it sector policies and their impact

8/7/2019 IT Sector Policies and Their Impact

1/18

.1 Introduction As in most other sectors, government policies andinterventions have played a key role in the develop-ment o the I sector in individual economies. Terelocation o leading de ense contractor Lockheed tothe Silicon Valley in the ties, thereby bringing insigni cant orders and leading to creation o a large

number o ancillary technology rms represents oneo the earliest instances o government playing acrucial role in development o I Parks. As has beendiscussed in the case studies o individual I Parks,similar models have been ollowed by governmentsin di erent countries such as Korea and Singapore.Te role o government has also evolved over timedepending on the level o maturity o the sector.Consequently, while government institutions/organizations in many countries have played a directrole in acilitating development o the sector in theinitial stages, the government has shi ted to a

acilitation role once the sector has attained criticalmass, with much o the subsequent growth initia-tives being private sector led.

Te current section highlights key ndings o anassessment o the impact o government policies,institutional and implementation mechanisms onthe development o the I sector in general, and IParks in particular. In addition to direct interven-tions in the I sector, we have also attempted tocarry out a high level analysis o government policiesand interventions targeted at i) other sectors such asphysical in rastructure and telecommunications,

which usually play a key role in development o theI sector and ii) acilitating spillover e ects rom thegrowth o the I sector to drive overall socio-economic development.

.2 Framework for analysisGiven the di erent types o government policies andinterventions impacting the development o the I

sector and I Parks, a categorization o the indi-vidual policy instruments becomes essential. Forpurposes o the current study, relevant governmentpolicies and interventions have been grouped intothe ollowing categories.

Fiscal policies that primarily represent thedi erent nancial concessions and bene tso ered to players in the I sector.Policies aimed at encouraging innovation, andresearch & development, areas which havetraditionally ormed the backbone or thedevelopment o certain segments o the Isector. Some o these policies could involveprovision o nancial concessions & bene ts, asin the case o scal policies.Human capital-related policies, primarily intended to acilitate availability o requisitehuman resources, which constitute one o thekey enablers or development o the I sector.Policies impacting the investment climate o the

country, which are aimed at making theeconomy attractive to domestic/internationalinvestors through a combination o policy measures and instruments. Most governmentpolicies and interventions in this category, whilethey may be tailored to meet the speci crequirements o a particular sector like I , areusually targeted at meeting socio-economicobjectives through all round economic growth.

A detailed description o the key policy instrumentsin each o the above categories, together withsuitable illustrations, has been presented in Figure

15 on the next page.

. Fiscal policies

ChinaUnder the Policies or Encouraging theDevelopment o So tware Industry AndIntegrated Circuit (IC) Industry ramed by the

Ch p 4

It S c : P ici s th i Imp c

IT Sector: Policies and Their Impact 53


2/18

International Good Practice or Establishment o Sustainable IT Parks

State Council, a maximum tax rate o 10% isapplicable or key so tware enterprises identi edby the state against the normal tax rate o 30%.

A number o government bodies, including theMinistry o Foreign rade and State Bureau o axation, decide which enterprises are eligibleor this.

So tware enterprises importing capital equip-ment as well as technology (including so tware)are exempt rom payment o customs duties andimport Value Added ax (VA ).

IndiaTe Income ax Act, 1961, o ers a number o incentives to I and I ES companies, includinga 100% exemption on pro ts rom export o

computer so tware till 2010 and a higher rate(60% compared to 15% or plant, machinery and equipment) o depreciation on computersand so tware.So tware echnology Parks o India (S PI), anautonomous organization under the aegis o Ministry o Communications and In ormation

echnology, government o India o ers anumber o concessions to S PI registered Iand BPO units like 100% import duty exemp-tion on capital goods imports, reimbursement o Central Sales ax (CS ) paid on capital goodspurchases rom the Domestic ari Area (D A).Many state governments have started thepractice o extending various nancial conces-sions/bene ts linked to the level o employment

Fi u 15.Types o Government Policy Instruments

broad c ass f at on Key po y instruments i ustrat ve ntervent onsF s al pol es di c x c c ssi s w iv s I c m x h i ys, c c ssi x s, simp i

p visi s, sp ci x x mp iI i c x c c ssi s w iv s Cus ms u y x mp i xp s imp s, ssi , s s x w iv s

Subsi i s, s, i c iv s C pi subsi y, subsi i s , p w & c m h ci supp xp s s

innovat on pol es r s ch v pm di c u i h u h s ic r&d s & p(r&d) supp pm s b ci i i s, x b k r&d xp s sI c u p p y i h s (IPr) l is i imp m i m ch isms p c i c py i h s m ksP vi i i cub i ci i i s Supp sch m s s -ups SMes i p

s vic s h i cub i s vic s.

Human ca tal pol es F mu i uc i p ici s & M ki ch s i cu icu um b s It s c cu icu um wi h cus It i p iv i v s m i uc i wi h quisi qus c qui m sSupp i i i & c p ci y g v m sp s /supp p ms vbui i i i i iv s h ci ski s s It w k c

F ci i i mp ym c i Subsi i s i k j b c i , p ici s c i x vis u i s b m k p ici

investment cl mate pol es Simp i i s i u i d c i It s p i i y s c su i i pimp m i m w k ci p icy imp m i m ch isms, si

ci i i s, i v s m ci i i s vic sF ci i i c ss-b i v s m s, F v b xp imp p ici s,

i p uc s s vic s i av i c a m s, p mi i i iwi h p p i i

e b i v pm l is i s c izi v i i y i i-C mm c / -g v m c i s, sp sibi i y s vic p vi s, i c p

i xis i p p visi sV u c pi (VC)/p iv g v m sp s VC u s, sp & w

qui y m k v pm ci s vic s s c wi h sp ci sc c c ssi s/bi b VC/p iv qui y i v s s

F ci i i v pm a wi c mp i iv v pm physic (b i i s uc u , v i i s uc u ) c mmu ic i s i

spi v b s p ici s


3/18


creation. For example, government o AndhraPradesh o ers a rebate o USD$450 on the landcost or every job created provided at least 333

jobs are created per acre o land.Given Indias ederal structure, a number o state/provincial governments also o er additional

nancial incentives to I and BPO units settingup operations in the region. ypical incentiveso ered include capital investment and interestsubsidies and subsidies on electricity tari .

MalaysiaUnder the Income ax Act, 1967, 70% o theincome rom so tware development is exempt

rom tax or a period o 5 years. Additional bene ts are o ered to companieslocated in designated I Parks like the CyberjayaFlagship Zone. Companies in such areas areeligible or 100% o their income being exempt

rom tax or the rst 10 years, 100% deductionon approved capital expenditure incurred duringthe rst 5 years o operation, and duty reeimport o multimedia equipment.Te government o Malaysia allows duty reeimport o multimedia equipments to the Icompanies.Te government o Malaysia also o ers grantsand subsidies to start up companies and localSMEs to meet various expenses through theSmall and Medium Industries Development

Corporation (SMIDC) o Malaysia. Forinstance, 50% o the cost o business planningand easibility studies and 50% o the cost o upgrading production & design capabilities arereimbursed as grants.

Singapore Under the Singapore Income ax Act, Icompanies with Pioneer Status enjoy a 100%exemption rom corporate income tax or the

rst 5 to 10 years o operation. In addition,companies with export revenues in excess o 20% o total revenues are eligible or tax

exemption on export pro ts.Te Economic Development Board (EDB) o Singapore runs a number o schemes to supportlocal I companies like the Start-up EnterpriseDevelopment Scheme (SEEDS). Under thisscheme EDB provides equity support to a startup company by subscribing up to 50% o itsshare capital subject to a maximum investmento USD$300,000. EDB also provides managerial

support to local companies through Directorsand Advisors or echnopreneurial EnterpriseScheme and the Enterprise Investment IncentiveScheme.

