ICT Industry Examines Strategy during Slowdown
By Chhun Kosal
Economics Today
Information and Communication Technology (ICT) plays a very important role in economic development. But in Cambodia, recent growth in ICT has been jeopardized by the economic downturn, leaving industry players looking for ways to cut costs.
More than just computers, ICT encompasses all communication networks, including telephone networks, the internet and consumer systems. No country can afford to ignore ICT or move forward without it.
Cambodia has poor communication infrastructure, even for Southeast Asia, and Cambodians for the most part are hesitant about ICT. Rapid ICT growth in Cambodia is now slowing.
“The global economic downturn has brought IT industry in our country to a standstill for a while. But Cambodia is not the epicenter of the downturn, and its effect has more largely to do with a precaution taken by investors and spending decision makers rather than the slump itself,” Volak Sao, the chief executive of Campura Systems Corporation, told Economics Today.
Nong Rada, managing director of Intel EM, said that the current economic situation has reduced Cambodians’ interest in ICT purchases. “People make purchases when there is excess money around but … many people are going through a difficult time, hence, investing in new technology becomes a secondary priority.”
He said that sales of computer equipment are down by around 15 percent compared to last year.
The Digital Age Arrives
Despite current caution, Cambodia has positively embraced ICT technology in recent years. Government institutions, the private sector and civil society are relying more and more on ICT, rather than old paperbased systems.
Volak Sao said such considerations mean that growth will soon pick up. “The economic recession we experienced just now happened because foreign direct investment [FDI] and foreign aid on which our economic growth relied upon heavily in the past decades has slowed down, and some speculative real estate investments also adopted the wait-and-see attitude during tough times. It’s just a short standstill and will be a V-shape recession for Cambodia. The ICT industry will soon pick up fast and possibly much more aggressively than during the so-called ‘boom’ time.”
Cambodia’s small ICT industry certainly suggests that ICT growth will continue. Hardware and software manufacturing industries have been successfully established in many developing countries such as China, India, the Philippines, and Thailand with a turnover of several billion US dollars. In contrast, Cambodia has no equivalent industry, though there are other forms of ICT, such as telecom companies, mobile operators, computer retail and repair shops, internet cafés, internet service providers, IT training centers, and software solution providers that specialize in web design, graphic design and web hosting.
According to a report from the Economic Institute of Cambodia (EIC), about 150 ICT distributors were listed in Phnom Penh in 2006. The IT distribution market “is highly fragmented yet largely dominated by a limited number of players. There were 268 distributors in 2008 which shows a big jump from only three IT distributors in 1993,” found the PC Penetration in Cambodia report.
The report added that “while the manufacturers of computer hardware and software are limited, the number of computer retailers or IT distributors has been increasing over time.”
Nong Rada agreed with EIC that the switchover to ICT would drive growth. The computer industry “is improving gradually with the increase of small and mediumsized businesses adopting computerization.”
However, Cambodia’s lack of an explicit ICT policy puts it behind Vietnam and Thailand, he said.
Key Challenges
There are also other, more serious challenges to Cambodia’s ICT industry. A low computer literacy rate, limited knowledge of foreign languages among Cambodians, rampant piracy, a lack of reliable electricity supplies and inadequate communication infrastructure are all major concerns.
“Adoption of computing, even though apparently pretty fast and robust in urban areas, is on the whole pretty small,” said Volak Sao. “Copyright is also a challenge. A lot of software can be purchased in a few dollars in the black market. This is harmful to the product owners”.
According to the UNDP’s Cambodia Country Competitiveness report, “Companies which are heavily reliant on ICT for their business operations face high operating costs in Cambodia, discouraging both the use of ICT in local companies as well as discouraging ICT-reliant foreign companies from investing.”
Volak Sao said that ICT adoption is slower in Cambodia than in Vietnam, Thailand, Singapore and Malaysia, though a lot faster than Laos and Burma. “In general,” he added, “the development trend looks good and we should be able to catch up with our neighbors very soon if those challenges are addressed correctly.”
Another stumbling block for Cambodian ICT is tax, said Nong Rada. He complained that a tax rate of 26.5 percent makes ICT products expensive for consumers. Expensive internet connections also affect purchases of PCs and other accessories, he added.
Nong Rada groused that “lack of government incentives to grow the ICT industry, specifically in relation to the high cost of electricity … [means] no incentives for interested companies to come and set up local manufacturing.”
Open Source
One increasingly popular option for Cambodia is Free/Open Source Software (FOSS). These are programs that users are free to distribute and change, unlike the more familiar offerings from Microsoft and others.
According to opensource.org, “Open source is a development method for software that harnesses the power of distributed peer review and transparency of process. The promise of open source is better quality, higher reliability, more flexibility, lower cost, and an end to predatory vendor lock-in.”
