ICT Policies & Global Supply Chain Penetration in Developing Countries

WSIS Facilitation Meeting on « E-Business and E-Employment » UNCTAD, ITC and ILO Palais des Nations , 24 May 2007 Claudine Bichara de Oliveira neTune, Executive Director (Brazil)

ICT Policies & GSC Penetration in Developing Countries

Plan

• Global Supply Chains in Developing Countries – How it Works?

– Main Obstacles – ICT Requirements and Trends • Policies & Practices in Latin America – Business Environment Policies – ICT related Policies and Practices – Innovation and IT Adoption by SMEs • General Assessment 2 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

ICT Policies & GSC Penetration in Developing Countries

Global Supply/Value Chains: What is it?

“Global Value Chains cover a full range of interrelated productive activities performed by firms in different geographical locations to bring out a product or a service from conception to complete production and delivery to final consumers”

Global Value chains for Building National Productive Capacities UNCTAD – TD/B/COM.3/79

3 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

ICT Policies & GSC Penetration in Developing Countries

GSC: How it Works?

Suppliers Manufacturers s Distributors Retailers Consumers

Competitiveness based on cost reduction through: Competition between chains : Source VOLLMANN, T.E., CORDON,C. Making supply chain relationships work . M2000 Business 4 | Claudine Bichara de Oliveira | neTune Ltd, Brazil • Just-in-time manufacturing • Cost of labour in developing countries

ICT Policies & GSC Penetration in Developing Countries

Attractive Factors to FDI

Market Share Political Stability Legal Environment Macro-Economic Stability Presence of Competitors Quality of Infrastructure Profit Repatriation HR Cost & quality Local Government Support Access to export market 5 | Claudine Bichara de Oliveira | neTune Ltd, Brazil 83% 30% 29% 28% 23% 23% 54% 43% 52% 41%

Source: A. T. KEARNEY

ICT Policies & GSC Penetration in Developing Countries

Global Competition Challenges

For TNCs For SMEs • Management • Real time data sharing • Delivery Delays • High demand on technology • Infrastructure • Economic Globalisation /New Markets and Competitors • New Products and Services • Speed of Change • Exponential Multiplication of Information • Production Capability

ICT: Key Ingredient to Enhance Competitiveness

6 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

ICT Policies & GSC Penetration in Developing Countries

Main Obstacles in Developing Countries

• Lack of strategic vision and/or concrete actions • Red Tape and Informal economy • Lack of Venture Capital • Lack of technology infrastructure and logistics • Human Resources Capabilities • Legal Framework

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Taxes - Consumer rights - Intellectual property - Self-regulation - Telecommunications Security (payment, delivery…) - Electronic contracts and signatures - Internet crimes 7 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

ICT Policies & GSC Penetration in Developing Countries

ICT Requirements & Trends

• Ubiquitous Communication – High Speed – Wireless Technology – IPv6 • Interoperability and Convergence – Multi-channel operation – XML language • Management Support Applications – SCM applications – PLM (Product Life Cycle Management) • Security, Confidence and Trust Aplications and Services 8 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

ICT Policies & GSC Penetration in Developing Countries

ICT Trend - Example

• RFID - Radio Frequency Identification Technology for contactless identification of objects.

– Barcode: product identification – Tag: product description (what it is, where it has been, when it expires ..) – Antenna: always turned on, wirelessly – Biosensor chip: information on physical condition of materials in transit 9 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

ICT Policies & GSC Penetration in Developing Countries

Business Environment Policies

• Infrastructure: Transport, Warehousing, Logistics • Regional/Int’l Trade Agreements • Free Trade Zone • Tax incentives • Financial system; Royalty remittances & loans • Venture Capital and funds • Public Private partnership • SMEs competitiveness 10 | Claudine Bichara de Oliveira | neTune Ltd, Brazil • HR: Development of capabilities & educational system • Entrepreneurship and entrepreneurial culture • Simplification of bureaucracy • Intelectual property, Trademarks • Industrial Clustering • International Standards adoption • Arbitration system adoption

ICT Policies & GSC Penetration in Developing Countries

ICT Related Practices and Policies

• Telecom privatisation • National Strategy for ICT & Development • Technology clusters • FOSS • E-Gov Policies: online services & e-procurement • Skill development – Public Awareness – Technical support training – High level IT education • E-Business enabling environment – PKI: data protection, digital signatures & certification – Interoperability of PKI oper. – Acceptance of digital transactions – Business data online validation & verification – Transport & logistics – E-payment – Customs automation – Self regulation for high quality of online services 11 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

