Issues on E-Commerce Development in Asia Pacific Region

1998. 3

Jin Ho Hur (jhhur@nuri.net)

Chair of Board of Directors

Asia & Pacific Internet Association

1998, APIA

Agenda

Internet Development in AP Reality Check Issues Remarks

1998, APIA

Asia & Pacific Region

1998, APIA

AP Internet Market ASEAN (Singapore, Malaysia, Thailand, Indonesia, Philippines)

diverse, highly regulated, infrastructure developing rapidly

Australia and New Zealand well-developed, 12 months behind US

Greater China Group (China, HK, Taiwan) regulated, greatest possibilities in sheer volumes

India and Sri Lanka lack basic infra, innovative with good-skilled resources

Japan the largest, rapidly developing market

Korea the second largest in Asia, rapidly developing market

Indochina (Vietnam, Cambodia, Laos) just beginning, weak infra, highly regulated (no online access)

1998, APIA

Stages In Internet Growth

Vietnam

India Thailand

PhilippinesIndonesia

China

Malaysia

KoreaHong Kong

Taiwan Japan

Singapore Australia

Source: Lotus AP

1998, APIA

Number of Hosts

(Source : Net Work Wizards)

pana

ngapore

a

l

95.1 95.7 96.1 96.7 97.1 97.7 98.1 CAGR(%)Jap a n 96,632 159,776 269,327 496,427 734,406 955,688 1,181,991 130.41

Australi a161,166 207,426 309,562 397,460 514,760 707,611 742,064 66.36Taiwan 14,618 16,166 25,273 30,645 34,650 40,706 178,914 130.45

New Zealand 31,215 43,863 53,610 77,886 84,532 155,678 174,406 77.45Korea 18,049 23,791 29,306 47,973 66,262 132,370 127,903 92.08

Hong Kong 12,437 15,392 17,693 24,133 49,162 48,660 67,359 75.61Sin g a po r e 5,252 9,208 22,769 38,376 28,892 60,674 58,313 123.09Malaysia 1,606 1,087 4,194 8,541 25,200 40,533 32,448 172.36

China 569 1,023 2,146 11,282 19,739 25,594 16,482 207.11Thailand 1,728 2,481 4,055 6,362 9,245 12,794 14,583 103.59Indonasi a177 848 2,351 5,262 9,591 10,861 10,426 289.09

India 359 645 788 2,176 3,138 4,794 7,451 174.81Philippines 334 365 1,771 3,117 3,628 4,309 4,370 135.64

Tota l344,142 482,071 742,845 1,149,640 1,583,205 2,200,272 2,616,710 96.64

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Number of Hosts

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

95.1 95.7 96.1 96.7 97.1 97.7 98.1

J apanAustrali aTaiwanNew ZealandKoreaHong KongSin g a po r e

MalaysiaChinaThailandIndonasi aIndiaPhilippines

a

ngapore

a

Australia

Japan

Korea

China

Taiwan

Fiji

New Zealand

Guam

Hong Kong

India

Macao

Philippines

Indonesia

Malaysia

Singapore

Thailand

U.S.A.

Europe

U.S.A.

U.S.A.

Sri Lanka

Pakistan

Nepal

BangladeshVietnam

Mongolia

Papua New Guinea

LegendLeased LineDial-up or X.25

Brunei

U.S.A.

U.S.A.

U.S.A.

Hawaii

Macro Map - 1993Macro Map - 1993

Australia

Japan

Korea

China

Taiwan

Fiji

New Zealand

Guam

Hong Kong

India

Macao

Philippines

Indonesia

Malaysia

Singapore

Thailand

U.S.A.

Europe

U.S.A.

U.S.A.

Sri Lanka

Pakistan

Nepal

BangladeshVietnam

Mongolia

Papua New Guinea

Available via anonymous ftp from ftp://apng.org/apng/010.map.psCopyright (C) 1995 Asia Pacific Networking Group

LegendLeased LineDial-up or X.25

Brunei

U.S.A.

U.S.A.

U.S.A.

Hawaii

Macro Map - 1994Macro Map - 1994

Australia

Japan

Korea

China

Taiwan

Fiji

New Zealand

Guam

Hong Kong

India

Macao

Philippines

Indonesia

Malaysia

Singapore

Thailand

U.S.A.

Europe

U.S.A.

U.S.A.

Sri Lanka

Pakistan

Nepal

BangladeshVietnam

Mongolia

Papua New Guinea

Available via anonymous ftp from ftp://apng.org/apng/010.map.psCopyright (C) 1995 Asia Pacific Networking Group

LegendLeased LineDial-up or X.25

Brunei

U.S.A.

U.S.A.

U.S.A.