NGOs, the private sector and even the government are turning to free software they can tailor for specific tasks.
“Around 60 to 70 percent of Cambodian government officials use FOSS because all the programs have been translated into the Khmer language and because of a lack of money for Microsoft software licenses,” said Van Khema, Deputy Director of Department Network Working Group Leader of National Information Communications Technology Development Authority (NiDA), told Economics Today.
NiDA has been promoting the use of FOSS since 2004 across Cambodia, and most line ministries now use FOSS systems.
Be Chantra, KhmerOS trainer and public relations officer of the Open Institute, noted that FOSS is “costless and legal.”
“FOSS can be used, copied, studied, modified and redistributed [and] is having an impact in schools, universities, ICT education and government policy in Cambodia,” he said, adding that over 10,000 people have so far been educated in FOSS by the Open Institute.
The FOSS movement provides all the applications needed for a full computerized system, and facilitates translation to many languages.
Open.org.kh, a website concerning FOSS in Cambodia, stated that computing in Khmer-language— available only through FOSS—separates the skill in a ‘second-language’ (English) from the skill of ‘computer usage’, allowing students to work on these skills independently, and even use their computer skills to later learn English.
“Cambodia thus becomes the first country in the world to fully change its education system to only teach through FOSS applications,” said the website.
Cambodian Deputy Prime Minister Sok An, in a speech delivered on his behalf, said he believed that FOSS could help Cambodia make “a lot of savings in license fees,” ensure software is readily available locally, eliminate software piracy, and enable Cambodians to closely study and understand computer programming.
“Free and Open Source Software provides a way out of a vicious cycle. It increases the user’s control. It also provides a framework for promoting intellectual capital, and achieving the UN Millennium Development Goals,” said Shahid Akhtar, head of the Bangkok-based UNDP Asia-Pacific Development Information Program (UNDP-APDIP).
Despite its benefits, there are drawbacks to FOSS. Figuring out how to develop a localization project can be a long and painful learning process, which must be repeated by every localization project in every country.
The translation of Khmerlanguage FOSS began in 2004 with KhmerOS, a joint project the Open Institute and the Cambodian National ICT Development Authority (NiDA). By mid-2005 a basic set of programs had been translated, and was distributed and taught to teachers and government officials, said the Open Institute on its website.
Even after the Open Institute and the Ministry of Education in 2007 created the Open Schools Program, an initiative to improve educational quality using FOSS, the software has yet to become widely popular. Microsoft has opened a Cambodia office to offer costly but legal versions of the Microsoft software that is still the firm favorite in Cambodia.
FOSS is not user friendly and is not always compatible with other software, say critics.
NiDA’s Van Khema conceded that such criticisms were partially justified, though much of the problem is due to local inexperience of FOSS. “FOSS can run as smoothly as Microsoft, it just depends on the users and their experience in using FOSS. But in other programs, such as design, it cannot run as smoothly as Microsoft because we do not have a lot of experience.”
Be Chantra advised home users and businesses alike to switch to FOSS “before Microsoft takes action to stop using Microsoft pirated software any more.”
Long Term Expansion
Regardless of which software type will win the day, the Cambodian ICT industry is set for a major expansion over the next decade, said Volak Sao. “I really believe the ICT industry will look a lot different 10 years from now. As far as ICT is concerned, changes in the past 10 years in Cambodia are much more than over the past 1,000 years. But the changes over the next 10 years will be far greater than what we have seen so far.”
Even the local manufacture of ICT equipment and ICT outsourcing is a possibility, he added.
Nong Rada agreed that the ICT industry will continue to grow in Cambodia, “but it is important that the Cambodian government help to resolve some basic issues, like zero tax on computer CPUs and related accessories, and lowering the cost of internet access.”
Volak Sao urged the government to focus on improving education to increase Khmer- and English-language literacy. “This will bring the ICT industry to a higher standard and improve our economic development to compete with other countries,” he said.
“The government must come up with workable policies that provide protection to ICT investors and the government itself needs to instruct all ministries to use computer systems as they mostly use manual systems now. This will add more strength to the ICT sector and help the country as whole to develop faster.”
3 comments:
cambodia ought to go into electronic industry like japan. i mean diversify our economy as well. it may take times, but never say impossible to do for cambodia. like they say, everybody has to start somewhere, somehow; nobody ever bornt with skills, you know! please think smartly. god bless cambodia.
Cambodia only need one computer and one hard drive in the whole country....
7:54am, you are right but the difference is that Cambodia does not have the brains and the technology know-how to be like Japan. I don't mean Cambodian people are stupid, but with poverty and a very disfunctional education system, I think it will take Cambodia more than 100 years to catch up with Japna.
Post a Comment