Under the Patronage of
H.E. Maqbool Bin Ali Bin Sultan, Minister of Commerce and Industry
Sultanate of Oman
“MEETING THE CHALLENGES OF ELECTRONIC BUSINESS”
Organized by
The Arab Management Society and the International Chamber of Commerce
In association with
Talal Abu-Ghazaleh International & Oman chamber of Commerce and Industry
Monday 9 – Tuesday 10, October 2000
Ladies and Gentlemen, Distinguished Guests,
It in my pleasure to welcome you here today and I hope that you will find this conference to be stimulating, provocative and helpful in formulating and answering the important questions you need to ask about how e-business will affect you. Such questions run the gamut from marketing and advertising issues to technical and legal questions. I am not going to try and sum up in a few words the whole e-business arena which we are gathered here to discuss; instead I want to just share a few of my personal observations on the subject and why the AKMS was interested in sponsoring with the ICC, a conference on this subject.
Electronic Business and globalization could be separated but in reality they are deeply interrelated and each feeds and encourages the other; a retreat from globalization would seriously weaken the promise of e-business, just as in the absence of e-business globalization would not advance so quickly. The information age has simultaneously brought us electronic business and globalization. Linked to these powerful forces in the new primacy of information and knowledge; intellectual capital is the force driving modern business. But despite all these lofty new terms and concepts, we humans still remain bound to all material substance of our lives; in other words, global trade requires global consensus, a practical framework including rules, standards, terminology, business and financial records. Intellectual capital is convertible to financial capital and thus protection of intellectual property increases in significance; as intellectual property becomes more important, the management of the tacit knowledge in an organization becomes a higher priority. We recently decided to change the name of the Arab Management Society to the Arab Knowledge Management Society to reflect this change.
To fully capitalize on the opportunities posed by e-business we need to facilitate the globalization of the world economy. It is for this reason that the World Trade Organization (WTO) is so crucial in today’s world. While some things, such as computer programs or music, may be sold over a line, much of the world’s product needs to travel physical infrastructure which requires transportation, clearance of customs, and other hurdles which may include protective tariffs and protective local businesses. The WTO system and its associated rules and conventions greatly enhance the opportunities for e-business. I believe however that the WTO is grossly under-funded considering its significance and the broadness of its mandate. Furthermore, we need much greater effort to be made on educating important business and government leaders, individuals like those of you gathered here today, on the importance and relation of trade liberalization to maximizing the impact of e-business and the overall development of the global economy in general. My firm, Talal Abu-Ghazaleh International (TAGI), recently published, in association with the International Trade Center (a body of UNCTAD & WTO), the Arabic version of The Business Guide to the World Trading System. The English version is available directly from the ITC and the Arabic version can by ordered from my TAGI office across the Arab countries; I honestly think it is a must for any businessman to read.
Trade liberalization is very important to us all. Of course there will always be individual firms and industries that will balk at liberalization when it increases competition for them, but the reality is that liberalization benefits both consumers and business. However it can be a challenging process for governments to implement the necessary changes. The process of trade liberalization requires a complex exercise of legal, economic and business analysis that can be daunting even to professional policy makers. It was for this reason that TAGI recently established a specialized WTO & E-Business Consulting unit. Actually, although I would like to claim responsibility for taking this initiative, it was actually a response to the direct request of assistance from the Minister of Economy of one of the Arab states acceding to the WTO. As we put together a project team, we realized that there were many other ministries and agencies throughout the Arab world that were in need of assistance that was simply not available. I believe that with the combination of publishing the Arabic versions of, first, The Business Guide to the Uruguay Round, and more recently The Business Guide to the World Trading System, and establishing its WTO & E-Business consulting unit, TAGI has plugged a big hole in the Arab world’s drive to advancement. The point I want to make to you here is that if you care about e-business you need to care about trade liberalization. In a recent (9/23 – 9/29) issue, The Economist magazine (a journal not much given to hyperbole) suggested that the combination of the information age with trade liberalization held out the promise of productivity gains and advancement that exceed those that were gained from the introduction of electricity! We are really talking about something BIG here.
As trade develops it becomes increasingly important not only to liberalize government trade regimes but also to establish better cultural, social, and linguistic ties. Groups like the ICC play a crucial role in such areas. While you can always say that “business is business”, it is never fully possible to remove the social and cultural dimension from the business transaction. The most basic and perhaps the most important aspect of this is communication and language. Misunderstanding your partner can be the quickest way to scuttle a profitable relationship. For this reason, projects that the ICC has implemented such as establishment of the world famous INCO Terms, which are used in trade around the world are extremely significant. Not everyone that uses terms like FOB, CIF, and so forth, realizes that they are INCO Terms or that it is the ICC that has provided the service of standardizing these terms around the world, but they serve their purpose. AKMS is working on similar efforts in the Arab world; for example our new Arabic-English, English-Arabic Business Dictionary is due out in 2001.
