ADDRESS OF DR. YO MARUNO DEPUTY TO THE DIRECTOR-GENERAL AND MANAGING DIRECTOR TO THE HIGH-LEVEL FORUM ON CITY INFORMATIZATION IN THE

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1 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION ADDRESS OF DR. YO MARUNO DEPUTY TO THE DIRECTOR-GENERAL AND MANAGING DIRECTOR TO THE HIGH-LEVEL FORUM ON CITY INFORMATIZATION IN THE ASIA-PACIFIC REGION: SOUTH-SOUTH COOPERATION DAY 25 MAY 2001

2 1 Your Excellency, Distinguished Speakers, Ladies and Gentlemen, On behalf of the UNIDO, I should like to thank you for the opportunity to address this distinguished audience on the occasion of South-South cooperation day. The topic on which we are focusing in this part of the programme enhancing South-South cooperation to narrow the digital divide is particularly pertinent. Today, developing countries are facing one of the greatest economic and, indeed, social challenges of our age: the information revolution. As I emphasized in my address to the Forum yesterday, the information revolution is as formidable as the industrial revolution of nearly three centuries ago. While that momentous upheaval in manufacturing and production took 200 years to realize its full potential, the information revolution has leapt the gap in a mere

3 2 seven years, since it was sparked off by the use of Netscape, in The ability to reach 20 million persons can be termed mass media. Radio took 40 years to achieve this status. Television needed 15 years. The Internet achieved the same impact within only four years. In the ensuring period, e-commerce has been revolutionizing the world, becoming one of today s main engines of economic expansion. But, instead of the factory-based growth of the eighteenth century, today s revolution has created virtual businesses, bounded only by the human imagination and the speed of the latest electronic technology. However, the information revolution s promise of widespread prosperity has yet to be fulfiled. There is a conspicuous gap between those in the fast lane of the information highway and those who find themselves left increasingly far behind. In 1999, for example, North America and Europe accounted 88 per cent of the world s Internet hosts, while the share of developing countries was less than six per cent. Likewise, disparities within

4 3 the developing world, itself, are readily apparent. While here, in China, the dynamic coastal areas have a density of telephone lines close to the OECD average, in Africa less than two per cent of the continent s population has access to telephone services. As these figures reveal, the challenge to connect is still immense. This is especially true for the developing world s millions of smalland medium-scale enterprises, or SMEs. To help them meet the challenge is all the more pressing since they play a vital role in economic growth, while generating jobs and making a major contribution to long-term poverty reduction. That is why UNIDO recently joined forces with Ericsson Consulting to study emerging trends in electronic and mobile commerce for SMEs in developing countries. Based on initial case studies in Egypt, Sri Lanka and Uganda, the goal is to overcome the bottlenecks SMEs face at policy, institutional and enterprise levels as well as to map out a viable approach for them to take part in e- commerce. This is an area that is developing rapidly and could change the existing picture significantly in terms of mobile access to the

5 4 Internet. But, while SMEs have to take full advantage of all possibilities offered by the rapid advances in information technology, their ability to do so depends crucially on an adequate national infrastructure, both in terms of telecommunications networks and financial and legal frameworks conducive to e- commerce. For policy makers, particularly in the public sector, this type of change requires looking beyond information technology as a tool. It demands a clear vision of its application to business and economic systems as well as its social impact. IT must be seen in the context of changes in systems of production and industrial development and, ultimately, the sharing of wealth with those trying to achieve a more prosperous life through industrialization. The kind of perspective needed is that which Lou Gerstner brought to the declining IBM Corporation, when he was head-hunted from President of Nabisco to become the CEO of IBM, in At his initial meeting with IBM staff, he jokingly and seriously asked whether silicon chips were more profitable than potato chips. Although IBM staff laughed at him for his apparent ignorance of computer technology, Lou Gerstner saw that the future of IBM