KoreaTe Corporate Income ax Law gives specialbreaks to the I sector under the aegis o axIncentive Limitation Law ( ILL) or oreigninvested companies involved in advancedtechnologies. Bene ts include a 100% exemption

rom corporate income tax or 7 years rom therst year in which pro t was generated or the 5th

year o operations, whichever is earlier. For thenext three years, the income tax exemption isapplicable to 50% o the pro ts. Additionally divi-dends are exempt rom dividend withholding tax.Te ax Incentive Limitation Law ( ILL) grantsexemption rom custom duties, VA , specialexcise tax to the companies set up with oreigninvestment. Such companies also get up to100% (prorated on the oreign ownership ratio)exemption rom the aggregate land tax or the

rst 5 years o operation and up to 50% or thesubsequent 3 years

A comparative summary o the scal policies o indi-vidual countries has been presented below.

. Innovation policiesChina

Te Policies or Encouraging the Developmento So tware Industry And Integrated Circuit (IC)Industry ramed by the State Council providesincentives or so tware enterprises to invest inresearch & development. Any amount exceeding3% o VA paid on sale o so tware products arere unded to the company provided the amountis used in research & development.Patent Law o the Peoples Republic o China

was amended in 2000 with patent right orinventions being valid or 20 years and thepatent rights or utility models and designsvalid or 10 years. Te Copyright Law wasrevised in 2001 to include computer so twareunder the de nition o works enjoyingcopyright, with the copyright being valid or

ty years. Te rademark Law, revised in 2001,


4/18


states that the period o validity o a registeredtrademark shall be 10 years. Te above amend-ments are in compliance with W Os

Agreements on rade-Related Aspects o Intellectual Property Rights ( RIPS).

Additionally the Measures or AdministrativeEn orcement o Patent promulgated by theState Intellectual Property Ofce o China in2001 aims at e ectively resolving patentin ringement and other related disputes.China has a network o incubation centers whichare usually set up in partnership between the

municipal/local government and domesticventure capital investors. Almost all I Parkshave incubation acilities or start up/early stagecompanies.

IndiaGiven Indias ederal structure, a number o state/provincial governments o er I compa-nies additional incentives linked to research

and development. For example, the govern-ment o Andhra Pradesh as part o its I Policy,20052010, o ers ree space or 5 years tocompanies engaged in high-end R&Dtogether with requisite so tware tools. Underthis policy, the cost o ling patents are alsoreimbursed to companies based in the state.Te Indian Copyright Act, 1957 was amendedin 1994 to include computer programs underthe de nition o literary work and any in ringement o such copyrights was made apenal o ence. Te amended Copyright Act is

based on the Agreement on rade Related Aspects o Intellectual Property Rights ( RIPS)and provides or a Copyright ribunal and acopyright protection period o 60 years.S PI, under the Ministry o Communicationsand In ormation echnology, provides incuba-tion acilities in each o its 49 centers spreadacross the country, with plug & play acilities,shared services support.

Fi u 16.Fiscal Policy Highlights or Di erent Countries

ch na ind a Ma ays a S nga ore Koreadi c t x c c ssi s& w iv s

I i c t x c c ssi s& w iv s

Subsi i s, g s h ci supp

r uc i c mx 10%

k y s wp is s i i-

by h s

n cus msdu y d imp rVat f r s f w rec mp iesimp r i g c pi lequipme i clud-i g ech l gy.

I c m t h i y p f mp s

Hi h p ci i c mpu s &

s wIt P ks u hSeZ p icy j ys100% It b k 5 y s, 50%

mp i s fv y s up

50% h p -i s p u h b ck

5 y s

du y imp sby StPI u i sCSt imbu s m pu ch s s mdta

r b i c s by sv m s

Subsi y c -i >2000 j bs

100% mp-i MSC

S us c mp i s 10 y s

100% uc i c pi p -

i u

du y- imp mu im i

quipm

50% c s si-bi i y s u i s busi ss p i

SMes

100% mp-i pi

s us c mp i st p f m

p s vic smp

equi y supp s -up -

p is s u hSeeds sch m

100% C p - i c m

mp i 7 y s100%

mp im ivi

wi hh i, i

i v s m ich y

e mp i mcus m u i s,Vat, sp cicis , c mp i s sup wi h ii v s m


5/18


MalaysiaTe Ministry o Science & echnology Industries (MoS I) operates a number o schemes to promote innovation among local Icompanies. Schemes like the Industry Researchand Development Grant Scheme (IGS), MSCResearch and Development Grant Scheme(MGS) and Demonstrator Applications GrantScheme (DAGS) o er up to 70% subsidy onR&D project costs. Te Commercialization o R&D Fund (CRDF) has also been set up tosupport commercialization o R&D products

rom market survey to product launch.Te Copyright Act, 1987 was amended in 1999to include computer programs under thede nition o literary work and any in ringe-ment o such copyrights was made a penal

o ence. Te amended Copyright Act is based onthe Agreement on rade Related Aspects o Intellectual Property Rights ( RIPS) andprovides or a Copyright ribunal and a copy-right protection period o 50 years.Te echno-preneur Development Flagship( DF) program was initiated to support localentrepreneurs through various incubationservices. Te National Incubation Network (NIN) under this program includes a country-

wide network o incubation centers or start-upsand early stage companies.

Singapore Under the Income ax Act a number o taxincentives related to R&D are o ered likedouble deduction o all expenses related to R&Dand exemption o withholding tax o royalty ortechnical ees paid to non residents.Te Economic Development Board (EDB) o Singapore, through a number o schemes like theInnovation Commercialization Scheme (ICS),Innovation Development Scheme (IDS) and

echnology Capability Upgrading Scheme,o ers grants to support R&D activities. Underthe Research Incentive Scheme or Companies(RISC), EDB reimburses cost incurred ontraining, investment in equipment and pro es-sional services related to R&D projects throughgrants.Te Copyright Act was amended in 1999 toharmonize it with key provisions under RIPS.Te amended Act provides or a 70 yearprotection or copyrights and setting up o aCopyright ribunal to adjudicate IPR violations.

EDB runs an island wide network o incubationcenters named Hub o echnopreneurs(HO Spots), which provide workspace andservices like shared administrative resources,assistance in und-raising and marketing, andgeneral mentoring and guidance. Te NationalScience & echnology Board acts as an advisory board to companies operating rom theseincubation centers.

KoreaTe Korean ax laws permit up to 7% o theinvestments incurred in R&D and man-powerdevelopment as tax deductible expenses. Up to50% o the income rom technology trans er by the patent holder is also exempt rom incometax.Te Korean government provides matchinggrants to original investments by oreigncompanies in R&D centers in the country through special support unds set up or thepurpose. Ministry o In ormation &Communication and Ministry o Science &

echnology supervise and operate similar undsto provide nancial support or R&D pro-grams.In 2000, the Copyright Act, the ComputerProgram Protection Act, and the rademark acthave been amended to comply with the RIPsagreement. In addition, a Standing Inspection

eam (SI ) has been set up under the Ministry o Culture & ourism and Ministry o In ormation & Communication, to work withMinistry o Justice to intervene on various IPR in ringementsTe Small & Medium Business Administration(SMBA) provides a single-point supportmechanism to the Small & Medium Enterprisesin areas such as human resources, marketing,and innovation. SMBA also supports organiza-tions like the Korean Business Incubation

Association set up by incubators and incubationtenants to support and acilitate technical

commercialization and marketing activities o incubators and incubation tenants. Almost all IParks have incubation acilities which are usually supported by the provincial/local Governmentand academic institutions or start up/early stagecompanies.

