Old ways may stifle Net-fuelled evolution

Countries with entrenched corruption may face difficulties as they seek to transform from manufacturing-based to knowledge-based economies, according to the Political and Economic Risk Consultancy (Perc).

In a report on the trend of corruption in Asia, the think-tank pointed to the impact the Internet was having on business and the importance of a transparent commercial environment in that transition.

Companies were increasingly focusing on links further up the value chain into service-related industries, moving away from raw materials and manufacturing as margins on such products became more commoditised, it said.

'Demographics will ensure that Asia continues to play a prominent role in global manufacturing, but if this is not where the profits are concentrated, it will be increasingly difficult for countries to earn the surplus funds they need to invest in their futures.' However, with service-based businesses no longer as reliant on the location of raw materials or cheap labour as the prime consideration for their base, they were instead looking at other factors such as political stability and transparency, the report said.

'The knowledge-based sector likes a transparent environment to work in,' said Perc managing director Bob Broadfoot.

Economies that were able to keep corruption in check - or at least had an effective legal system to deal with the problem - therefore stood a greater chance of attracting funding for business ventures in the new economy, Mr Broadfoot said.

He highlighted the recent success Richard Li Tzar-kai's Pacific Century CyberWorks had in raising equity and attracting high-quality investment partners, despite its unproven track record as a business.