6 5 Corporation lay not in hardware technology but in more innovative products such as e-business. Based on this kind of vision, he was able to steer IBM into profit by looking beyond the trees of merely producing computers to the forest of the new information technology revolution. His approach is equally valid if developing countries are to bridge the digital divide. A major step in this direction lies in the South-South dimension of e-commerce. Drawing on its more 30 years as an honest broker for industrial investment and technology, UNIDO has been helping to build cooperation between developing countries in order to bridge the digital divide in industry. Last month, for example, UNIDO s Technology Bureau for International Industrial Partnerships, in New Delhi, joined forces with Shanghai s Regional Cooperation Office for City Informatization to bring together a total of some 60 IT companies from India and China. A series of one-to-one business meetings in Shanghai and Fuzhou resulted in the conclusion of an initial 16 letters of intent for joint IT ventures.

7 6 Together with the Shanghai Municipal Government, UNIDO is reinforcing this kind of cooperation with the launch of an information technology promotion centre to serve the Asia-Pacific region, through three main services: = assistance to selected cities in assessing their IT infrastructure requirements = organization of information technology and business promotional events and = advanced training for IT capacity building. A key aspect of UNIDO s approach to IT promotion is to concentrate on strengthening business-to-business e-commerce. The aim is to integrate SMEs into domestic, regional and international production processes and supply chains. In Uganda, for instance, e-commerce has made it possible for the local fishing industry to link up to an alternative market, in Asia, for what had formerly been a thriving export trade in perch, in the wake of an import ban by the European Union. Likewise, in India, artisans producing printed fabrics will soon have direct access to one of their principle markets Japan thanks to Internet kiosks being set up in rural villages. Until now, they have received about

8 7 $1 per metre for fabrics that retail in Tokyo at 50 times that price. In the near future, e-commerce will eliminate middlemen and increase profits to those living on almost subsistence wages. In fostering such partnerships, UNIDO enjoys a distinct advantage since it brings together the interests of the private and state sectors as a neutral partner. By assisting governments and enterprises to build B2B supply chains such as those that have given the automotive industry in the United States a leading edge the Organization can help SMEs reduce their transaction costs, increase sales, improve customer services and create new businesses and linkages across the globe. As a spin-off, SMEs gain a better understanding of the use and potential for information technology while finding new ways to improve their businesses. Since access is a prerequisite for e-commerce, the Organization recently launched a unique Internet-based electronic platform called UNIDO Exchange. It provides a one-stop shop for sharing information and fostering business partnerships between enterprises, governmental and non-governmental bodies, R+D

9 8 institutes and other industrial stakeholders worldwide. It has opened a new window for South-South cooperation in the growing number of industrial opportunities based on information technology. UNIDO Exchange exemplifies what the Organization does best, namely focusing its specialized services to give value added to its clients. For example, there are many organizations engaged in investment promotion. UNIDO is one of them. But, if and when investment promotion is combined with technology transfer, quality control and environmental aspects such as cleaner technology, UNIDO is in a unique position to provide its clients with valueadded services. UNIDO Exchange members have direct access to the full scope of UNIDO-related expertise, its field offices and affiliated institutions. As a knowledge-based and technology-oriented tool, UNIDO Exchange is a gateway to the latest information and perspectives on industrial development. It is also enabled for e-commerce transactions and paves the way for business-to-business, government-to-government and government-to-business interactions. On-line availability of UNIDO s tools and

10 9 methodologies mean that, for example, members can access all information required to finalize business negotiations without recourse to intermediaries. Although UNIDO Exchange is still in its initial stage of operation, its membership already numbers more than 200 companies and institutions from the developing world. The implications for sharing knowledge and developing partnerships on a South-South, as well as a global, basis are considerable. If initiatives such as these are combined with the commitment of opinion makers in positions of social, political and commercial influence, I am confident that the South will increasingly reap the digital dividends of the information revolution. For UNIDO, this will bring our guiding goal of poverty alleviation one significant step closer to reality. For developing countries, it will make them the benficiaries and not the victims of the information technology. Thank you.

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