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1 INFOBALT2002, VILNIUS, LITHUANIA LEAGUE OF INVESTORS, 22 October 2002 Ballistic Lithuania from Baltic: ICT Market trends 1995-2002

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2 Romualdas Krukauskas Vice President of association INFOBALT INFOBALT2002, VILNIUS, LITHUANIA LEAGUE OF INVESTORS, 22 October 2002

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3 BALTIKUM-FORUM MNCHEN, 15. Oktober 2002

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4 5 000 BC - Beginning of Baltic Culture 1009 - First use of the Name LIETUVA- Lithuania - Litauen (Quedlinburg Analen, in Deutschland) 1387 - Lithuania adopted Christianity 1795 - Lithuania as part of Russia 1918 - 1940 - Independent Lithuania 1940 - 1990 Lithuania as part of USSR 1990 - 2002 - Independent Lithuania

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5 1. Association INFOBALT02 = Union of 155 companies 2. Traide fair INFOBALTXX and conference in Vilnius = Baltic CeBITXX (from 1994)

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6 INFOBALT EXIBITIONS IN 1994 2001 INFOBALT EXIBITIONS IN 1994 2001 EXIBITORS EXIBITORS SQUARE METRES SQUARE METRES

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7 THANKS ALL OF YOU FOR COOPERATION ! INFOBALT 2002 INFORMATION SOCIETY WEEK 21-26 October, 2002, Vilnius International conference Information Society 2002 and League of Investors 21-22 October, 2002, Vilnius International exhibition of information society technology Infobalt 2002 23-26 October, 2002, Vilnius www.infobalt.lt

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8 SYSTEMS2002 EXIBITORSSYSTEMS2001 - 2156 EXIBITORS EXIBITORRSSYSTEMS2002 - 1600 EXIBITORRS INFOBALT2001 - 195 EXIBITORSINFOBALT2001 - 195 EXIBITORS INFOBALT2002 - 201 EXIBITORSINFOBALT2002 - 201 EXIBITORS

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9 1.The mission of the INFOBALT is to represent and defend the interests of the IST industry in Lithuania and abroad Aiming to fulfil this mission, the INFOBALT pursues creation of optimally favourable conditions for the growth of the IST industry, which would be of benefit to the Lithuanian population, public sector and business world in the improvement of the quality of life. www.infobalt.lt

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10 WWW.INFOBALT.LT STRUCTURE 1. Association INFOBALT 2. Fund of Association INFOBALT for Development of Information Society in Lithuania 3. Company INFOBALT CENTRAS 4. INFOBALT Copyright Agency

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11 The Wall Street Journal published its Index for Economic Freedom, an economic ranking of nations. Lithuania, which was among top scorers, was heralded for having the most improved economy in the history of the index. Investment bank Goldman Sachs called Lithuania the Ballistic Baltic in a recent report - it is a rising star and a launch pad to profitable growth. BALLISTIC LITHUANIA

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12 Lithuanias economy is the fastest growing economy in Central and Eastern Europe (according to analysis made by Hansabank Markets and LandesBank Kiel) BALLISTIC LITHUANIA

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13 GDP rose by 5.7% in 2001 and is projected to rise an annual 5.4 % - in 2002 BALLISTIC LITHUANIA

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14 WWW.LDA.LT

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15 `

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16 annual inflation rate fluctuates at about 0.1% - 0.2% BALLISTIC LITHUANIA

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18 17% industry growth in 2001, compared to 2000 retail sales increased by 14% in the seven months of 2002, compared to the same period of the previous year cumulative FDI has been increasing fastest in Central and Eastern Europe and is currently USD 3.5 billion, which makes around 21% of GDP Lithuania is rapidly becoming an export economy, exports now make 38% of GDP and are continuing to grow; export volumes totalled USD 5.2 billion in 2001. over 80% of the economy is already in the private hands the banking system is 100% private and 90%-owned by major Western banks BALLISTIC LITHUANIA

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19 Growth of ITT market in Lithuania in 1994-2000, USD million

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23 In 2001, the Lithuanias ICT market grew by 24,8 per cent In 2001, the Germany ICT market grew by -1,3 per cent

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24 Baltic States IT Market Size in 2001 (mln. USD) Baltic States IT Market Size in 2001 (mln. USD) Baltic States IT Market in 2001 was 642, 18 mln. USD

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26 SURPRISE ?!? ICT/GDP ratio in 1998 (WITSA, INFOBALT)

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28 ICT Market in Lithuania (in Millions Euro) : 1999 615 ; 2000 722; 2001 806; According EITO2002-IDC 1999 754 ; 2000 1070; 2001 1480; According Infobalt.