Macro Map - 1995Macro Map - 1995

Hawaii

Australia

Japan

Korea

China

Taiwan

Fiji

New Zealand

Guam

Hong Kong

India

Macao

Philippines

Indonesia

Malaysia

Singapore

Thailand

U.S.A.

Europe

U.S.A.

U.S.A.

Sri Lanka

Pakistan

Nepal

BangladeshVietnam

Mongolia

Papua New Guinea

LegendLeased LineDial-up or X.25

Brunei

U.S.A.

U.S.A.

U.S.A.

Laos

Cambodia

Hawaii

Macro Map - 1996Macro Map - 1996Does not include International NSP Backbones

EuropeNew Caledonia

Australia

Japan

Korea

China

Taiwan

FijiTongaVanuatuSolomon Islands

New Zealand

Guam

Hong Kong

India

Macao

Philippines

Indonesia

Malaysia

Singapore

Thailand

U.S.A.

Europe

U.S.A.

U.S.A.

Sri Lanka

Pakistan

Nepal

BangladeshVietnam

Mongolia

Papua New Guinea

LegendLeased LineDial-up or X.25

Brunei

U.S.A.

U.S.A.

U.S.A.

Laos

Cambodia

Hawaii

Macro Map - 1997Macro Map - 1997Does not include International NSP Backbones

EuropeNew Caledonia

Seychelles

1998, APIA

Reality Check Internet infrastructure development

Is getting stronger, but still needs further development, especially on regional backbone

Has been largely in sync with economic development stages Regional hubs :Japan, Hong Kong, Singapore, Australia

E-Commerce efforts Are emerging; not yet a significant market driving force, but mostly

entrepreneurial efforts or long-term investment Most efforts are targeting at domestic market with a few regional ones Few, if any, success stories yet Many are still confused on the proper business model Many eyes on business-to-business, rather than business-to-

consumers. Few actual developments in reality

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E-Commerce Examples

Cases Aggregation: eg. asia-online.com News services: eg. Pointcast Asia Online shopping: numerous Feature services

Real estate information, stock information, entertainment, ...

Local information: eg. Digital city guide

Remarks A number of trial/speculative services Few, if any, mission critical services yet: eg online stock trading

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Reality Check

Immature marketLow Internet penetration

Lack of confidence

Lack of infrastructure- Financial, telecom

Few business cases

Limited services/apps

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Reality Check Financial infrastructure

Lack of readily-available payment system Lack of credit analysis and notary system applicable

Telecom infrastructure Low Internet penetration ratio :

AU/NZ highest per capita world-wide, Japan reaching 10% Insufficient regional backbone

Confidence of consumers and providers Lack of real world utilization of information: distribution, trading, real-

estate, stock, …. Concern on security Concern on dispute resolution and liability issues

Building business Cases Task of mapping real world applications vs creating new apps Task of making success cases

1998, APIA

Observations Prioritization is needed to handle diverse issues. In short term, market development is of higher priority than

policy/regulatory issues, assuming some changes to current impediments, especially limitations in the financial system.

Immediate study for policy/regulation is needed for facilitating E-commerce development in longer term.

In mid-to-long term, a consistent and transparent policy framework is essential for continued market growth.

Policy framework is to facilitate the realization of the real world systems on Internet consistently and transparently.

Some thoughts are to be given to the policy framework to address peculiarity of commerce over Internet, eg. Global nature of trades over Internet.

1998, APIA

Issues- Immediate

Mostly, market development issues

Financial infrastructure Readily-available and interoperable credit card payment

Building business cases Pilot projects : maybe government initiation e.g. singapore.com

Study on legal, policy, and regulatory issues

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Issues- Mid-Term

Financial infrastructure Interoperable e-payment systems/standards Credit analysis/information for individuals/incorporations Building certification infrastructure: e.g. CA

Security Interoperable standards for cryptography, e-signature, ... Transparent policy, not impeding private sector efforts

Legal and regulatory issues Legal status of e-documents, e-signatures, … Taxation and customs

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Issues- Long-Term

Uniform “Commercial Code” Legal status of electronic contracts, electronic documents,

electronic signatures,… Dispute resolution and liability Reflection of real world practices Trans-border issues are of particular importance.

E-Payment Interoperable, diverse payment methods Considerations for common currency for intra- and inter-

regional trades

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Remarks

Proper policies and standards are required, but market development is of higher priority initially.

“We are not creating an entirely new animal.” Most issues are closely tied to real world economic issues. Financial infrastructure Policies and regulations

Infrastructure is to be institutionalized as soon as possible to facilitate private sector efforts Especially, financial infrastructure

1998, APIA

Remarks

Policy and regulations are not to restrict market development Consistent and transparent

Issues specific to each economy/region should be considered Different standards on value Currency