Asia is poorly prepared for the impact of e-business and without concerted action is set to lag Europe and the United States, according to a study by the Economist Intelligence Unit. Estimates by Pyramid Research, the EIU's communications division, show that by 2004 revenues from Asian business transactions over the Internet should reach almost US$300 billion, from US$31 billion last year - but this will still leave it trailing behind the US and Europe. The EIU said the main problem lies in 'teledensity', and the relative lack of phone lines, Internet connections and mobile phones across the region. 'E-business needs to run over phone lines. There needs to be connectivity. There needs to be a critical mass of communications infrastructure, which most of Asia does not yet have,' said Pyramid Research director for Asia, Ross O'Brien. 'To achieve this critical mass, three interconnected drivers need to be in place: committed governments; competitive communications service markets, particularly competitive local service market; and consumers and businesses with the ability and proclivity to invest in information technology and communications services.' The EIU said that in some markets in the region, these requirements were in abundance, and provided promising prospects for the future development of e-business activity. Countries such as Japan, South Korea, Taiwan and Australia account for 80 per cent of e-business revenues in Asia, and should maintain a 75 per cent level by 2004, it said. At present, 80 per cent of e-business transactions are business-to-business deals, and business-to-consumer transactions should eventually account for 23 per cent by 2004. The report comes as economists have increasingly begun to include the impact of Internet technology-related business in economies and its effect on overall growth. Earlier this week, the United Nations estimated that the so-called new economy was adding US$100 billion a year to output in the US alone, and appeared capable of achieving non-inflationary growth of 3 per cent to 3.5 per cent a year over the medium term. However, some forecasters are more confident than the EIU over the role of e-business in Asia, and last month Goldman Sachs estimated that business-to-business transactions will amount to US$440 billion by 2005 - or 10 per cent of the forecast global total of US$4.5 trillion. It said that e-commerce transactions should also boost economic growth by between 0.2 per cent and 0.8 per cent in individual countries. Goldman Sachs still concedes that e-commerce penetration is uneven, with Australia, South Korea, Hong Kong and Singapore leading the way, but countries - such as the mainland - are not expected to see the benefits of business-to-business by 2003-2004.