters by 2006.
Changes in East Asia's ICT Markets
And of course, this report contributes to the government's efforts to help Australian ICT firms succeed in East Asian markets, by analyzing recent trends in regional ICT demand, trade and investment barriers, regulations and government support.
The East Asian ICT market is indeed undergoing profound change.
East Asia is experiencing some of the fastest growth in ICT expenditure and take up in the world, boosting demand for ICT equipment, software and ICT and e-commerce services.
Telephone, PC ownership and Internet access are expanding rapidly, spurred by falling equipment tariffs, increasing foreign investment, growing government support and improving regulatory regimes and legal environments.
The report also analyses in some detail 11 major ICT markets in the region from Japan to Vietnam.
As would be expected, industrialised East Asian economies spend much more as a share of GDP on ICTs and ICT services, and undertake more e-commerce than do developing regional economies.
The advanced services-based economies of Japan and Singapore purchase over 60 per cent of Australia's ICT service exports to the region.
Most East Asian governments strongly support ICT production, and ICT and e-commerce take up.
For example, to improve ICT services, the Republic of Korea and Singapore have built broadband networks on which they provide online government services.
And many developing East Asian economies are expanding ICT training and education programs.
At the same time, many East Asian economies are deregulating their telecommunications sectors, lowering call and Internet access charges.
Deregulation creates opportunities for foreign firms such as Telstra which has established headquarters in Hong Kong and undertaking business in China, Vietnam and several other regional economies.
However, many East Asian governments recognise the need to do more to liberalise their telecommunications markets, improve IT education and strengthen the legal environment to encourage faster ICT and e-commerce take up.
Electronic transactions security, intellectual property piracy and electronic data privacy inhibiting e-commerce will also present particular challenges for many regional economies.
ICT Opportunities in East Asia
East Asia's diversity in income, education, skill levels and regulatory regimes provides varying commercial opportunities and growth prospects.
The Government and business community need to work closely to capitalise on emerging opportunities in areas as diverse as e-security, mobile data services, Internet and value-added services, public sector ICT solutions and risk management.
Austrade assists ICT businesses access markets in East Asia, through a network of regional offices and frequent business delegations to the region.
Austrade's Global ICT Team, a network of ICT specialists, can help Australian businesses expand into new markets and roll out new products internationally.
International market access will also be critically important for the growth of our ICT industries.
The Australian Government is building on significant achievements like the WTO's Information Technology Agreement to ensure trade barriers against ICT goods and services continue to fall, creating further opportunities for Australian ICT exporters.
Ladies and Gentlemen,
I can only highlight a few aspects of this broad-ranging report.
The important message I would like to leave with you today is that the remarkable complementarity between the Australian and East Asian ICT sectors will create new, attractive opportunities for Australia' s dynamic ICT businesses in the near future.
The Australian ICT industry is well placed to succeed in the competitive East Asian ICT market. Certainly the Australian Government stands ready to assist in any way it can.
Today's EAU report is an important contribution to Australia's agenda, and provides a valuable resource for business and government alike.
I reiterate my congratulations to the authors and sponsors. And I commend the report to you.
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