A comparative summary o the innovation policieso individual countries has been presented below.


6/18

8 International Good Practice or Establishment o Sustainable IT Parks

. Human Capital Policies

ChinaTe Law on Science and echnology Progress(1993) and Law on Popularization o Scienceand echnology (2002) enacted by Ministry o Science and echnology encourage enterprises tocooperate with research & developmentinstitutes to increase their capabilities. Tegovernment has included in its policy theresponsibility o school and educational institu-tions to make science and technology educationan essential part o the curriculum to popularizethe same among students and teenagers.

Te government has recently allowed entry o oreign players into higher education on a case by case basis. For example, the Indian I trainingcompany NII is in the process o setting up anetwork o centers or providing training inprogramming & spoken English to graduates.Chinese visa regulations are airly simple andallow long term multiple entries rom most o the countries based on valid letters o invite rombusiness partners in China.

IndiaEducation is a concurrent subject in India, withboth the central ( ederal) and state (provincial)exercising control. Consequently, a number o state governments have initiated changes likecompulsory introduction o English at primary level with a ocus on emerging BPO sectortrends, setting up specialized units under theeducation department or tracking emergingtrends in the I sector and planning changes inthe curriculum.

A number o state (provincial) governments alsosupport training & development initiatives witha ocus on meeting the manpower requirementso the I sector. For example, the government o

Andhra Pradesh has set up Jawahar KnowledgeCenters in all 23 districts o the state with thesupport o industry associations and corporateentities to impart ocused technical and so tskills to engineering graduates with a ocus onthe I sector. Te government o Karnataka runs220 training centers all over the state with thecurriculum ocused on di erent types and levelso I and BPO skills.

Fi u 17.Innovation Policy Highlights or Di erent Countries

ch na ind a Ma ays a S nga ore Korear s ch

v pm supp

I c u p p yi h s p c i

P vi i i cub i

ci i i s & s vic s

a y m uc i 3% Vat p i

s s wp uc s b -

u p vii is us r&d

P l w C py i h &t m k l ws

vis i iwi h trIPS.

a m s It P ks

h v i cub -i ci i i ssupp byp vi ci / cg v m &

c mic i s i u-i s

F sp c , s -w s& pc s imbu s m

hi h r&dc mp i s s

v100% It uc i

c pi p i-u wi h sp c

sci ifc s ch

am I iC py i h ac ic mi y wi htrIPS

g v m u

c u y-wii cub i c su StPI

Up 70% c s r&d p j c simbu s u

IgS, MgS dagSCrdF suppr&d i v s m s

am M y-si C py i hac i i wi htrIPS

n i I cub -

n w k(nIn) u htdF p msp s byg v m

200% uc i r&d p s s

r&d s urISC, ICS, IdSsch m s

C py i h ac ii wi h trIPS

edB u s 7 Hot-

Sp s i cub ic s, wi hm m sup-p m nStB

Sp ci r&dp m i u st c i

p i u &i v s m ir&d ci i i st mp i

m ch ys i c m

am m s C py i h ac ,C mpu P -

m P c iac & t m k

c i i wi htrIPS

Sm & M iumBusi ss a mi -is i wi h K BIap vi s SMe &s -up supp


7/18


Visa regulations in India have been simpli ed oracilitating easy movement o pro essionals rom

other countries. India has also entered into anumber o bilateral agreements with countrieslike Singapore (a Comprehensive EconomicCooperation Agreement was entered in 2005)

or easy mobility o pro essionals between thetwo countries.

MalaysiaTe 2nd National Science & echnology Policy identi es development o human resourcescapacity & capability as a key thrust area orscience & technology (S& ) development. A number o speci c measures have been suggestedin terms o achieving a speci c proportion o students pursuing S& courses to thosepursuing other streams at the upper secondary level, including setting up a post-graduate S&research university, introduction o nancialincentives or students pursuing S& , expandingthe operations o the S& Human ResourceDevelopment Fund, making academic curriculamore hands-on & innovation oriented, andstrengthening mechanisms or allowing industry to contribute to curricula development.Di erent training programs and institutes o ertraining programs to improve the available skillsets in line with industry requirements. Forexample, the MSC K-Workers Development

Institute was set up by the Ministry o Education with the mandate o matching the demand andsupply o knowledge workers. Te government,under the 2nd S& Policy, has initiated measures

or strengthening the existing system o certi ca-tion o technical personnel & classi cation o skills, expanding the operations o the SkillsDevelopment Fund to nance industry trainingprograms, allow joint management o the und by the private sector and leveraging existing acilitiesat industrial training & other institutes.In addition to these, the government has takenup a number o initiatives like relaxed visa

regime to acilitate mobility o resources. MDeCis empowered by government o Malaysia toapprove applications by companies to employ

oreign nationals.

Singapore Over the years Singapore has developed an openeducation policy inviting oreign universities toset up campuses in Singapore. Currently 15

international universities have their campuses inSingapore. Te education curriculum at schooland graduation level have been adapted to suittechnology based industry. For instance com-puter education has been made compulsory inschools. As are result a huge pool o Englishspeaking I resources is available in Singapore.Te Ministry o Education (MoE) in partnership

with IDA runs a number o training programslike In ocomm raining Framework (I F) totrain di erent segments o the population andCritical In ormation Resource Program(CI REP) to train I pro essionals in latestindustry skills.Singapore has a policy or enabling easy entry orskilled oreigners through its Employment Pass/Center Pass schemes. Foreign entrepreneurs

wanting to promote businesses in Singaporeneed to apply or EntrePass, an employmentPass or oreigners. Te application proceduresare quite simple. A success ul applicant canregister the new business on the basis o thispass. In addition to easy visa procedures, thecountry has entered into bilateral agreements(typically re erred to as ComprehensiveEconomic Cooperation Agreements) with anumber o countries or acilitating easy movement o pro essionals.

KoreaTe Korean government developed the BasicFramework or National Human ResourceDevelopment 2001 or creation o a knowledgebased society. Te government has also imple-mented plans like Adapting IC into EducationMaster Plan-I, 19972001 and Adapting ICinto Education Master Plan-II, 20012005,

which ocus on ully utilizing & integrating ICinto the National Curriculum in elementary andsecondary school education. Te government hasalso adopted the e-Campus VISION 2007 toencourage the use o IC in university educationand research.

Both government and private sector organiza-tions o er certi cation programs in the eld o in ormation and communication technologies.Te national certi cation system, implementedunder the National Skills Certi cate law isadministered by the Ministry o In ormation andCommunication and Human ResourcesDevelopment Service o Korea, under theMinistry o Labor. Currently there are more than


8/18


100 I related certi cates issued by industry

associations or corporate groups. Te govern-ment rom time to time recognizes certi catesissued by these private institutions as nationalcerti cates. Currently over a million people havebeen trained & certi ed under these schemes.Te government has over time created a strongnetwork o support institutions to promoteresearch on e-learning, develop in ormationrelated to education and research like the Bureauo Educational In ormation & echnology (1996) under Ministry o Education and KoreaEducation and Research In ormation Services(KERIS,1999)

In 2000 the 10 Million In ormatizationProgram was launched by the government o Korea as an initiative to bridge the digital divide.In the same year the National Center orLi elong Learning was set up under the aegis o Li elong Learning Act (March 2000) to carry outresearch, collect in ormation, and providetraining to instructors and administrators onIC education with a ocus on senior citizens,

illiterates, and the disadvantaged like the dea

and the blind.South Korean visa regulations are airly simpleand allow ve year multiple entries rom most o the countries based on valid letters o invite rombusiness partners in the country.

A comparative summary o the human capitalpolicies o individual countries has been presentedbelow.

