2008 EU-Cariforum Business Forum

2008 EU-Cariforum Business Forum

CARIFORUM-EU Business Forum

November 24-25, 2008

Discussion Paper ICT

Background / The Information and Communication Technologies (ICTs) sector is widely recognized to be among the most vibrant contributors to global economic expansion and wealth creation during the latter part of the twentieth century. The sector has continued to provide immense opportunities for fostering and enhancing development and growth in most countries.
The seemingly vast potential of ICTs is attributable, not only to its almost indefinite inherent capacity to expand, driven by advances in science and technology, but also by its diverse and pervasive roles in facilitating increases in economic output and productivity. The almost indomitable role of ICTs in this regard, is substantiated by most research findings and conclusions. This fact was also observed to be the case for the background research conducted for purposes of informing and partially fulfilling the objectives of the CARIFORUM-EU Business Forum.
Those research findings similarly led to the conclusion that the ICTs sector ranks highly among those offering substantial opportunities for economic diversification and growth. Accordingly, they also provide an excellent foundation for the promotion of Caribbean-European business development and expansion[1]. On that basis therefore, it is important that closer examination and analysis be conducted in order to enable better understanding by stakeholders of the business climate in the respective regions (Caribbean and Europe).Better understanding will also serve to facilitate and enhance implementation of the requirements to foster improved and expanded business enterprise development between the Caribbean and Europe.
This discussion paper seeks to distil and highlight a number of issues considered to be integrally important to underpinning the envisaged sustainable inter-regional dialogue, as well as enhancing, in a practical way, the process of CARIFORUM-EU business enterprise development.[2]
EPA Provisions for the CARIFORUM ICT Sector / The Economic Partnership Agreement represents the first agreement in services negotiated by the European Union, as well as by CARIFORUM (with the exception of the Dominican Republic)[3] .
In terms of assistance, the EPA text in its article (?) indicates that it will provide development assistance to the region’s service sector, in the following areas:
-Developing capacity of CARIFORUM firms
-Developing sector standards and regulatory regimes
-Building human resources in CARIFORUM, through training
-Development of skills equivalence and fostering the mutual recognition of skills
The mechanisms already identified in the text include the 10th EDF Regional Resources, as well as the Aid for Trade support for which the EU has pledged €1.0 billion[4].
Regional Situation Analysis / Member States of CARIFORUM have generally indicated a commitment to address many of the constraints relating to economic diversification, particularly in regard to new export services, including ICT services. The National Export or Competitiveness Strategy for most CARIFORUM countries call for the ICTs sector to be considered a priority in regard to development planning. In pursuance of this objective, the pace of diversification and expansion has been relatively slow, particularly when assessed in relation to the imperatives resulting from decreases in traditional exports.
In fact, it is widely believed that, despite the perceived importance of ICTs as a high value-added growth sector, Caribbean countries have not been developing appropriate strategies at a satisfactory pace to exploit the vast opportunities that are available.[5]
The Dominican Republic for example, has established a free zone for technological industries and a training institute in order to guarantee the human and other requisite resources for this sector. As a direct result, the number of call centre facilities has increased appreciably. That initiative has also given rise to an increased number of technology based firms investing in the country.
Market Outlook: CARIFORUM Perspective / According to the 2008 Professional Services Report prepared for the Commonwealth Secretariat, by the consulting firm Emerging Market Economics (EME), the potential growth outlook for the sector is considered to be extraordinary.
Some specific observations include:

The European market while also growing its outsourcing of ICT services, has not been looking to the American continent for incremental growth Eastern Europe represents their first choice, particularly for countries like Germany and the Scandinavian countries that have more cultural and language ties with that geographic region.
North and Middle-East African countries like Tunisia and Egypt are also taking advantage of the near-shoring effect.
Asia is considered to be important for the larger companies, with India leading the market. Other countries like Vietnam and Indonesia follow close behind.
European SMEs are also increasing their outsourcing of ICT services, but prefer suppliers closer to home as they think they can have greater control and easier access.
Different studies have shown that lack of knowledge regarding the availability of resources in Latin-America and the Caribbean has proved to be disadvantageous to these countries as markets for outsourcing services.
Competition for the Caribbean comes mainly from Asian countries. In the case of the USAmarket, there is also competition from Canada. If we compare labour costs and internet transmitting costs, we can identify those areas in which the Caribbean can concentrate in order to become competitive.
Average labour costs do not necessarily represent the best index for the assessment of competitiveness[6].There are several other indices of competitive advantage; such as:

