BENEFITS AND OPPORTUNITY OF TECHNOLOGY CONVERGENCE 
TO THE PRIVATE  SECTORS

By  :  Setyanto  P. Santosa
                                                          CEO Pacific Link Indonesia 
                                                           http://www.pacific.net.id

1.	Two rapidly growing trends – globalization and technological innovations – are having an enormous impact on the way business is conducted. For our purpose , let me simplify the convergence of  telecommunications, information technology  and multimedia by focusing on its applications i.e. internet especially electronic commerce (E-Commerce), with its impacts to the private sectors especially its benefits  and opportunity. 

2.	From the industry point of view, there are two types of companies in technology convergence. Those who create the technologies (IBM, Intel, Microsoft, etc.) and those who apply the technologies (Telcos, AOL, Yahoo, Amazon,etc.).Companies within the first category provide the world with new technology via creation of new or improve hardware or software that is used by businesses and consumers, let me call as Technology Creator. The second category companies applies the technology provided by Technology Creator to create new and exciting business models, we can call Technology Users. Within the Technology Users are web-site hosts or web content  based companies (internet companies) which can be further divided into 3 types of business model :

•	Internet Access Providers (AOL, Prodigy, Pacific Link, etc)
•	Informational based or portals (Yahoo, Detik, Astaga, etc.)
•	Transactional based or e-commerce ( Amazon, Toysrus).

3.	It’s already proven that through internet, we are seeing a revitalization of society. The frameworks are being redesigned from the bottom up. The internet has immeasurably increased the quality of life.  Social and business connections which never before were possible, or relatively hard to achieve, are now facilitated by internet. Geography and time are no longer boundaries. A new world of connections between people is possible. The internet is also a source of accurate information and a source of opinions. It can be a helpful medium to understand the world better. Internet is also the short time frame it takes to reach critical mass. It took TV over 30 years since its inception to reach critical mass, while internet took only less than 5 years to reach similar point of critical mass.

4.	Apart from being a powerful medium of real communication, the internet actually gives and exceptional impact the private sectors. Through E-commerce, the world’s leading organizations are reorienting themselves around electronic business which becomes the ground rules for commerce in the 21st Century. Many smaller firms have also emerged to take prominent positions in segments of the burgeoning global electronic marketplace. Indeed, one of the most important features of electronic commerce is the opportunity and promise  it holds for private sectors – especially SMEs – to extend their capabilities and grow. For the purposes of this discussion, electronic commerce is defined as the use of computers and electronic networks to conduct business over the internet or another electronic network.

5.	According to the study which was conducted by Price Waterhouse Coopers on SME Electronic Commerce (September 1999), the opportunity of the implementation of technology convergence actually is being utilized by private sectors especially SMEs.   SMEs are significant players in business to business ( B to B ) electronic commerce which constitutes more than 80% of all e-commerce activity. SMEs that can take the opportunity to use e-commerce will have a competitive advantage in the B-to-B marketplace. SMEs do not really have the brand recognition that bigger companies have , however with e-commerce SMEs can create a presence and compete in markets that were traditionally dominated by big business. Enhancing the role and participation of SMEs in the global marketplace through e-commerce as of critical importance to Indonesia. SMEs are key to  economic growth and productivity in Indonesian economy.

6.	The potential opportunities and benefits of  technology convergence in the form of e-commerce for private sectors include the following matters :

•	 building customer loyalty 
•	 reaching new markets
•	 optimizing business processes
•	 participating in extended business communities
•	 improving business knowledge 
•	 creating new products and services.

            Raising the awareness and understanding of these and other 
            opportunities and benefits is an important means of increasing the uptake 
            and use of e-commerce among private sectors.

7.	The most significant barriers to the adoption of e-commerce :
•	Low use of e-commerce by customers and suppliers
•	Concerns about security aspects of e-commerce
•	Concerns about legal and liability issues
•	High cost of computer and networking technologies
•	Limited knowledge of e-business models and technologies
•	Unconvinced of the benefits of e-commerce for the company
•	Quality of telecommunications services inadequate for e-commerce.

8.	Private sectors also noted the prominent role of the Government has played  in encouraging and influencing the adoption of electronic commerce in our economy. For example, in Singapore, e-commerce is clearly being driven by the government. As part of its vision to develop Singapore into an “intelligent island”, the government has developed an e-commerce master plan and a series of initiatives to take it forward. These include the establishment of a “cyber law” framework and provision of grants aimed at encouraging e-commerce uptake by local companies, as well as tax incentives for foreign companies to use Singapore as their base for their e-commerce activities in Asia. The government also makes a coordinated effort to make Singaporean realize its vision. Government suppliers are required to submit electronic bids for government contracts. By making e-commerce a priority, government is actively encouraging the diffusion of e-commerce as a way to improve firm competitiveness and access to new markets. Initiatives including  raising awareness, developing visions for e-commerce, cyber laws, establishing development centers and pilot projects, creating business access points and providing education and training programs. 

9.	To encourage wider adoption and use of e-commerce, the following matters should be done : 

•	Improve telecommunications infrastructure
•	Reduce E-Commerce legal barriers
•	Improve business access to internet
•	Fair tax policy for transactions
•	Develop National E-Commerce strategy
•	Raise business awareness of E-Commerce
•	Improve Government Services on the Internet
•	Enhance Government E-Commerce Use
•	E-Commerce Training
•	Promote E-Commerce Use
•	Provide Web Page Facilities. 

10.	Finally,  I would like to invite the views of the floor on  on this topic. I hope this gathering can contribute to the Government as well as to the people of Indonesia the awareness and the necessities  of utilizing the technology convergence, telecommunications, IT and multimedia  for the benefits of our future. 

Jakarta, May 30, 2000

setyanto@pacific.net.id 

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