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30 ICT Market Growth rates in Lithuania in 1999-2001 in EURO : 00/99 17.4%; 01/00 11.6%; According EITO2002-IDC estimation 00/99 42.0%; 01/00 38.3%; According Infobalt estimation.

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32 ICT Market Growth rates in Lithuania in 1999-2001 in LITAS : 00/99 31.2%; 01/00 24.8 % - accorging INFOBALT due to different exchange rates in 1999-2001 years.

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? And only future common work and cooperation between CEEC and Western experts in unification of methodologies for ICT market estimation can give the adequate and real outlook of Eastern European ICT industry, fully comparable with Western European data and forecasts.

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40 INFOBALT Strategic goals By 2015, with stable annual economic growth rates: 7 per cent - optimistic level 6 per cent - average level to achieve 25% share of ICT (Knowledge Economy) in Lithuanias GDP (with 25 % of this from export) To achieve that the society gets greatest possible benefit from IST, scientific research and innovation activity To accelerate the development of economic factors which ensure social development and employment (digital divide) To arrange economic factors for ensuring environment protection

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41 Structure of GDP 1900-2010 19501900 Metai 2020 20% 40% 60% GDP Industry Agroculture Information &Services 80%

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42. ICT share in LITHUANIAS GDP IN 2000 2015

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46 Informacins visuomens pltros komitetas prie LR Vyriausybs Vyriausybs Informacins visuomens pltros komisijos posdis Fiksuoto ryio tarifai (2001 m. vidurys) 91.6812.4 1840vedija 3ND32.211.6-39.9Suomija 82.684615823Latvija 61.171661117.8Estija 142.7940111219Lietuva Internetas (ct./ min.) Tarptautiniai (JAV) (Lt./ min.) Tarpmiestiniai skambuiai (ct./ min.) Vietiniai skambuiai (ct./ min.) Sujungimo mokestis (ct.) Abonentinis mokestis (Lt./ mn.)

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47 EU Economic Growth lags behind the US Source: Eurostat EU US

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49 Knowledge capacities : decline (& recovery?)

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50 Intensity and volume of R&D expenditure, 1999

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51 THINK FAST Knowledge-based Economy SPEED START TODAY, NOT TOMORROW 1.Leapfrogging is best done in times of extreme change like these 2.Hurry to create a stable middle class of knowledge technologists 3.Your agriculture + manufacturing services labour force redeployment will be major, so start early DRUCKERs POINTS: 1.You have 10 months or so to tilt your National Devt. Strategies towards KBE 2.Use e-Europe + and Intl. Organizations for help 3.But dont wait: begin your own actions, support your first movers MORE DOWN- TO-EARTHS POINTS:

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52 LISBON THE PROCESS AND THE STRATEGY STRATEGY: Promoting the information society, R&D, innovation and competitiveness Investing in human capital and modernising the European social model Applying an appropriate macro-economic policy mix The EU has today set itself a new strategic goal for the next decade: to become the most competitive and dynamic knowledge- based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion

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53 EU ACCESSION COUNTRIES: COMPLETE BASIC ECONOMIC REFORM; AND ADD POLICY CONSISTENT WITH CREATING A KNOWLEDGE BASED ECONOMY Eliminate subsidies to non-innovating old enterprises (mostly in agriculture, coal, mining, railways, shipbuilding, and steel) Regulatory development for the financial system and creation of sophisticated capital markets, including a regulatory environment that encourages venture capital Better protection of intellectual property rights Policies to increase labor market flexibility (reduced mobility restrictions, low minimum wages, reduced termination restrictions) Effective social safety net (coordinated pension, unemployment and social assistance schemes) Continued building of legal and judicial institutions, with accountability of government Improved allocation of public expenditure, including more funding of R & D, and of higher education, while maintaining fiscal stability Policy to continue to reduce cost of start up by small and medium enterprises

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54 5 th Framework 1998-2002 Tendering for R&D Projects - 50% financed by European Commission (EC) and 50% by participants - Universities, Industry, Government Institutions See www.5fp.lt and www.cordis.lu/rtd2002/ Lithuanias participation in 5 th Framework for R&D in European Union