. Investment Climate Policies

ChinaTe Ministry o In ormation Industry isresponsible or ormulating and administeringpolicies or the development o Chinas I andtelecommunications sector at the Federal level.

At the local government level, the provincial/municipal governments play a key role in areas

Fi u 18.Human Capital Policy Highlights or Di erent Countries

ch na ind a Ma ays a S nga ore KoreaIt cus

uc i p ici s& cu icu um

t i i & c p ci ybui i i i i iv s

F ci i imp ym c i

c i

Sp cifc ws p pu iz i

su ip ss sci c

ch ye y ip y s i hi h

uc i c s c s b sis

r&d i s i u sb s i B iji

c u u sch s/ i -

i i s i u s j i ywi h c s,u iv si i s sci ifc s chi s i u s qu if

i i p s -u s

Simp if visu i s

P iv s cp icip iC mpu s y e -

ish m p im yv i m y s s

It cus i ic s suppby v i us sg v m s

emp ym i kf ci i c iv sSimp if Vis

u i s

2 S&t p icycus s m ki

cu icu m i -v i i ,

i v v m p iv s c is i cu icu

op i s Ski sd v pm Fu

u m u2 S&t p icy supp i us y

i i p ms,v i xis i

i us i i ici i i s

MSC K-W k s

d v pmI s i u s up byFi c Mi is y

Md C mp w- pp v

vis /w k p mipp ic i s

C mpu uc -i sch

ve is c

umb i i / -

i u iv si i s

ItF, CItreP u byIda e uc -

i Mi is y

Simp if visu i s

e p ss i s s i

up busi ss

It i cy ivh u h 10 mi -i i m iz -i p mC mpus

Visi 2007 c u i

us ICt iu iv si i s

Sp ci iziz i s

such nCa,IIta, etrI,

p m ir&d i hi h

ch y

Simp if visu i s


9/18


such as overseeing development o the I sector& I parks in their respective regions andmanaging local level venture capital unds.Te country promulgated the ElectronicSignature Law in April, 2005, or establishinglegal validity o electronic signatures andinstitutionalizing the process o issue andcerti cation o digital signatures.Te role o private sector/ oreign players in Isector development is evident rom theMemorandum o Understanding (MoU) enteredinto between the State Development & PlanningCommission o China with Microso tCorporation o USA in 2002. Tis is an allencompassing MoU under which Microso t willassist China in acilitating development o theI sector besides committing investments o USD$750 million over a three year period.China has three main stock markets viz.Hongkong, Shanhai & Shenzen Stock Exchange

with 1164 ,837 and 569 companies listed in therespective stock exchanges. Te Hang Seng is theleading index or shares traded on the HongKong Stock Exchange. Started in 1969, theindex consists o the 33 largest companies thattrade on the exchange.In 2005, 44,019 oreign-invested enterprises

were newly set up in China, with a estimatedinvestment value o USD$72.406 billion InChina FDI is allowed in a number o sectors

including retail, so tware and electronics. Many oreign players are present in the I sectorincluding Motorola, Samsung, Langchao, andLG. (Source: www. di.gov.cn).China is a signatory to a reaty or thePrevention o Double axation with over 65countries all over the world. Among them aremajor I markets like USA, UK, France,Germany, and Japan.

India At the central ( ederal) government level, theDepartment o In ormation echnology

(DoI ), Ministry o Communication &In ormation echnology, government o India isresponsible or ormulating speci c policies andpromoting the Indian I sector. It has ormu-lated and administers a number o schemes likeS PI, Electronic Hardware echnology Park (EH P), Export Promotion Capital GoodsScheme(EPCG) or providing variousincentives & concessions to I companies.

Te DoI has promulgated various legislationssuch as the In ormation echnology Act, 2000,and the Semiconductor Integrated CircuitsLayout Design Act, 2000 as part o its initiativesto create a supportive legal ramework ordevelopment o e-commerce in the country. Ithas also initiated the National e-Governanceprogram (NeGP) or adoption o I to bringabout improvements in citizen service delivery both in the Central Government as well asindividual states. Most o the large I companieshave bene ted through signi cant additionalbusiness by participating in NeGP.Te state (provincial) governments also o eradditional bene ts & concessions through theirrespective Departments o In ormationechnology/nodal agencies. Many states have

declared the I & BPO sector as essentialservices to provide additional operational

exibilities to companies in these sectors.India has a developed and well-regulated

nancial services sector, including liquid andvibrant capital markets in the orm o Bombay Stock Exchange and the National Stock Exchange. Tere are a large number o interna-tional & domestic nancial services players suchas commercial banks, nancial institutions,investment banks, venture capital & privateequity unds, stock brokers, and oreign institu-tional investors. A number o international

venture capital/private equity unds such as theCarlyle Group, the Blackstone Group, andGeneral Atlantic Private Equity operate in thecountry, in addition to domestic players likeICIC and Kotak Bank. o encourage venturecapitalists to invest in India, dividend incomeand long term capital gains rom investments ina VC undertaking are exempted rom tax. TeSecurities and Exchange Board o India, theregulatory body or Indian capital markets in itsGuidelines or Venture Capital has laid down theregulations governing venture capital unds inIndia on listing and inviting public subscription

or enterprises unded by VCs. While the country lags behind in key ICindicators, large cities have access to world classtelecommunication in rastructure. Signi cantcompetition exists in most o the sectors (roads,airports, telecommunications), which usually play key supportive roles in I sector develop-ment, with both government and private sectorplayers being present.


10/18


India has double taxation avoidance agreements(D AA) with various developed and developingcountries such as the U.S., the UK, France,Germany, China, Brazil, Malaysia, and South

A rica. While there are FDI restrictions or some o thesectors like retail, which usually are key bene -ciaries o I sector spill over e ects, 100% FDIis permitted in other sectors like real estate. Withland use being a state (provincial) governmentsubject, most o the state governments haveallowed a combination o business, residentialand commercial end use as ar as I Parks areconcerned, to enable maximization o spilloverbene ts.

MalaysiaMalaysian Industrial Development Authority (MIDA), the governments principal agency orpromotion and coordination o industrialdevelopment in Malaysia o ers a number o

scal bene ts or IC companies. I companiesengaged in so tware development are eligible tobe granted Pioneer Status. Further to acilitateinvestment in I parks, MultimediaDevelopment Corporation (MDeC) was set upto act as a single window clearance agency orprospective investors in MSC.Te international trade policy o Malaysia isdesigned to increase exports. Malaysia is part o

the ASEAN Free rade Area (AF A), establishedin 1992 to reduce/eliminate tari s on intra- ASEAN trade. Malaysian External radeDevelopment Corporation (MA RADE) was setup in 1993 to act as a nodal agency or localexporters and oreign importers. Te country hasalso executed D AAs with 52 countries includ-ing Japan, Korea, Germany, France, and the UK.Te Malaysian Communications andMultimedia Commission (MCMC) was createdin 1998 to regulate the IC industry.Communications and Multimedia Act, Digitalsignature Act and Computer Crimes Act were

promulgated in late 90s to ensure security andlegality o electronic transactions.Te government has embarked on a drive tocreate robust in rastructure suitable or Iindustry. With the privatization o the govern-ment telecommunications department in 1987and the ormation o the National

elecommunications Policy (N P) in 1994 themarket is now ully liberalized. Te government

in partnership with private sector has investedheavily in building a high speed network (10Gbps) that connects MSC with Japan, ASEAN,Europe, and the U.S.

