HK seen as 'e-ready', willing and able

PUBLISHED : Wednesday, 09 May, 2001, 12:00am
UPDATED : Wednesday, 09 May, 2001, 12:00am

Hong Kong has joined Australia and Singapore as one of three Asian economies to crack the world's top-ranked markets in terms of e-readiness, according to a new report from the Economist Intelligence Unit (EIU) and Pyramid Research.

The United States came first among the world's 60 largest economies that the EIU and its specialist communications and Internet division, Pyramid, ranked for their respective government's ability to push ahead with e-business initiatives.

Singapore outpaced number 13-ranked Hong Kong in e-readiness, taking seventh place.

Despite being two of the world's biggest countries and recognised for their major strides in information technology development, India and China scored poorly in the EIU/Pyramid rankings - claiming 45th and 49th place, respectively.

The report described e-readiness as shorthand for the extent to which a country or market's business environment is conducive to Internet-based commercial opportunities. It is a concept that spans a wide range of factors, from the sophistication of the telecommunications infrastructure to the security of credit-card transactions and the literacy of the population.

Countries need to tick off a long list of prerequisites, we assume, before they can stimulate the creative ferment that the US has witnessed over the past five years, the report said.

It said many economies were continuing to embrace the Internet as an ideal conduit to the global marketplace in the same manner as far-sighted companies were moving forward with their e-business projects.

The EIU/Pyramid e-readiness rankings are useful for executives keen on using the Internet to expand into new markets and also for providing a development benchmark for the economies being ranked.

What's useful about these readiness assessments is that it lets a country look at itself and make an assessment and say to itself, 'You know, if we really do want to seize this opportunity, we are going to have to make some changes', Alan Larson, the US Undersecretary of State for Economic, Business and Agricultural Affairs, said in an interview last year with the EIU ebusiness forum, the free Web site on global e-business for which the rankings were created.

Although the EIU/Pyramid ranking of the US as world leader in the e-business race was predictable, there were some surprises.

Australia, for instance, took second place to put English-speaking countries - including third-placed Britain and fourth-placed Canada - in the top four slots for e-readiness.

Nordic countries Norway, Sweden, Finland and Denmark claimed four of the next five places, thanks to their sophisticated telecommunications infrastructure, high-mobile phone penetration rate and gadget-savvy populations, the report said

In regional terms, the e-business race is hard to call, the EIU/Pyramid report said. Top scores go easily to North America and Western Europe, but elsewhere the outlook is more ambiguous.

It noted that Asia was a study in contrasts, with standouts such as Singapore, Hong Kong and Taiwan (tied with Austria at no 16) and laggards such as Pakistan (no 60) and Vietnam (no 58).

One of the conclusions that the e-readiness rankings suggested was that agility trumps size and wealth, and that this was apparent in how some Asian economies placed.

The EIU/Pyramid report said India and China scored poorly because poverty, illiteracy and infrastructure inadequacies prevent e-business from gaining critical mass in those markets.

Still, the report cited pockets of promise. It said India had a world-class cadre of software programmers and a booming outsourcing industry for everything from call centres to medical transcription.

China, on the other hand, boasts one of the world's fastest-growing Internet populations.

As far as an economy's wealth not automatically translating into e-business prowess, the EIU/Pyramid report cited the cases of Taiwan and South Korea (no 21) - both of which have a strategic embrace of hi-tech industries and broadband Internet access - to pass ahead of, respectively, Japan (no 18) and Italy (no 22), which claim higher reported gross domestic product figures than Taiwan and South Korea.

More uniform regions offered contrasts as well. Although countries in Latin America and Eastern Europe cluster at the middle of the rankings, Hungary (no 28) is a far cry from Ukraine (tied at no 52 with Romania) and Chile (no 29) is a world away from Ecuador (tied at no 50 with Iran), the report said.

Even Africa and the Middle East, where scores are generally low, boast aspiring digital economies such as Egypt (tied with Peru at no 40) and South Africa (no 35).

The new e-readiness rankings' main conclusion: policy matters.

The EIU/Pyramid report said: It is true that an entrepreneurial culture is unambiguously good for e-business. But active government support is important as well.

It noted that a prerequisite to affordable Internet access, for instance, was a competitive telecommunications market. So, for countries where a monopoly provider has traditionally supplied a large chunk of state revenues, e-business cannot take flight unless the government moves boldly and firmly to liberalise the sector.

The importance of a regulatory regime geared to e-business is clear in our rankings; it was the main factor that put Australia 18 places ahead of its neighbour New Zealand, which ranked 20th, it added.

The EIU/Pyramid rankings divided the 60 economies into four groups. They are:

  • E-business leaders - economies such as the US, Australia, Singapore and Hong Kong that have most of the elements of e-readiness in place, though there are still some concerns about regulatory safeguards.
  • E-business contenders - countries such as Taiwan, Japan, New Zealand, South Korea that have both a satisfactory infrastructure and a good business environment although certain parts of the e-business equation are still lacking.
  • E-business followers - the largest group in the e-readiness rankings - economies such as Mexico (no 34), the Philippines (no 39) and Sri Lanka (n0 43) that have begun to create an environment conducive to e-business, but have a great deal of work still to do.
  • E-business laggards - countries such as China and Vietnam which risk being left behind and face major obstacles to e-business growth, primarily in the area of connectivity.

The six categories that determine the e-readiness rankings are:

  • Connectivity (30 per cent). This measures the access that individuals and businesses have to basic fixed and mobile telephony services, including voice and both narrowband and broadband data. Affordability and availability of service (both a function of the level of competition in the telecommunications market) also figure as determinants of connectivity.
  • Business environment (20 per cent). In evaluating the general business climate, the EIU screened 70 indicators covering criteria such as the strength of the economy, political stability, the regulatory environment, taxation, and openness to trade and investment. The resulting business environment rankings measure the expected attractiveness of the general business environment over the next five years.
  • E-commerce consumer and business adoption (20 per cent). Payment and logistics systems form the backbone of this set of criteria. Here, the EIU evaluated the extent of credit-card ownership as well as the existence of secure, reliable and efficient electronic payment mechanisms, the ability of vendors to ensure timely and reliable delivery of goods, and the extent of Web site development by local firms.
  • Legal and regulatory environment (15 per cent). The EIU considered the extent of legal support for virtual transactions and digital signatures. Ease of licensing and the ability of firms to operate with a minimal but effective degree of regulation are other criteria.
  • Supporting e-services (10 per cent). The EIU says no business or industry can function efficiently without intermediaries and ancillary services to support it. For e-business markets, these include portals and other online intermediaries, Web-hosting firms, application service providers, as well as Web site developers and e-business consultants.
  • Social and cultural infrastructure (5 per cent). Education and literacy were necessary preconditions to a population's ability to navigate the Web and drive future domestic Internet development, the EIU said.