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55 Lithuanias participation in 5 th FW for R&D in EU Financing distribution according different programs of 5 th FW from EC to Lithuania (TOTAL 7,7 MEUR) Largest: IST Information Society Technologies 1.405.209 1.615.894 930.369 838.596 870.821 663.465 773.896 536.096 LIFE IST GROWTH NNE ESD INCO INNO IHP Source: European Commission, December 2001

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56 Lithuanias participation in 5 th FW for R&D in EU By end of 2001 membership fee paid from Lithuania to EC 5FW 7,4 MEuro Return back to Lithuania from EC 5FW 7,7 MEuro Source: European Commission, December 2001

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57 LT - LITHUANIA

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58 6. INOVATIONS LTU + 7. LEAPFROGGING, TIGERS, AMBITION PRJECTS LTU + 8. SENSE AND RESPOND A NEW PARADIGM in INDUSRTY, SCM-ERP-CRM LTU- 9. New dimension in private-public- ED&SC.&R&D coolaboration and partnership LTU -

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How technologies can help to solve POLITICAL PROBLEMS www.infobalt.lt

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Good, friendly relations between Lithuania and Kaliningrad Region of Russia, cross-border movement of people in this area and related visa issues has become an "entrance" ticket for Lithuania to join the European Union. The residents of Kaliningrad Region today have visa free entry to Lithuania, and vice versa Before EU accession, Lithuania is planning to introduce visa regime in July 2003. Russia would prefer to keep current visa free movement of people from Kaliningrad to "great" Russia and in opposite direction LITHUANIA AND KALININGRAD REGION www.infobalt.lt

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Electronic Travelling Visas on smart-cards for the residents of Kaliningrad Region can improve the border crossing possibilities for the residents of Kaliningrad Region Political Project Idea Technologies can help to solve a political problem - www.infobalt.lt

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Use of mechanisms of PKI - Public Key Infrastructure - with electronic signature on smart-card as a toolkit for Electronic Visas or e-Visas Technological Project Idea www.infobalt.lt

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has the same purpose as a handwritten signature... as handwritten visa could be role-based... The same... has the same legal effect as a handwritten signature... The same... Digital signature analogy - e-visa www.infobalt.lt

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KALININGRAD LITHUANIA BORDERBORDER Resident of Kaliningrad Lithuanias Border control police officer Computer Center of Lithuania's Consulate Network must work as e-visa Certification Authority. Lithuania's Consulate in Kaliningrad Region issues e-Visas for the residents of Kaliningrad www.infobalt.lt

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With the help of mobile computers, border control staff can quickly and easily (in 3-7 seconds) check the identity of a person, validate electronic visas and track the history of crossborder transitions (if necessary) in each particular case Every year, some 1.5 million border-crossing transitions are made between Kaliningrad Region and Lithuania. Time spent on border-crossing procedures can be saved dramatically System can work both in ONLINE and OFFLINE modes System can be used by customs offices for tracing of transit procedures via Lithuania Advantages of e-visas www.infobalt.lt

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Can improve the border crossing possibilities for the residents of Kaliningrad Region With the help of PKI mechanisms for Electronic Visas, the project can integrate the business of Kaliningrad Region into the world of e-economy and enable all residents of Kaliningrad Region to be full participants of e-trade worldwide by using of e- signatures. In the future, can be used for the movement within the EU Advantages of e-visas www.infobalt.lt

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68 THERE ARE NOT ANY MAJOR TECHNOLOGICAL CHALLENGES. THE PROBLEMS ARE ORGANISATIONAL AND EVEN HARDER - SOCIAL (EITO 2002, p. 345). 1.Infrastructure (10%) 2.Broadband comm.(5%) 3.Non-technological issues 30% 4.Digital signatures (20%) 5.Security (20%) 6.Legal issues (15%)

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69 Since 1999 Infobalt is providing aggressive Public Relations Actions concerning Promotion of Information Society in our Country. The Goal - to enhance Government, Business and Citizens concern about the inadequate development of Information Society in Lithuania, to intensify the understanding of the importance of ICT, the Internet in the process of transition to new economy.

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Association Infobalt Lithuania, Vokiei 28/17 16, LT-2001 Vilnius LITHUANIA Ph. +370 2 62 26 23, fax +370 2 62 26 29 E mail: office@infobalt.ltoffice@infobalt.lt www.infobalt.lt Contacts

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71 WE ARE LOOKING FORWARD TO SEE YOU IN LITHUANIA ! THANKS ALL OF YOU FOR COOPERATION !