Singapore In Singapore, I was identi ed as a core sectoras early as 1980 when the rst ve yearNational Computerization Plan (NCP) was

ormulated. Te industry has been awardedPioneer Status. In addition to a number o special nancial incentives it enjoys privilegeslike simpli ed compliance procedures.In ocomm Development Authority o Singapore(IDA), a statutory board o the Singaporegovernment under the Ministry o In ormation,Communications and Arts was ormed inDecember 1999 to promote and developSingapores vibrant I industry. Te SingaporeEconomic Development Board (EDB) acts as anodal agency or administration o nancial &other incentives across all industry sectors.Since 1965, Singapore has entered into anumber o D AAs with countries including

Australia, Canada, China, France, Germany, andIndia. Over the years, Singapore has signed reetrade agreements with countries like USA, Japan,India, Korea, Europe and others aiming to makeSingapore a services hub.In 1998, the Electronic ransactions Act (E A)

and Computer Misuse (Amendment) Bill wereenacted to provide a legal oundation orelectronic signatures and to prevent potentialabuses o computer systems.In April 2000, government o Singaporeremoved restrictions on telecom licenses to intro-duce ull competition in the telecom sector.Te Singapore Stock Exchange (SGX) was ormedin 1999, is the Asia-Paci cs rst demutualizedand integrated securities and derivatives exchange.SGX is at the ore ront o exchanges globally inattracting international issuers and is rapidly emerging as Asias o shore risk management

center or international derivatives.

KoreaGovernment ocus and emphasis on IC isevident rom the number o white papers andvision documents ormulated by Ministry o In ormation & Communication like WhitePaper: Internet Korea 2005, Broadband IKorea Vision 2007, I 839 Strategy 2004,


11/18


Dynamic Digital Korea, White Paper 2004, e-Korea Vision, 2006, which envision Korea asthe world leader in I .Korean government has enacted various Ispeci c legislations like Act on Promotion o In ormation & Communication Network Utilization and In ormation Protection 2001,Act on the Protection o In ormationIn rastructure 2001, Electronic Signature Act1999, and Protection o CommunicationsSecrets Act 1993 to promote I sector. Tegovernment has entered into agreements withcountries like China and Japan or enhancingin ormation security. Te Korean governmentis implementing Five-year Development Plan

or In ormation Security echnology 20012005 and Mid & Long-term Basic Plan orIn ormation Security 20032007 or thedevelopment o in ormation security tech-nologies.Te government has extended nurturing supportto eight technology based services, three crucialin rastructures and nine new business growthengines under its I 839 strategy 2004 to ensuregrowth o the Korean I industry.Large amount o public unds has been in usedby government to create a domestic venture capi-tal market. Prominent examples o governmentventure capital unds include Small andMedium Business Fund(SMBF) (which has

initiatives like Dasan Venture and Limitedpartnership unds), Te technology CreditGuarantee Fund, and special unds such as TeIn ormationalisation Promotion Fund and TeScience and echnology und. Te governmenthas provided urther support in orm o legisla-tion allowing venture investments by banks,providing tax incentives to VCs, and creation o KOSDAQ or high technology start-ups.Te Korean Stock exchange has a total numbero 729 listed companies as o November 2006.Te main tracking index is the KoreanComposite Stock Price Index. Te procedure or

buying stock on the Korean market is compli-cated, especially or oreigners. An investor whointends to trade securities on the KSE marketmust open an account with a KSE membersecurities rm because only KSE member rmshave direct access to the KSE market.Te government provides incentives or advancetechnology FDI in the orm o exemption/reduc-tion o national taxes, exemption/reduction o

regional taxes, ree lease o land in ForeignInvestment Zones and a negotiated Cash Grantto select companies.Korea has D AA with more than 60 countriesincluding India, China, Germany, and Russia.

A comparative summary o the Investment climatepolicies o individual countries has been presentedin Figure 19.

. Key Findings As is evident rom the analysis o the regulatory andpolicy regime in di erent countries, most countrieshave ollowed a consistent approach in terms o thedi erent types o policy interventions or the

development o the I sector. However, the level o direct government involvement varies acrossindividual economies, with some governmentsadopting a acilitative approach while others haveopted or direct interventions. For example, whilethe government o India has primarily depended onprivate sector venture capital/private equity invest-ments, China has opted or government-sponsoredventure capital unds. In the current section, wehave attempted to identi y key trends in policy development which appear to have an impact on theper ormance o the I sector. Te six case studiesalso brings orth a number o policy initiatives

which acilitated the growth o I sector in generaland I Parks in particular. In this section, we alsoprovide illustrations o such policy enablers.

Adopting a holistic approach to policy development is key As development o the I sector and I Parks isdependent on a number o other sectors like telecom-munications, roads, airports, venture capital/privateequity, capital markets, most success ul countrieshave put in place suitable policies or improvingefciencies and service levels in these sectors. Tus,

countries like Singapore were one o the earliest toput in place requisite policies or acilitating competi-tion and private sector participation in telecommuni-cations and in rastructure and ensuring e ectiveregulation and development o the nancial servicessector, including capital markets. Even India, whichis categorized as a developing country, has a policy regime which supports private sector participationand competition in most o the supporting sectors, in


12/18


addition to a well regulated and vibrant nancialservices sector. On the other hand, countries like

China are yet to achieve the same level o maturity intheir nancial services sector and hence have todepend on government-sponsored venture capital

unds or supporting I sector development.

E fcient institutional and implementation mechanisms are critical

While most countries have adopted regulations inline with established good practice, establishing the

proper institutional mechanisms is integral toe ective implementation. Most o the countries

have attempted to achieve this by constituting nodalorganizations within government or providingsingle window services. For example, most o theincentives o ered to the I Sector and I Parks inMalaysia are administered through the MultimediaDevelopment Corporation. In India, most o thebene ts and concessions are on o er through theSo tware echnology Parks o India, which has itsofces throughout the country.

Fi u 19.Investment Climate Policy Highlights or Di erent Countries

Simp if i s i u i imp m im w k

F ci i i c ssb i v s m s

e b i-C mm c

acc ss V uC pi

e b iI s uc u

v pm

Mi is y I m -i I us y s h

p icy m ki &mi is iv -

cy, wi h supp iv m p vi ci

g v m sM U b w

v m Mic s

100% FdI wi It & BPo c mp -

i s, It P ksdtaas wi h u65 c u i s

e c ic Si ul w p ss i2005

r c i s mb VC u s

g v m sup-p xis i VC

u s p vi ci /It P k v

C mp i ivc m m k wi h

mi c sw p y s

Pub ic p ivp ship (PPP) physic i s uc-

u v pm

d p m I -m i t ch y

p icy m ki& mi is ib sC g v -m sch m s ikStPI siwi w s vic sIt c si

ss i s vic s im y s s

100% FdI i It &BPo c mp i s,It P ksdtaas wi h v -

p v p-i c u i s

F m i Cybapp t ibudi i c i c iu It ac , 2000

P s c s b ish b

VC u sn x i c m

m VC u -ki

n i t c mP icy, 1999

p up c m-mu ic i m k

p iv p y sPPP i s uc u

v pm

Md C c s s s p cy i v s s i

MSC.S w v p-m PiS us i us y

Matrade s up i1993 u MItIt x i s wi h

J p , K ,g m y, F c ,UK, c.

