E-COMMERCE

Mr Tay Beng Chuan asked the Minister for Trade and Industry if there are any (i) projections regarding the potential contribution of E-commerce over the next 5-10 years to Singapore's Gross Domestic Product compared with other regional economies; and (ii) statistics as to the percentage of small and medium-sized enterprises in economies such as Hong Kong, Taiwan and South Korea which have embarked on E-commerce.

BG George Yong-Boon Yeo: There are no such projections regarding the potential contribution of E-commerce to our Gross Domestic Product over the next 5-10 years. The E-commerce industry is still a very new industry, whose impact on the economy, not just for Singapore, but also for the global economy cannot be correctly estimated. But its rapid growth confirms the conclusion of most analysts that this is major global trend with far-reaching effects. The problem of estimation arises because the industry is potentially very broad and cuts many economic sectors, making any computation of the exact contribution of E-commerce activities on the existing value-chain a complicated undertaking. Singapore is however keeping abreast of statistical developments relating to the measurement of E-commerce, where there is still no international consensus.

In February this year, DOS launched a new survey1 to obtain information pertaining to electronic commerce (EC) activities in Singapore to enhance our understanding of this emerging sector. The full set of results would be published in due course. Preliminary findings confirm that the E-commerce growth potential in Singapore is good, even if the actual level of activity is still small at the moment. For example, revenue derived from EC supporting services amounted to S$144 million in 1997. This soared 85% to S$267 million in 1998 and is expected to increase by another 34% to S$359 million in 1999. The focus remains primarily on business-to-business (B2B) rather than business-to-consumer (B2C). Similar projections by agencies like the International Data Corporation (IDC) also paint a very optimistic scenario. IDC projected that E-commerce revenue in Singapore would grow by about 110% per year over 1998~2003.

We do not have comprehensive data on the percentage of small and medium-sized enterprises which have embarked on E-commerce. However, a recent NCB sample survey on the state of E-commerce readiness (based on a sample of more than 1000 companies in 8 industry sectors) showed a high level of Internet-readiness among companies in the selected industry sectors, notably in the manufacturers of electronic products. About 73% of the companies surveyed already had corporate Internet access and over a third owned corporate websites. About 9% already use the Internet to conduct business-to-business e-commerce. Of the companies already procuring through the Internet, 57% were already procuring through Web-based trading platforms and another 32% used e-mail. The survey, however highlighted that many small and medium-sized companies were still relatively behind larger companies in the area of E-commerce. It is important for these SMEs to do more to move into E-commerce, by taking advantage of various Government schemes currently in place.

Corroborating our state of overall EC readiness, the World Competitiveness 1999 ranking of whether the E-commerce environment is sufficiently developed for business opportunities, ranked Singapore as the 3rd, after Iceland and Finland. (In comparison, Taiwan, Hong Kong and South Korea were ranked 13th, 16th and 40th respectively.)

Singapore will continue to promote global companies to base their E-commerce hubs in Singapore to further grow the industry. EDB targets to anchor at least 25 of the leading logistics, manufacturing and services companies to set up their e-commerce operations in Singapore by 2003, in order to tap the tremendous growth worldwide2.