ICT Policies & GSC Penetration in Developing Countries

Innovation and IT Adoption among SMEs

• Tax incentives to stimulate IT adoption, purchase & production • Funding for R&D and innovation • University - Enterprise cooperation • E-network / linkage to int’l iniciatives • Business Telecenters 12 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

ICT Policies & GSC Penetration in Developing Countries

Mexico: “Innovation for Competitiveness” Programme

• Business Innovation Programme / CONACYT + World Bank – Consortia and research networks – Venture capital fund – Pre-competitive fund – Sectoral funds – Researchers and technologists in industry • HR: Financing scholarships Programme / CONACYT • Technology and innovation policy framework + international integration 13 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

ICT Policies & GSC Penetration in Developing Countries

Chile: Customs Modernization / ISIDORA

Internet-Integrated Systems for the Development of Customs Operations and Regulations • Integration of Customs procedures with those of other public and private participants of the international supply chain such as: – Other Government agencies (Single-Window) – Seaports – Warehouse administrators – Shippers – Transport agents – Consolidators 14 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

ICT Policies & GSC Penetration in Developing Countries What is Brazil doing ?

15 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

ICT Policies & GSC Penetration in Developing Countries

Brazil : Governmental Programs

• Governmental Programs towards technological development and innovation adoption in the private sector (specially among SMEs) – PAC: Program of Acceleration of Growth – PROGEX: Program of Technological Support to Exportation – PITCE: Industrial, Technological Policies & Foreign Commerce – PROTEC: Brazilian Society Technological Pro-Innovation – Program for the Development of the national industry of Sw & related services – Profarma: production, R,D&I for cies of National control 16 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

ICT Policies & GSC Penetration in Developing Countries

Brazil : Financial support

– Fiscal exemption: Lei do Bem – Wages: PDTI; PDTA,for R&D&Inovation, and University/enterprise cooperation: PAPPE, RBT – Funding: Pró-Inovação (technology for supply chains); Juro Zero (inovation in SMEs) – Private Equity and Venture Capital: Inovar, Bovespa Mais, Forum Brasil – 16 sectoral funds 17 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

ICT Policies & GSC Penetration in Developing Countries

Brazil : Enhancing Online Services

• ICP-Brasil / PKI • E-Ping / Interoperability • FOSS • SPB / Sistema de Pagamento Brasileiro • SISCOMEX – Sistema Integrado de Comercio Exterior + Export Fácil Web • Sinmetro & ABNT (Certification) procedures via WEb • NF-e : Nota Fiscal Eletrônica • Procomex: customs modernization • BraziltradeNet • Business Telecenters into SMEs Clusters 18 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

ICT Policies & GSC Penetration in Developing Countries

General Assessment Still remaining obstacles

• Red tape and high taxation • Security concerns • Informal economy not integrated, micro enterprises still lacking in everything • Connectivity in remote rural areas • Underdeveloped transportation infrastructure • Lack of a “go abroad” culture • Latin America: distinct trading groups, not a single trading block • More emphasis on import substitution than international market integration • Segmented efforts 19 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

Assets

• • • • High potencial local market New multinationals emerging from the developing countries New business areas: biotech, energy, environment, etc. in traditional sectors empowered by ICTs Successful associative initiatives

ICT Policies & GSC Penetration in Developing Countries

How is Brazil in the picture ?

Head Embraer Goods Grandene

Petrobras

CSN SADIA

SMEs Clusters

Services Pão de Açucar

Petrobras Mendes Junior Automotive PIM-Manaus (Assembling electronics) Monsanto (soy) Tata Unilever (food) Telmex Telefônica Walmart 20 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

ICT Policies & GSC Penetration in Developing Countries

Role of International Organizations

• Situation analysis and strategy definition for e-trade practices • International standards and norms • Research and information exchange with other regions • Capacity building at all levels 21 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

ICT Policies & GSC Penetration in Developing Countries

Is the World Flat ?

“ Globalization has bound people, countries, markets closer than ever, rendering national borders relics of a bygone era – or so we’re told” “[But] In fact, more than 90% of all phone calls, web traffic, and investment is local”

“Why the world isn’t Flat”- Pankaj Ghemawat, Harvard Business School Foreign Policy, March-april 2007 pp.54-60

“Obviously, the world is not yet flat. ….This is about trend lines and a scale of change brought on by these “flattening” new technologies.

Answer from Thomas L. Friedman – “The World is Flat” author Foreign policy, May-June 2007 p.4 - Letters

22 | Claudine Bichara de Oliveira | neTune Ltd, Brazil

ICT Policies & GSC Penetration in Developing Countries

THANK YOU !

[email protected]

Rio de Janeiro, Brazil Tel/Fax: +55 21 2511-3129 www.netune.com.br

23 | Claudine Bichara de Oliveira | neTune Ltd, Brazil