100% FdI i It &BPo c mp i s,It P ks

C mmu ic i s& Mu im i ac ,di i Si uac C mpuC im s ac ci 90s

d ic V uC pi u s

ik MSCVC tPMVF

n i t c mP icy p ss i1994PPP i s uc u

v pm

It s Pi S usi us y.th 1s 5 ynCP mu

s y s 1980Ida m i1999

100% FdI i It &BPo c mp i s,It P ks

C mpu Misusac e c ict s c i ac

c i 1998

Fi ci hub asi wi h bVC u sn x i c m

m iv s m sh by VC

ut c mmu ic -

i m k ib -iz i 2000PPP i s uc-

u v pm

F cus i i i -iv s ik Cyb

K 21 i i i -iv & It K

visi 2007 v p w

i ICt

Ftas wi h USa, J p , I i ,K , eu p

h sdtaas wi hm h 60

c u i sdtaa wi h v60 c u i s

e c icSi u ac

c i1999, P c i

I m iI s uc uac 2001.

g v . b ckVC u st x c c ssi s

VC u s

It839 s y v v -

pm

ch na ind a Ma ays a S nga ore Korea


13/18


Te developer o an I Park requires variousclearances or constructing buildings and related

acilities in the park. Such clearances includebuilding plan sanctioning, re services clearances,sewerage & drainage clearances, and environmentalrelated clearances. A one-stop clearance agency helpsthe developer to get these I Park related clearances

aster, which helps them reduce time and thusenables reduction in project cost. For example, inHyderabad, APIIC acts as the single point clearanceagency or building and related construction o Hitec Park. Developers have signi cantly gained

rom this arrangement.

Intellectual property protection policies representanother case in point. While most o the countrieslike China and India have amended their Copyright Acts in line with RIPS and have also set updedicated Copyright ribunals or adjudication,litigants have the option o approaching the existing judicial system as a nal recourse. With the existinglegal system in both these countries being consideredrelatively less efcient, value added intellectualproperty related I activities such as new technology development have taken a backseat compared toother countries like Singapore and Korea, which havea aster process and a more streamlined judiciary.

Focused policies or IT Park development are critical or developing ICT economiesLeveraging I Parks or I sector developmentbecomes critical in economies like China and India,

which lag behind developed countries in key ICindicators. With development o the I sector beingclosely linked withsupport sectors like telecommunications, physicalin rastructure, it is easier to provide these supportservices in geographically concentrated zones/areas.Consequently, many o these countries have adoptedpolicies or encouraging development o I Parks. An example o such a policy would the In ormation

echnology Special Economic Zone (SEZ) policy inIndia, which o ers a number o scal/other bene tsto companies located in approved I Parks. On theother hand, countries like Singapore, where therequisite support in terms o best in class telecom-munication and physical in rastructure is availablethroughout the country, have adopted policy regimesapplicable to all companies in the I sector, asagainst companies located in a designated I Park.

Encouraging private sector participation is critical

Almost all countries have adopted a variety o policy mechanisms or encouraging private sector invest-

ment not only in the I sector but in developingsupport sectors such as nancial services, telecom-munications, and physical in rastructure develop-ment. Other than a ew niche areas like speci cresearch & development initiatives where govern-ment organizations have played a direct role, thegovernments role in most countries has been that o a acilitator. While in some countries, this representsa conscious decision on the part o the government,in others it has also been driven to an extent by existing budgetary/ scal constraints.

Many o the parks studied were developed through

public-private partnership. Such policies havebene ted both the private sector as well as govern-ment. For example, in case o Cyber owers,Hyderabad, government contributed by providingland and the private player was responsible ordeveloping the land and construction o thebuilding. Acquiring vast plots o continuous land

would have been very difcult and time consumingor the private sector. With the government

acquiring land through legislative means, the privatesector developers ensured that the related acilities

were constructed in a record time o 18 months.

Flexible land-use policies providingthe developers more choice Flexible land use polices permits the developer tobundle I ofce space construction with construc-tion o other acilities such as shopping complex,hotels, eateries, and housing complex. Such bundlingmakes the project nancially more attractive giventhat the returns rom the commercial/residential enduse are typically higher. For example, in CFZ,Malaysia 500 hectares o land has been zoned ascommercial use. In Hitec City, Hyderabad, 40% o the net developable/usable area can be used or

housing, club house, recreational center, shoppingcenter, a school and other support activities.

Linking incentives/subsidies withidenti ed strengths/core competencieso domestic companiesIn developing countries like India and Malaysia, mostI and I ES companies are export oriented with themajor markets being the U.S. and Europe. It may be


14/18


observed that governments in these countries o er anumber o scal incentives on export income/pro t.On the other hand in countries like Singapore wherethe target market segment or most I companies ishi-technology, research intensive products, thesubsidies and incentives o ered by governmentagencies are linked to R&D spending. Adopting the

scal policies to suit the strengths and markets o indigenous companies is an e ective policy measureto promote the domestic industry.

E ective coordination with other ministries/departmentsIt is important to understand that the presence o good policies alone do not sufce, it is equally important that these policies get efciently implemented. For proper implementation o

policies it is important that there is e ective co-ordination between various government ministries,agencies and departments. Di erent countries havetaken di erent strategies in to enable such co-ordination. In developed countries like Singapore,proper co-ordination between various departmentsand ministries administrating the subsidies &incentives has been ensured through efcient e-Governance systems. In the developing countrieslike India and Malaysia, a dedicated governmentagency has been created to administer the subsidiesand incentives. For example, in Andhra Pradesh,India incentives are administered through a high

level co-ordination committee called ConsultativeCommittee on I Industry which includesmembers rom various government departments (In ormation echnology & Communication, LaborDepartment, Municipal A airs Department, LandDepartment), utilities (electricity, water supply)and industry associations (HYSEA, NASSCOM ).Tis committee is responsible or granting variousprovincial/state subsidies, resolving implementationissues and prescribing guidelines or industry growth.

Having the right policy mix is essential or maximizing spill over bene ts

As has been established through the I Park casestudies, success ul development o an I Park inevitably leads to signi cant spillover bene ts interms o other economic activities such as realestate development, vibrant retail, and hospitality and nancial services sectors. Many governmentshave attempted to maximize these spillover bene tsthrough a suit o policies including allowing

exible land use, encouraging private sectorinvestments in these sectors or aster development,and motivating I sector participation in capitalmarkets. Tus, while India provides additional

exibilities to I & BPO companies or listing onpremium stock exchanges in terms o a lower paidup share capital viz. a viz. companies in othersectors, almost all the I Parks covered in thestudy allow mixed land use with a speci edproportion o the total land area earmarked orbusiness end use, commercial end use and residen-tial purposes. It is essential or incorporating such

exibilities to existing policies or promulgatingnew policies with these exibilities to maximizeeconomic development.

Fostering e cient linkages with other

economies is essential All success ul countries are observed to have policy and regulatory regimes which encourage trade andinvestment linkages with other economies. Suchlinkages are usually acilitated through a variety o policy instruments including liberal oreign directinvestment (FDI) guidelines, non-restrictive visa/

work permit procedures, unrestricted trade in goodsand services, and double taxation avoidanceagreements. However, the level o maturity o theindividual policies vary rom country to country,

with countries like Singapore adopting a relatively lower duty structure or imports across sectors, while

others like India o er a concessional duty structureor all capital goods imports speci cally or the I

sector.

There are additional fexibilities or policy ormulation in a ederal structure o government In countries like China, India, and Korea which

ollow a ederated structure with both Central(Federal) and State (Provincial/local) governments,regional governments have attempted to di erenti-ate themselves by providing additional bene ts/

concessions to I /I Park companies. For example,in India, a number o state governments o eradditional exibilities/bene ts including subsidieson capital investments & interest payments ando ering discounted land prices linked to employ-ment generation. In Korea too, much o thepolicymaking has gradually shi ted rom the ederalto the provincial governments. Such initiatives haveled to di erential development o the I sector in


15/18


di erent geographic regions within the samecountry, with individual local governments attempt-ing to di erentiate themselves through additionalbene ts/concessions and investor riendly imple-mentation mechanisms.

