Asian Governments Try to Find Role on Internet

Governments around the world are grappling with the steep challenges and enticing opportunities posed by the Internet. The Net's prospects include a new platform for commerce, a flood of information newly accessible to the public and a shift in the economic order from old to new industries.

For Asia, where most countries are working overtime to catch up with the developed world's economies, and many at the same time are undergoing political and social transformation, the Net presents especially urgent issues. What is worse, by commanding attention and drying up investment resources, the region's financial crisis in the late 1990s may have delayed the emergence of the Internet here while the U.S. and Europe were advancing at full speed to embrace the Net.

Several issues rose to the top of agendas last month as Asian government officials and private-sector executives -- an increasingly common pairing as the region responds to the Internet -- gathered in Manila at the Asian Regional Conference of the Global Information Infrastructure Commission (GIIC).

The Internet to-do list that emerged out of the three-day event was lengthy: building out communications networks, putting Net access devices in the hands of citizens, setting up a legal framework for using the Internet, putting government itself online and bolstering education to increase Asia's competitiveness.

Leaders also took aim at the looming challenges Asian countries face as they try to wrest victory in a revolution that is sweeping into the region from North America and Europe. The challenges include often limited resources, inertia in governments and the astounding political and social diversity among countries that now see an urgent need to cooperate.

The stakes are high, officials said at the conference and in later interviews.

"No technology other than information technology has been more hospitable to developing countries," said Jaime Augusto Zobel de Ayala, president of Philippines conglomerate Ayala Corp. and a GIIC commissioner. Because investment capital is drawn to technological innovation, a skilled and creative work force is now more important than money in the bank, opening up economic potential for less prosperous nations, he explained.

Others are not so sanguine.

"Unless we prepare ourselves right away, it will be difficult for us to benefit from this window of opportunity," said Randeep Sudan, special secretary to Chief Minister N. Chandrababu Naidu of India's Andhra Pradesh state.

One of the first moves by Asian governments has been to lay down the law, updating legal systems to deal with electronic transactions, Internet crimes, trademarks and copyrights and other issues. Last month's conference opened with Philippines President Joseph Estrada signing -- electronically -- an executive order to implement detailed rules for carrying out the country's Electronic Commerce Act.

The law makes electronic signatures and contracts legally binding and requires the government within two years to offer all its forms and accept all payments in electronic form. It also removes ISPs' (Internet service providers') liability for messages they transmit and addresses the biggest Net legal issue to hit the Philippines -- and perhaps the world -- in the past year: hacking.

The law imposes mandatory prison terms and fines for hacking attacks, such as the dissemination of the ILOVEYOU virus believed to have originated in the Philippines earlier this year.

Laws to smooth the road to online transactions likewise have been passed recently in Singapore, Thailand, India and Hong Kong as governments strive to make electronic commerce the legal equivalent of conventional shopping and business.

However, revamping long-developed commercial laws to fit the new Net environment is fraught with complications, government officials and industry participants said.

Attempts to tax e-commerce transactions and income, for example, raise questions such as how to audit online business, whether Internet content is a product or a service and even international issues concerning tax jurisdiction, officials and observers said.

One former Philippines tax official at the conference expressed concern over which country's tax laws may take precedence when business occurs across borders. She warned the Philippines tax authorities might be at a disadvantage when negotiating tax treaties with countries that have more expertise in this area. That situation could cost the Philippines a big chunk of revenue from cross-border transactions or multinational companies' profits.

"I hope the issue of competition (for tax revenue) will not come into play," said Carol Carreon, now managing director of SAP Philippines.

Whereas many governments elsewhere in the world have already brought a number of their functions online, a wave of state online initiatives is just now sweeping Asia. Observers cite limited infrastructure and funds, as well as the lack of coordination among government departments, for the lag in Net adoption.

In addition to the Philippines, India, Thailand, Japan and other Asian national governments are now deep in the process of harnessing the Net for their own services.

Thailand's effort was launched in 1997, but promptly held up when the financial crisis sliced into the government's resources, said Junavit Chalidabhongse, a researcher at the National Electronics and Computer Technology Center (NECTEC), which is leading the initiative. NECTEC is now moving steadily forward, replacing a hodgepodge of incompatible departmental networks with a single Internet Protocol-based government intranet. Limited funds still constrain the work, he said.

"It won't be as big as we thought in the original plan, but we have to start from what we have now," he added.

With strong backing from the top levels of government, NECTEC also is assigning Internet evangelists in each department to make their teams comfortable with the technology.

The drive to make more government information available on the Web, as well as services such as driver license applications, extends even to some provinces in China.

As innocuous as initiatives such as these may seem, in the long run, putting more government information online may represent a significant change and trigger an even greater transformation in the status quo.