Establishing communication between parties from different cultures and languages is an important requirement for facilitation of electronic business and (what we hope will be) accompanying liberalization in trade. The ironic thing with e-business is that establishing communications between people with the same language and culture can also be a challenge. In the Arab world we have over 250 million people and most of those do not speak English. For them, the Internet is essentially a closed door, and therefore still a mystery. This poses a real problem for Arab businesses that wish to enter the e-business arena, and it poses a problem for the Arab governments, which might wish to begin developing the capacity for e-government and widespread e-commerce in their countries. We need to work more aggressively on the Arabization of the internet, both in content and to allow searching in Arabic script and even to use Arabic letters in representation of top level domains. At the July 2000 meeting of the Business Constituency (BC) of the Domain Name Supporting Organization (DNSO) of the ICANN conference in Yokohama, Japan, the TAGI representative introduced the idea of translating all documents of the Business constituency into other languages. The resolution was then made to translate all BC documents into Arabic, with TAGI volunteering to undertake this. At the same conference, at the Names Council (NC) meeting, it was suggested that ICANN should adopt a resolution to translate all ICANN material including their website, into other languages. TAGI also has volunteered to undertake this work. But the real challenge is finding a technical solution to the need for top-level domain names in Arabic letters and to building search engines that will search in Arabic script.
Once we Arabize the Internet we will be better able to establish a wide base of users, which will in turn increase the incentive and the necessity for our businesses and governments to pursue e-business opportunities, which will in turn increase content further and increase additional users to go online. I see this as one of our important challenges because right now most in our region simply do not know what the “Information Age” is all about. When you don’t know something you don’t miss it. But I am sure that most people in the Arab region would not like to go home to find their lights out, and they can only see by candles. If we don’t find a way to participate in the information age, we are essentially getting “left in the dark”.
As we begin to make further progress towards joining the Information Age and becoming part of the Knowledge Society that is based on it, we will gradually note that changes will occur in our companies and society. The concept of the “Knowledge Society” is one that is very fascinating to me. This is the fact that a society can move to the point where productivity has gotten to the stage that the basic needs of society and individuals are readily met and that the gathering, trading, elaboration and management of knowledge becomes the main focus of economic activity. Although thissounds almost like science fiction, it is in fact a fairly accurate way to categorize the advanced economies of the world; the worker now days is a “knowledge worker” and the company’s role is the management of knowledge.
Recently, we changed the name of the Arab Management Society (AMS) to the Arab Knowledge and Management Society (AKMS) to reflect this change. Knowledge management is primarily about the organizational and cultural issues that encourage sharing and use of tacit knowledge in the organization’s human resources and extracting economic value from this knowledge. Following from this is the need for technology solutions that help organizations to encourage this. Utilizing the business management and technology tools to effectively harness the tacit and explicit knowledge in an organization requires special skills, particularly in the e-business environment. The AKMS has recently begun preparations for the development of a knowledge management Diploma program, which will allow Arab managers to learn about the tools of knowledge management and be certified regarding their familiarity with these; this diploma program will begin in the Spring of 2001 and will mark the first time that knowledge management is studied as a discipline in the Arab world.
But why do we need to study the management of knowledge? The answer is that knowledge has financial value and is a form of intellectual property. In an era where services are the largest component of GNP and intangibles are the largest component of corporate value, it is natural that intellectual capital takes on even greater significance then ever before. Intellectual property has always been significant, but in recent years it has begun to enter the mainstream and the public consciousness age, is built on knowledge , the intellectual capital that drives the organizations of today. This is one reason why it is essential that we increase protection of intellectual property rights in the Arab world, particularly in regards to implementing existing laws and judicial remedies. One of the Arab NGOs with which I work, The Arab Society for Intellectual Property, is working in the area and is developing an Intellectual Property qualification which IP practitioners will be able to achieve by passing a comprehensive exam in intellectual property protection; along with this they are publishing the Abu-Ghazaleh Intellectual Property Dictionary, which will be a big step forward in the available information on IP in the in the Middle East.
In our world today where true value lies in knowledge success in e-business is dependent on the ability to successfully manage that knowledge and as always, to protect it. Not long ago I spoke at the annual meeting of ASCA (the professional society that represents the Arab accounting profession) and we discussed this very point. Intellectual property is a core business asset but is not traditionally represented fully on the balance sheets; there are good reasons for this, the principal one being that it can be hard to value intangible assets. However ASCA is taking the lead in the region by putting electronic commerce and IT management on the curriculum of 2001 for the Arab Certified Public Accountant exams. It is impossible for Arab accountants to anymore ignore the central importance of IT and e-business to the health of an organization, particularly in regard to management and security issues. And in the not-too-distant future, I am sure that IP valuation will be included as well. I consider these all good signs that the Arab professionals are working to support the business community in adapting to the rapid changes in the global business environment. Because if we are going to prosper, we will need to adapt to change much more quickly than ever before. I hope that the information that is presented at this conference will be helpful in allowing you to do so.
Thank you,