Mr. Barnes:

Our next speaker is Dr. Ghazie Ismail, who is the Senior Vice President of the Multimedia Development Corporation of Malaysia.


Speaker 4

Dr. M Ghazie Ismail

Senior Vice President, Multimedia Development Corporation, Malaysia

Distinguished guests, ladies and gentlemen.

When Malaysia first started the multi-media super corridor (the MSC) project in 1996, little did we realize that the MSC today would become the main engine of growth for e-commerce in Malaysia. We had at that time indicators of success for the MSC, which includes a number of companies investing in Malaysia, export of software and other related multi-media products, growth of the GDP, Internet penetration, and PC penetration, and also the number of e-commerce companies created.

Today we now have the APEC E-Commerce Readiness Guide with 6 broad categories, and we really welcome this initiative.

In my presentation today, I have not followed the 6 broad categories, but key elements based on the APEC indicators are presented.

So allow me to share with you the preliminary finding of the e-commerce readiness profile for Malaysia.

I will cover essentially four areas:

* The MSC as a catalyst for e-commerce in Malaysia

* The E-commerce readiness and impediments survey that we carried out prior to the APEC guide for large enterprises as well as small and medium enterprises

* Some telecommunication and Internet statistics

* Challenges for Malaysia

Malaysia is a small country with a population of 22 million.

It has an urban population of approximately 50%.

GDP in 1998 was US$ 74 billion. Last year it grew to US$ 86 billion, and the GDP per capita is now about US$ 4,000.

The Multimedia Super Corridor initiative is a project that intends to transform the Malaysian economy from an agricultural and manufacturing into an information economy.

And we have given ourselves a modest target of achieving this by 2020.

The project started in 1996 and to date we have 322 companies that have been granted MSC status.

We provide high broadband fiber network in this area, which provides an availability rate of 99.99%.

If the Telco does not provide this, then they will provide rebates to the customer.

There are government e-commerce projects that were embarked on two years ago, these include electronic government, the multi-purpose smart card, and smart school; this is an initiative to connect 90 schools initially, where all schools in Malaysia will be connected, and of course telemedicine.

Out of the 322 companies with MSC status, approximately 60 companies today are involved in e-commerce activities.

For companies that participate in the MSC, they enjoy what we call the MSC Bill of Guarantees.

And I think if you look at this (Slide 5), what is important here is Item 7; there is no censorship of the Internet.

I think this is quite important and crucial for the development of e-commerce in Malaysia.

In addition to that, we also provide all the necessary incentives, up to ten years tax-free status for companies with MSC status.

As part of the e-commerce enablers, the government has enacted a comprehensive set of cyberlaws.

In 1997, the parliament passed the Digital Signature Act.

This allows certification authority as well as PTI technologies to be introduced in the country.

In addition to that, there is a tightening of the Copyright Act in 1997.

The Computer Crime Act in 1997 also looks at unauthorized access of databases and there are provisions in this act that prosecute hackers very much like the recent virus that was transmitted all over the world.

And then we have the TeleMedicine Act 1997, which allows teleconsultations to be done in the country, and the recent one is The Communications and Multimedia Act. This is a convergence act that converges broadcasting technology as well as telecommunication technology, and the ministry has now merged into one ministry called the Communications and Multimedia Ministry.

We also passed the Consumer Protection Bill in 1999, and we are now drafting the Personal Data Protection Act, which will be presented to parliament later this year.

As a result of the Digital Signature Act of 1997, there are now 2 certification authorities. Essentially they are established to provide and enhance trust on the web, to legally accept and recognize electronic signatures, and also at the same time facilitate cross border cross certification.

In other words, as you know, e-commerce is borderless, you have to transact across borders, therefore there is a need to have cross-certification across borders.

And in Malaysia, to operate CA, you need a license.

And there are 2 licenses, basically one is the Establishment License and then after having that, you obtain an Operational License.

But of course, you have to go through very strict audit requirements.

The electronic payment gateway is what we call another e-commerce enabler.

And in Malaysia, MAPS together with the banks have set up this payment gateway, and it supports both SET and SSL protocols.

Let me now move on to the E-commerce Readiness and Impediments Survey for Small, Medium and Large Enterprises in Malaysia.

We carried out this survey prior to the APEC Readiness Guide, and conducted it early last year. And this survey was conducted by AC Nielson.

We took a sample of 811 SMEs and we surveyed 4 major sectors as indicated on the slides (Slide 11.)

And we found that the most ready sector in terms of e-commerce capabilities and awareness are in services and manufacturing. And these are the statistics.

If you can see this particular slide, although it is a bit small, for manufacturing and services, computer usage is quite high, access to the Internet is quite high, the fact that they have databases of customers and suppliers is also very high. However the Internet-based order taking and Internet-based order payment is a bit low, so this is an area we have to focus on to get more of the SME involved in transactional e-commerce activities.

Some of the concerns by the SMEs, these are impediments, they are the:

* High set-up costs

* Lack of technical knowledge to implement EC

* Again, the issue of critical mass

* Perception of inadequate legislation protecting IP rights

* The lack of standards for conducting trade nationwide and globally

For large enterprises, we surveyed 385 firms and 6 sectors, and found that the sectors that are most ready are in finance, consumer, wholesale/retail, and manufacturing.

Again the details are shown in Slide 14.

And if you can see this again, the issue of order taking and Internet-based order payment is very low. And again this is an area where we have to focus in order to increase more transactional e-commerce activities amongst these large enterprises.

These are some of the impediments.

Again they are very similar to the small and medium-scale industries.

But the only difference is the last item "Insufficient customers and suppliers having Internet access". Again this is an area where we have to focus.

The next item in the agenda is really the telecommunication and Internet statistics.

Do we look at the profile of the country in terms of policy directions?

The Ministry of Energy Communications and Multimedia provides this.

And then the licensing and regulatory side is through the Communication and Multimedia Commission.

We have introduced Equal Access since January 1999 last year.

The Internet and Content Policy, there is no censorship of the Internet. We encourage industry self regulation.

As for the WTO, we fully adhere to the ITA requirements.

As far as Intellectual Property Rights legislation, there is the Copyright Act 1997, as well we have signed the WIPO Treaty.

The overall telephone density is about 22%.

And if you look at the main telephone lines, there are about 4.5 million, and this is over the last 30 years.

And if you look at the cellular subscribers, there are 2.48 million, and this is over the last 5 years.

So you can easily see that the mobile users are increasing at a very rapid rate.

The network is almost 100% digitalized.

In terms of foreign equity in TELCOS, you can see we have Deutsche Telecom, Telenor Norway, and British Telecoms involved in our local TELCOS.

And in terms of ISP, we have 6 ISP in the country.

I have run a little bit short of time, so I think I will end here, and maybe there will be questions towards the end of this session.

Thank you very much.