"There should be a level of transparency unheard of in the history of ASEAN (the Association of Southeast Asian Nations)," said Roberto Romulo, chairman of the e-ASEAN Task Force, in a speech to the conference. The task force is spearheading an effort to help the group of nations jointly address e-commerce competitiveness. The 10 countries in ASEAN are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

The Internet poses dilemmas for governments that are especially acute in some tightly controlled Asian states, John Ure, director of the Telecommunications Research Project at the University of Hong Kong, said in an interview this week. For example, any state that wants to promote development through e-commerce must strike a balance between access to the Internet and the perceived need to control information for national security.

"The more authoritarian the government, the more the contradictions appear to be, but in the longer run they know that as e-commerce will be of major importance to their economies, they can only temporarily control Internet access," Ure said.

Eventually, with more information in the hands of citizens, repressive government regimes such as those in Myanmar or Cambodia will have to change, he added.

"They'll have to start moving toward a system where the rules and laws of society are based upon a legitimization that is derived from (the people's) views," Ure said. He pointed out, however, that those popular views may not be ones considered democratic in the West.

The Chinese government, which has made e-commerce a cornerstone of its drive for economic development, is walking the line between promotion and control of the Internet through a process of give-and-take that isn't widely understood, according to Duncan Clark, founder and managing director of BDA (China) Ltd., a research firm in Beijing.

Tight Chinese government restrictions on data encryption that were handed down last year only to later be rescinded are an example of the kinds of trial balloons floated frequently as policy evolves. Decrees are issued by dozens of government agencies, alone and in coalitions, that want to regulate aspects of the Internet, Clark said -- sometimes because they see economic gain for themselves. If the rules appear unenforceable or opponents can muster more support at the higher levels of government, the rules' proponents will back down.

"It's almost a consensus form of government," Clark said. "There is much more debate and discussion going on here than is often understood." Over time, China is growing more pragmatic in its approach to the Internet, he added.

Beyond immediate concerns of how to regulate the forces that the Internet has already introduced, Asian governments are looking to extend and revamp education for future advantage in a knowledge-based world economy.

A "Smart Schools" pilot program in Malaysia, for example, is designed to both expose more students to computers and shift the education system from rote learning toward creativity and innovation, said Radzi Mansor, chairman of Telekom Malaysia Bhd., in a presentation to the GIIC conference.

In almost all Asian countries, however, a shortage of resources -- including bandwidth, which has been limited partly by long-standing telecommunications monopolies in many Asian countries -- forms a barrier to bringing citizens into the Internet economy.

"The first and most important constraint we perceive is the paucity of bandwidth," Sudan, of Andhra Pradesh, said.

Limited funds demand creative solutions. Ramon "Ike" Villareal Seneres, director general of the Philippines' National Computer Center (NCC), is creating a program to put more computers in schools in remote areas of the country -- but not just for students. After school hours, the computers will be available to the community as a whole to engage in e-mail, further education and even small businesses, he said.

Governments across Asia are cooperating with the private sector on project after project. Where a free right-of-way along a public highway in India or seed money for the Smart Schools initiative in Malaysia may be contributed by government, the investment in fiber-optic cable or in computers is up to private corporations.

The GIIC, itself a private-sector-led group that helps to promote the development of information infrastructure and IT policies, launched subgroup GIIC Asia at the Manila conference. The subgroup will work to involve more small and medium-sized businesses in policy development, said Carol Ann Charles, deputy director of the GIIC, based in Washington.

Private-sector representatives at the Manila conference, for the most part, applauded Asian governments' Internet efforts.

However, one Chinese entrepreneur warned against too much effort by governments to promote or regulate the Internet.

Edward Zeng, founder of Beijing-based e-commerce company Sparkice.com Inc., said the Internet is like a baby with government taking the parental role.

"If the parents give the baby an accurate size of shirt, but the baby grows fast, the baby could be hurt," Zeng said. "It's very important for the parents to give the baby a casual sweatshirt to give them enough room to grow.

"That's why in Silicon Valley there are so many computer geniuses in casual T-shirts," Zeng quipped.

He acknowledged that convincing governments to sit back and let e-commerce flourish may be difficult in some Asian countries.

"Based on the history of long-term economic planning... it is very hard to convince the people whom most of their lives have been in control to give up control," Zeng said.

The rise of the Internet and global e-commerce are also giving rise to close cooperation among Asian national governments. At its next top-level meeting in November, ASEAN is set to ratify an action plan from the e-ASEAN Task Force that calls for all ten member states to adopt consistent e-commerce laws by 2003.

While large countries such as China and the U.S. draft nationwide laws covering e-commerce, smaller states must band together to create a bloc in which companies can easily carry out electronic trading, according to e-ASEAN Chairman Romulo.

"We will be bypassed by the world unless we are seamless in the area of the Internet," Romulo said.

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