For countries aspiring to o er o shore BPO services, ormulation o a DataProtection Act is a necessity In view o the recent breaches in security in variousBPO organizations, enactment o a data protectionlaw has become a necessity. Tis has gained urtherimportance with the data protection directive issuedby the EU (Directive/95/46/EC on the protectiono individuals with regard to the processing o personal data and on the ree movement o suchdata), which constitutes one o the biggest market

or providing o shore BPO services. Based on thisdirective, UK has already enacted its DataProtection Act. Te EU directive and enactment o Data Protection laws by member countries imply that only countries having data protection laws inline with the EU directives will be avored or o -shoring BPO services rom EU member countries.Some countries that are trying to emerge as o shoreBPO destinations have already ormulated policiesaddressing this issue. For example, Department o

rade and Industry, Republic o Philippines hasissued Guidelines or the Protection o PersonalData in In ormation and Communications Systemin the Private Sector. Te guidelines also provides

or an independent third party namely, DataProtection Certi er, duly accredited by the govern-ment, to certi y the privacy program o a company and therea ter to monitor and oversee its implemen-tation and en orcement.

.8 Policy PrioritizationIt is evident rom the above that a number o policy interventions need to be undertaken by govern-ments to develop the countrys I sector. Tegovernments role in acilitating the growth o theI sector is primarily through developing holistic Istrategies linked to the core competencies o theparticular country such as innovation throughResearch & Development activities and low costskilled manpower. Te countrys I sector growthstrategy would require policy enablers which would

orm the basis or ormulation o speci c policy initiatives. Given that implementation o the Istrategy is crucial to the economic growth, specially

or developing countries, some policy initiatives may have short term implications like attracting Iplayers to the country while other policies have longterm implications like ensuring sustainability o theI sector. Policies that can be implemented in theshort term result in an immediate bene cial impact

or the sector or quick wins. Te impact o policiestypically aimed at sustaining the sector are seen overthe long & medium term like or a non-Englishspeaking country to ensure English speaking Iskilled manpower or the I sector may take 510years to be e ective a ter implementing the policy initiatives through the school system. Quick wins,although being ar rom comprehensive solutions inthemselves, act as building blocks to a sustainable Isector development.

Short-term o esSome o the key priority short term policies arehighlighted below:

Provide scal incentives to encourage private sector participationGovernment needs to provide scal incentives inorder to encourage private sector participation in theI industry. Tese incentives could be in orm o taxexemptions, or example in India, I and I ES

companies are provided with 100% exemption onpro ts rom export o computer so tware till 2010.Tey could also cover areas such as customs bene ts,subsidies or employment generation, and equity support or start-ups.

However, it is also critical that governments not justocus on providing such incentives to the I

companies, but also to support sectors like physicalin rastructure development like transportation,telecommunications, and real estate players. Forexample, the government o Singapore removedrestrictions on telecom licenses to introduce and

encourage ull competition in the telecom sector.Similarly, in India, the National elecom Policy o 1999 opened up the telecommunications sector toprivate players. As a result, a number o privatesector telecom operators started operations, resultingin immediate improvement in the countryscommunication in rastructure and customer servicedelivery on account o competition.


16/18


Establish an e ective implementationmechanism Single window nodal agency E ective implementation o the incentive policies is

one o the most important parameters that attractsthe private sector to invest. Te establishment o proper institutional mechanisms are integral toe ective implementation, with most governmentspre erring setting up single window/one-stopservices. Such nodal agency provide a one stopservicing acility or developers o I Parks as well asthe occupants/residents o such parks. An exampleo such single window/one-stop service nodal agency in an I Park is Multimedia DevelopmentCorporation in CFZ, Malaysia, which is the singlepoint o contact or park occupants or obtainingrequisite government approvals and acilitatingbusiness linkages with the government.Create a coordinating committee which fosters linkages with various government ministries,departments, and agencies It has been observed that developing/constructing anI Park requires the involvement/clearances romvarious government ministries/departments/agencies.It would be bene cial i a coordinating body comprising members rom various governmentdepartments (In ormation echnology &Communication, Labor Department, Municipal A airs Department, Land Department) and utilities

(electricity, water supply) be ormed so that theprocess o approving an I Park developers plans,acquisition o land, issues relating to utilities &supporting in rastructure can be undertaken. Such anempowered coordinating committee will ensure a asttrack clearance and approval process. An example o such a committee is the Consultative Committee onI Industry in Andhra Pradesh which is empoweredin areas such as granting various provincial/statesubsidies and resolving implementation issues.

Promote/Facilitate creation o an industry body speci cally or promoting and developing o IT sector Steps should be undertaken by the government to

acilitate/promote the creation o an Industry body or the I sector, which could represent the indus-

trys interests in issues like government procurement,in ormation security, work orce development,intellectual property protection and accounting,

nance and taxation, and act as a bridge betweenindustry and policy makers. One o the main

objectives o such body would be to maintain closeinteractions with the government in ormulating thenational policy and speci c action plans ordevelopment o the I industry. Te bodys mandatemay also include coordinating with oreign govern-ments and embassies to make the Visa and Work Permit Rules more industry riendly; interacting

with the Education Ministry, Universities on currentindustrys skill & uture skill requirements orensuring necessary changes in curriculum; andcampaigning & generating awareness againstso tware piracy and copyright laws.

Such an organization also o ers valuable services toits member organization in terms o encouragingthem to improve quality o service, adopt moderntechnologies and provide innovative solutionsthrough organizing regular interactions/I sectorseminars/meets. Te existence o such an organiza-tion also provides valuable linkages betweenentrepreneurs, investors, organizations and individu-als desiring to connect with and mutually leveragecomplementary skills, services, resources, contactsand talents within the country. Tis also provides anideal orum or overseas and domestic companies toexplore the vast potential available or JointVentures, Strategic Alliances, Marketing Alliances,

Joint Product Development, etc. An example o such an Industry Body is NASSCOM in India. Box6 provides a brie description o Nasscom.

Design fexible land use policies or attracting private real estate playersFlexible land use policies are required to attractprivate sector real estate players to invest in develop-ment o I Parks, as such policies can ensure higherreturns on investments or the Park developer. Suchpolicies typically allow mixed land-use i.e. allow residential and commercial land-use along withindustrial land-use. Other means o providingincentives to developers include allowing a higher

oor space ratio. Te Floor Area Ratio (FAR) or FloorSpace Index (FSI) is the ratio o the total oor area o buildings on a certain location to the size o the lando that location. By allowing a greater FSI, govern-ment enables the private investor to create more space which can be rented out/sold to occupants and thusenables them to realize higher revenues.

long-term o esBesides the above-mentioned short term policiesthat can be implemented on a priority basis to kick-start the I sector development, governments would


17/18


also need to consider implementing policies havinglong term implications or ensuring sustainability o the I sector. Tese include educational re orms toattract private sector in education; oster linkages

with other markets like the capital market to attractprivate unding, introducing Corporate Governancenorms so that even i some short term measures like

providing scal incentives are removed a ter aspeci ed time rame, the continued development o the sector can be ensured. Long-term policies shouldbe aligned to the core competencies o the country.For example, i a countrys I strategy is to ocus onencouraging I so tware development to leverage itslow-cost educated manpower base, the government

Box 6. National Association of Software and Service Companies(NASSCOM)naSSCoM is h ch mb c mm c h It s w & s vic s i us y i I i h vi v 1100 m mb s, which v250 b c mp i s m h US, UK, eU, J p , Chi . naSSCoM w s s up ci i busi ss is w s vic s c u v c m s ch i s w ch y.

naSSCoMs visi is s b ish I i s h 21s c u ys s w p w h us p si i h c u y s h b s u cihub s w s vic s. naSSCoM is c mmi w k p c iv y c u i s m mb s p w c ss mm p c ic s, bui & uph hi h s qu i y s s b c m b y c mp i iv . th p im y bj c iv naSSCoM is

c s c ys h w h h s w iv It i us y i I i . o h s i c u ci i i busiw s vic s, c u m v c m s ch, p p i uc i mp ym , b i h w

h I i c my h u h h v pm h It s c p vi i c mp i busi ss b s b c mi sv i b s u ci . n ssc m is i umb c ivi i s v pi h It s c I i which i c u s:

