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January/February 1997
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The Internet and Global Trade: Potential for the Asia-Pacific Region
By Madanmohan Rao
madanr@planetasia.com


With the end of the cold wars and an increase in globalized economic activity, Asia is emerging as the world's largest marketplace, fastest-growing economy, and most vibrant region. That emergence is being accompanied by the growth of macroeconomic frameworks at the global (e.g., World Trade Organization) and regional levels (e.g., Asia Pacific Economic Community [APEC], Association of Southeast Asian Nations [ASEAN]. Much of international economic activity now has an increasing information content, which often is stored and transmitted using electronic, digital technologies.

In the context of the four trends of globalization, regionalization, informationization, and digitization, the global Internet is being regarded as the most cost-effective multimedia and most versatile publishing and communications platform. Several digital communications networks are already being used for international business activity, such as Advantis, IBEX, MCIMail, SITA, and TIPS. However, the Internet offers many advantages over those networks: the Internet is much more global in its reach, it is based on open standards for communications protocols, it offers more multimedia capabilities, and as a national information infrastructure it can be used by many sectors of society: business, education, government, news media, and public health.

Businesses around the world are harnessing the Internet to save costs of communication, publishing, customer service, and advertising, as well as to find new markets and sources of revenue. At the national level, the Internet can also be used to boost exports and imports by providing information not just on business products and services but also on other trade-related matters like banking, communications, customs, freight, insurance, market intelligence, shipping, and tariffs.

Within Asia, six frameworks can be used for expanding trade via the Internet: unilateral, bilateral, regional, multilateral, sectoral, and ethnic.At the unilateral level, trade information is provided by commercial, regulatory, and government actors in a single country. For instance, governments and chambers of commerce in Hong Kong, Indonesia, and South Korea have Web sites providing information about conducting trade with each of those countries. Examples of bilateral ventures include joint U.S.-Japan Web-based services that facilitate exchange of information about business opportunities in the two countries. Value-added features include translation capabilities between English and Japanese.

Regional ventures are still in the formative stage; they include Internet-based information services about trade in the APEC and ASEAN blocs (similar services already exist for other regional trade blocs like the North American Free Trade Agreement). Some regional ventures have also been launched by corporate initiatives such as Hong Kong-based Intermedia Corporation's inasia.com Web directory.

At the multilateral level, the best example of an international network for trade is the Global Trade Point Network (GTPN), created by UNCTAD (United Nations Conference on Trade and Development). The GTPN was launched as part of UNCTAD's trade efficiency initiative involving 171 countries. The membership of the GTPN includes over 20,000 trade bodies in nearly 100 countries, which exchange trade-related information on the Internet via the Web and gopher. Coordination of the GTPN takes place via regional organizations like ASEANet and national organizations like AIT, AUSTRADE, JETRO, KOTRA, and SNS.

Instead of grouping by region, businesses can provide trade information by grouping according to category of product or service. For instance, several specialized Web sites offer information about the health care and software industries in the United States, the microchip industry in Japan, and the manufacturing industry in Asia. Such organized, clustered services can offer higher-quality information about trade opportunities within a specific business category.

The sixth framework for Internet-based trade services is based on ethnic origin. Ethnic groups with a huge diaspora population, such as Chinese and Indians, have created specialized online trade services like the Overseas Chinese Business Network and the IndiaWorld Communications Web site, with business information specially geared toward those ethnic groups. Networks for the Vietnamese diaspora are in the formative stages.

So what are the overall prospects for continued growth of the Internet as a trade platform in Asia? First of all, Asia constitutes today's most dynamic region in the world economy. According to the UNCTAD 1995 Report on Trade and Development, the Asian economy grew by 4.8 percent in 1993, 5.3 percent in 1994, and 6 percent in 1995, outstripping that of any other region. Furthermore, growth in intraregional trade (between the countries of Asia) far exceeds trade with other regions. Finally, the growth of the PC market, networks, telecommunications, and Internet-related products in Asia also outstrips that in any other region in the world. Thus the steady growth in use of the Internet for business and trade in Asia is definitely ensured.

There are, however, several obstacles and challenges. For instance, the telecommunications infrastructure in many Asian countries is still inadequate in penetration, reliability, and quality.

Internet access in many Asian countries is still expensive, and only big or medium-size businesses can afford it. As a development priority, governments can find it hard to focus on data communications instead of more pressing concerns like food, water, and shelter. There is also concern that use of computer and communications technologies may displace certain sectors of the workforce, thereby increasing unemployment in certain cases. Besides, much of the material on the Internet is still in English; Asian countries where the dominant business language is not English will need to step up efforts to publish and translate content in their local languages for the Internet to be of significant use.

Some governments--especially those of the newly emerging economies in Asia--have yet to demonstrate the progressive vision and commitment needed to achieve effective country-positioning on the Internet. Concerns of a more controversial nature include Internet material--such as pornography--that may offend Asian cultural and religious sensitivities and Internet discussions that may be perceived as a threat to national security and political stability. The Internet also raises unresolved concerns about copyright, defamation, privacy, and taxation of transborder data flow.

Finally, the Internet itself faces many technical challenges due to its unprecedented growth, such as dealing with traffic congestion, ensuring secure transactions, and offering guarantees of reliable service.

On the whole, though, prospects for Internet-based commerce and trade, especially in Asia, look promising. Therefore, businesses and governments in Asia can look forward to a speedy ride on the information superhighway despite a few bumps up ahead. It seems inevitable that the silk routes of the 21st century will be data communications networks like the Internet.


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