culture and language
competence and diversity of skills pool
internet transmitting costs
geographic proximity and ease of travel connections
cost of capital and other constraints to investment programming(e.g. taxation and other public policy constraints)
infrastructure capacity and reliability
legal and other institutional and regulatory provisions[7]
political and social stability
However, according to the (EME) report, earlier cited, the key decision making factors in near-shoring are:
Quality of labour;
Cost savings,
Risk control; and
Quality of service.
The region’s ICT industry is currently characterized by a prevalence of services at the lower end of the ICT services continuum. The industry is dominated by call centres and business process outsourcing operations (BPO), installation and maintenance activities, and some software resellers. Higher end services such as solution services and innovations, while they do exist, are less frequent.
One of the key recommendations arising out of the EME report was that countries focus on higher knowledge services in the ICT industries. For example, countries like Bahamas, Barbados, Jamaica and Trinidad and Tobago that have developed a strong knowledge base in financial services would be excellent in knowledge process outsourcing, instead of providing call centres and such relatively low value-added services.
Strategic Issues
to be address / To exploit the full potential of the ICTs sector, thus enhancing its role, from a business development perspective, it is considered necessary that a number of strategically important issues are addressed by the sector. Some of the more important proposed issues, responsibilities for implementation and implementation time-lines are suggested as follows.
We use the following abbreviations for each action:
Issues To be address by whom:
Government (G)
Sector / Industry (S)
Business /Enterprise (B)
Time – line for action:
Immediate (I)
Short /Medium Term (SMT)
Long Term (LT)
Public Policy

Strategic development and expansion of basic ICTs educational opportunities. (G) / (S) - SMT
Promote and streamline national facilitating investment programmes. (G) - SMT
Encourage development of more effective regional coordinating mechanisms. (G) / (S) / (B) - SMT
Proactively pursue liberalization of the region’s telecommunications sector. (G) - SMT
Development of quality assurance standards (G) / (S) - SMT

Legal

Develop more effective legal and regulatory frameworks to facilitate industry expansion in regard to such areas as investment planning, international telecommunications, e-commerce and intellectual property rights. (G) - SMT

Infrastructure

Develop improved data and information transmitting facilities in order to expand capacity and attain greater economic efficiencies (G) / (S) - SMT

Human Resources

Incorporate ICT education as an integral component of public policy relating to education and training. (G) / (S) / (B) - SMT
Promote and facilitate software knowledge and skills development. (G) / (S) / (B) - SMT
Expand opportunities for ongoing skills specific training, including the fostering of mentorship programmes. (G) / (S) / (B) – I

Research and Business Development

Encourage and promote, on a structured basis, more industry-specific research initiatives, in collaboration with institutions of higher learning, such as universities. (G) / (S) / (B) - SMT
Encourage intra-industry networking, including registration and information sharing with organizations having similar interests. (S) / (B) - I
Provide financial and technical assistance to foster development and growth of small enterprises having impressive growth potential. (G) / (S) / (B) - I
Encourage and promote the development of group clusters. (S) / (B) - I

Marketing Development

More structured dissemination of information on markets, their conditions and outlook. (S) / (B) - I
More aggressive promotion of the regional strengths as provider of ICT services in relation to key target markets. (S) / (B) - I

Potential Funding Sources
The following table provides a partial list of potential sources of programme financing for industry investment and development projects.
Potential Sources of Funding / Main Purposes
The European Union:

Ninth EDF Caribbean Regional Indicative Programme

Tenth EDF Caribbean Regional Indicative

EDULINK

PROINVEST

Centre for Development of Enterprises

Institutional Support Programme for Regional Integration(ISPRI)

The ACP Business Climate Facility((BizClim)

Other European Union Sources

Other Sources

CIDA CARICOM Trade andDevelopmentProject

The World Bank

The Multilateral Investment Fund(MIF) of the Inter-American Investment Bank (IDB)

/ Integration support: CROSOQ and CRNM
NinthEDF Caribbean Trade and Private Sector Development Programme
As in the foregoing
Tertiary education development support
Support for investment projects
Technical assistance and sector support for ICT firms
Assistance to the Dominican Republic to assist in fostering closer collaboration and integration with the rest of CARIFORUM.
Support for business environment improvement initiatives.
Pledges of individual member states for the support of EPA development related projects
Support of the Secretariat for CSME harmonisation activities
Support for e-commerce initiatives
Special project support from IDB resources

Discussion paper on challenges & opportunities for Film and Audiovisual Sector after the EU-Cariforum EPA

2008 EU-Cariforum Business Forum

Discussion paper on challenges & opportunities for Film and Audiovisual Sector after the EU-Cariforum EPA

[1] Please refer to “Identification of Key Business Issues: CARIFORUM-EU Business Forum” and the “Technical Report, CARIFORUM-EU Business Forum”, respectively.

[2] The issues suggested the, for purposes of discussion, are not exhaustive. Participants are therefore encouraged to propose additional issues which, from their vantage point, should be considered in the interest of developing an effective Business Forum. Participants are also encouraged to present their views as to the most efficacious approach to be taken in implementing the suggestions and proposals proffered.

[3] The Dominican Republic had earlier negotiated and signed te DR-CAFTA Agreement, which includes the services sector.

[4] See list of potential funding sources at section 5 of this paper.

[5] Celine Gomez,, Ninth EDF Caribbean Trade and Private Sector Development Programme, Port de France, Martinique, June 2007.

[6] For international comparisons relating to average costs for labour and internet access, respectively, refer to Tables 10 and 11 of the Technical Report. See also, A. T. Kearney, Off-shoring for Long Term Advantage, Global Service Location Index, 2007.

[7] See Celine Gomez, op cit.