Fostering Partnership with the Government naSSCoM h s p s iv s i v i us c mmi s i h v m I i , i c u i h Mi is y I m i t ch y,Mi is y C mm c , h Mi is y Fi c , d p m t c mmu ic i , Mi is y Hum r s u c s d v pm , Miis y l b , h Mi is y e a i s. naSSCoM s c s s c su i b y v i us s v m s i I i

naSSCoM h s p y k y i b i h v m i I i v p i us y i y p ici s. naSSCoM h s b p p , ui z i p c i , s i c u p p y p c i ws,

c m m k h c i s w ch y p ks p iv s c p icip i i h uc i sys mm suwhich h v y su i si ifc w h h i us y. naSSCoM h s s b i c i wi h s v i vm s p m wi -wi p ship h u h b s u ci I i . naSSCoM s p ys i p s i It I us yi s s i issu s i b i c s s w qu i y s s, immi i p ici s, Wto i s vi

- i p c ic i b s u ci s vic s.

Global Partnerships naSSCoM p ys c iv i h i i s w c mmu i y. naSSCoM is m mb h asi oc i C mpu -i I us y o iz i (aSoCIo) c mp isi p s iv s m 20 c u i s c mp ssi v 10,000 c mp i s h

i . naSSCoM is s u m mb h W I m i t ch y S vic s a i c s (WItSa). this umc mp is s ICt ss ci i s m u 70 c u i s.

Undertaking Research and Thought Leadership naSSCoM u k s s ch h ICt i us y i I i h w i c i u us y uc i s m mb s wbusi ss pp u i i s, busi ss p c ic s i b m k s, p i h s i us y w h c i i i v s mI i .

Encouraging improvement in Quality of Products and Services naSSCoM s y b i v s i c u i i s m mb s p vi b qu i y p uc s s vic s. th ss ci i p vi s

ssis c i s m mb s i chi vi i i qu i y c ifc i s by izi s mi s p ms qu is s iss mi i v i m i .

Intellectual Property Rights naSSCoM is supp s i c u p p y ws i I i . I 1990, naSSCoM b c iv pub icw ss c mp i uc us s b u h w u us s w u ch h c u ys f s i-pi cy h i If s i-pi cy - h i . naSSCoM h s s succ ss u y ci i c m ws i s s w pi cy i I i h p i uc Cyb l ws. naSSCoM c i u us y s wi h h v m I i qui ch s i h IPr ws,k pi i i wi h WIPo h I i l ws i s. naSSCoM s w ks c s y wi h h Busi ss S wa i c (BSa) c c py i h ws.

naSSCoM p vi s i s m mb s wi h v i us ums m ki busi ss c c i s sh i p c ic , mp ,IteS-BPo F um, em i C mp i s F um, P uc & I v i F um, Qu i y F um, S cu i y F um, It W k c d v p-m P m, It d m s ic M k F um, naSSCoM e i i S vic s F um.

continue on next page


18/18

0 I t ti l G d P ti E t bli h t S t i bl IT P k

Box 6. National Association o So tware and Service Companies(NASSCOM)c i uWi hi n ssc m, h sp cifc ups ums which wi h sp cifc It i us y s m issu s. S m h

BPO Forum: th naSSCoMs IteS-BPo F um is cus ssi h sp cifc s h IteS- BPo i us y buiI i b i IteS-BPo. th IteS-BPo F um h s w b c iv h p s u y s c uc s s i s c

i i v i v vi i us y p y s, v m h c mi . I i s i s v ci i h bui up ski m p w , naSSCoM h s i s i u v i us i i i iv s ik

P m, c i n i Ski s r is y It P ssi s b s c uc i cu iv v pm

Emerging Companies Forum: em i c mp i s m si ifc p c h I i s w s vic s ih um ims w s i s p h hu w h pp u i y h is s i his s m . th u

p m h m i c mp i s s m sh p i c s, y c i ic p j c s v cus sc cus m m s.

Engineering Services Forum: this um w s c i 2005 wi h h bj c iv h p I i -b s i i s vic pp im y p i h p i i i s vic s sh i / u s u ci (eSo) h p I i chi v his sp c . r c y his um h s s s u y i n ssc m- BaH s u y h g b iz i i iv i ss ssm h b i i s vic s m k . Fu h , his um is cusi (i) Cb u I i s iv y ss k w s hs i h eSo m i , (ii) S h i i ks wi h h m s ic m

ywhich h s s i k s spi - v c s eSo, (iii) W ki wi h h c mi h c h (iv) W ki wi h h v m su v b busi ss p icy u y vi m .

Providing a Forum for Innovation: th bj c iv his i i i iv is p m h I v iv It i s i i y i vi s i I i . I h y 200405, naSSCoM s i s v s c ss I i , wh i I v iv c mp i s mi s p p . th si f is s m h s p s i s w h i vi p s h naSSCoM

Mumb i. du i 200506, naSSCoM w u c i u wi h his i i i iv i i yi sh wc si i v iv c m s iz s i s v s u b s ssi s bui i i v i c ss h iz i .

IT Workforce Development Group : th W k c d v pm i i i iv w s c c yz It i us y i cac mi su v i bi i y b y mp y b qu i y It p ssi s. th up is sp sib i us y- c mi w ksh ps s mi s iscuss h cu issu s si p b b s u i s.

Product Forum: th naSSCoM P uc F um ims p vi v i us y i m i , ch i s i m k i , b i , i v s m s p uc s v p i I i i c u i . th um s ss

(I c u P p y) c i p c i . th bj c iv s his um (i) Imp v h b s qu i y by I i ISVs (ii) Imp v c ibi i y M i I i s w i c b m k s by s b ishi wi h c ifc i p m i i bui i bus c s w c sys m (iii) es b ish c m CIo

i s s h y m y susp c h qu i y p uc s m u k w v s h c p p siv b bm s ic m ISV s u i s by s b ishi c ibi i y wi h hi p y i us y c ifc i .

Qu i y F um: naSSCoM h s c y u ch his um iscuss p m v i us issu s Qubj c iv h um is p vi I i wi h i ship i h Qu i y sp c .

Trusted Sourcing: naSSCoM c iv y p m s I i s t us S u ci s i i h s b p yi p c ivsu i h h I i I m i S cu i y vi m b chm ks wi h h b s c ss h b . th u h

m , e uc i , e c m e c m , h naSSCoM S cu i y F um ims c b i vic u y i m i s cu i y c mp i c . naSSCoM h s s m n i a vis y B I mC mp i c . th m i u c i s h b i c u yi w s cu i y s s which i c u i ifc i

i isi wi h h Mi is y It b i buy-i m v m , p m s cu i y u i s & c ifc i mss p ms wi h sp c s cu i y issu s.

Domestic Market Forum: th d m s ic M k F um is b i s up u h bui h m s ic m k . th I i us u s u ci p s i It i s uc u sp ci iz v s. r c izi h wi imp c h i c s sp ci iz i which is h qui m h us iz i s, naSSCoM is mi h d m

F um which wi s v s h p m i k h It s c wi h h It i us y.

Source: as iscuss wi h C . S.V. r m ch , r i di c n ssc m & n ssc m a ur p s

would need to improve the legal system to protectand promote proprietary knowledge as this is o ten acompanys main business asset. As such, laws

relating to intellectual property, and the implemen-tation o such laws would be critical to gaininginvestor con dence.

it sector policies and their impact

Documents