GIIC Eyes E-commerce Growth

MANILA (08/16/2000) - A recent report by market researcher Gartner Group Inc. projects the value of worldwide business-to-business e-commerce to leap to US$7.3 trillion in the year 2004, or about 7 percent of total global sales transactions, up from $145,000 million in 1999.

The latest market forecasts also project the volume of e-commerce conducted globally to grow to $1.2 trillion by 2002. In Asia- Pacific alone, according to another market analyst group, Forrester Research Inc., e-commerce will surge to $1.6 trillion in 2004.

These staggering statistics speak of how e-commerce has changed the world of business. The Internet economy has tapped new sources of funds, created new financing models, and spurred the development of venture capital.

GIIC managing director W. Bowman Cutter, who discussed these studies during last month's conference of the Global Information Infrastructure Commission (GIIC) here in Manila, said U.S. investors are pumping a record $56 billion yearly into American venture capital funds, compared to just $3 billion in 1990. In the first quarter of 2000 alone, some $22.7 billion went into start-ups, compared with $6.2 billion in the first quarter of 1999, Cutter said.

But recent findings by Computer Economics, an e-business adviser to corporations, suggest that while e-commerce will continue to boom in the next decade, Africa, South America and parts of Asia could be left out of the trade revolution. Computer Economics also estimates that only 6 percent of e-commerce will be transacted in the said regions this year, with the figure to rise only by 1 percent by 2003.

To back up this data, Cutter also pointed to a recent survey of CEOs conducted by A.T. Kearney, which revealed that the CEOs of North American companies reported a higher level of e-business activity for their firms -- 81 percent compared with 72 percent in Europe, and 65 percent in both Asia and Central and South America.

However, the survey showed that perceptions of the current and future impact of e-business varied greatly by region: 78 percent of North American executives said the Internet had changed the way they do business, compared with 64 percent of Asian executives, 46 percent of European executives and 29 percent of Central and South American executives.

"More than half of the North American executives cited the impact of technology and of e-business as their main challenge over the next three years. This compares to 25 percent for European executives, 20 percent for Asia and 18 percent for Central and South America," Cutter said.

On the other hand, Cutter acknowledged that e-commerce in Asia has led to the rise of innovative new companies and new players, and has also led to the restructuring of large corporations to make them behave like their smaller, leaner, and meaner competitors.

"Asia need not follow an American or Western model of development," Cutter said. "In fact, Asia presents a new model to the rest of the world as an example of how economies can adapt to the new information economy, technological innovation and dynamically changing markets."

Cutter's advice is for Asia to continue to secure a legal environment for e-commerce, continue liberalization and opening of the telecom market, and push for e-governance.

To prove that Asia is riding the crest of the wave of the IT revolution, Cutter pointed to how Japan, Korea and Thailand tapped IT to recover faster from the Asian economic crisis.

"For each of these economies, IT was the main stimulant and driver of economic growth. The data speaks for itself," said Cutter.

- Japan's Ministry of Post and Telecommunications (MPT) predicts that mobile Internet access will drive up the number of Japanese Internet users to 77 million by 2005. The MPT currently estimates that at the end of 1999 the number of users stood at 27 million, which equaled a penetration rate of 21.4 percent.

- Almost a quarter of Koreans (10 million) were online at the end of 1999, and that figure is now over 10 million, according to two different recently released surveys. Koreans are also warming to e-commerce, according to Internet tracking firm I-Click, which says that 3.3 percent of Koreans (920,000) have bought online. Total online purchasing in the second half of 1999 amounted to 202.9 million won ($178 million) and each shopper purchased 2.8 times on average.

- Thailand will see a 50 times increase in e-commerce from its present level in the next three years, according to statistics from Thailand's National Electronic and Computer Technology Center. It projects that e-commerce in Thailand will explode from 1.22 billion baht ($31.2 million) last year to 50 billion baht ($1.28 billion) in 2003. Thailand currently has an estimated 800,000 to one million Internet users, the report said.

In addition, Michio Naruto, GIIC commissioner and special representative from Fujitsu Ltd., said the revenue from Internet subscribers in the region was $2.9 billion in 1996 and is estimated to be $14 billion by 2001.

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