by Alissa Chiaravanond

a project for BA296a

Supervised by Professor Howard Besser

Novemeber 1996


The Internet has grown dramatically over the past decade. Much of this growth has occurred in the last two years, as firms rushed to connect to the Internet to communicate with their customers and suppliers and put up World Wide Web servers to disseminate product and marketing information. The Internet is drastically changing the way companies do business. It is reshaping retail, information and software vendors, and the banking and financial brokerage industries. Also, many companies are hesitant to engage in electronic commerce due to security issues. However, at the same time, they are feeling the need to participate so they are not left behind.

Electronic commerce is a global trend; Internet usage has gained a scaleable amount of users, and electronic commerce is a way to extend local markets around the globe, across all borders and time zones. Businesses around the globe are increasingly engaging in electronic commerce, and sufficient technology for reliable electronic transactions exists. All businesses including Asian businesses will need to establish an Internet presence in order to become or remain competitive. This paper examines the current situation in Asia and some of the prerequisites for electronic commerce to flourish in the region. A major factor further stimulating Internet growth in Asia is the drastic improvement of the telecommunications infrastructure in Asia. Also, many Asian countries are pushing to increase educational and commercial uses of the Internet.

Electronic Commerce

Electronic commerce is a vision for bringing a whole range of services into the information age on a global scale. In the past two decades, financial and business-to-business processes, from order processing to electronic funds transfer, have been automated and are now routinely handled by computer. Electronic commerce is more than just handling the parts of business transactions electronically, or just putting up a storefront on the World Wide Web (WWW). Electronic commerce is a new way of doing business. It requires a better understanding of the buyer-seller relationship. It requires a different way of thinking. Also, online commerce seems destined to turbocharge business and alter the dynamics of many markets. It will accelerate the pace at which individuals and organizations connect, communicate, negotiate, and transact. This new opportunity can bring the entire process of managing the full range of business transactions on-line.

Today, many corporations see the possibilities for improving their businesses even further and are embracing the Internet as way to achieve this change. Every business in the world can become accessible to every other business or consumer via computer. Furthermore, electronic commerce will continue to grow. For instance, Forrester Research predicts net merchants to sell US$520 million in goods by the end of 1996 and $6.6 billion by the year 2000. This new way of doing business is expected to be the wave of the future for business transactions and grow dramatically.

Internet as a Medium

The evolution of PC connectivity, from LANs to enterprise networks, has resulted in rising expectations for data access, communications, and productivity throughout the business world. Widespread access to network communication tools such as email, in combination with online services and Web browser software, has created a new awareness of the commercial potential of the Internet. So far, the Internet appears to be an excellent medium for marketing communications and technical support, and much of its potential has yet to be developed.

The Internet offers several advantages as a medium for electronic commerce: it is widely accessible globally, it is reliable because it encompasses multiple alternative pathways, gateways, and interconnections; it has potential for high bandwidth for data throughput, and it is platform independent.

Additionally, business systems and computer technologies are diverse. The network must provide technical heterogeneity to accommodate this diversity. It must be an open, non-proprietary system to support diverse technology so that everyone can get in. The Internet fulfills these requirements because it is an open, standards-based network. Designed around an open communications protocol known as TCP/IP, the Internet utilizes multiple alternative pathways to achieve an extremely high degree of resilience. Initially used primarily by government and academic institutions, it has subsequently expanded into an open worldwide network.


Just as with any dramatic change in business, there are pitfalls and obstacles. While the enormous possibilities of electronic commerce on the Internet have generated much excitement, the rush to commercialize the Internet has also brought much confusion.

With its increasingly low cost, high speed, open access, and reliable architecture, the Internet would seem at first glance to be an ideal medium for electronic commerce. There are significant concerns, however, regarding its use for commercial transactions. Lack of security, inability to confirm message integrity, vulnerability of messages to interception and fabrication, lack of user support, and difficulties in obtaining reliable assurance of authenticity or receipt.

Before business can begin to conduct full-scale trading operations over the Internet, they must address these concerns and solve a different set of problems. For example, they must be able to electronically exchange large quantities of transactional data: purchase orders, invoices, shipping documentation, and other data typically shared by trading partners, while ensuring the complete authenticity, data integrity, non-repudiation of both sender and receipt, and confidentiality of every exchange. Until recently these concerns have discouraged efforts to conduct business transactions over the Internet.

Today, companies are performing increasingly secure and reliable large-scale business transactions over the Internet. For instance, the combination of EDI standards including low-cost, high-speed open networks, and new authentication agent software are making electronic commerce a reality. There has been tremendous improvement in developing the technology required to conduct secure transactions. The issue is now evolving into concerns about adoption of theses security mechanisms. However, after a scaleable number of businesses adapt to the new technology, and standards are adopted, security problems will greatly improve.

Global Presence

Internet application toward electronic commerce has expanded and is having an increasing global presence. Global reach and awareness will make every Internet user a possible customer, and huge markets will be created for providers who think globally. This global reach is a great advantage. Trade areas will disappear and businesses that establish an Internet presence will be able to extend their local markets around the globe, across 24 time zones, 24 hours a day. Businesses can use the Internet to reach potential customers in Europe and Asia, with the same cost effectiveness and ease that they do in the US Retailers are discovering the export business. For example, forecasts predict the software and services markets to grow from approximately US$800 million in 1996 to US$3 billion in 2000.

Furthermore, electronic commerce comes with its own built-in, potential marketplace of approximately 45,000 local, regional, and global computer networks through more than 300 Internet service providers with an estimated 60 million users in 130 countries worldwide. Current estimates indicates that the number of Internet users worldwide grows by 10 percent each month, which also suggests that the Internet as a marketplace will grow.

Internet in Asia

The Internet comes at an interesting time for Asia. The strong economic growth in the region suggests that Asia has the money, and the need, for information that the Internet brings. This, coupled with the collapse of socialist ideologies regarding the control of information, suggests that the Internet is poised for dynamic growth in Asia. Internet development has only begun to take off in 1995. This trend will persist. Especially because technological innovation and economic reform in the Asian region will continue to stimulate growth: New types of wireless telephone and high speed communications capabilities are available. Innovation enables less developed countries to quickly catch up with more advanced neighbors. Reforms including deregulation and privatization intend to diminish control of existing monopolies and governments. Many Asian countries are pushing to increase educational and commercial uses of the Internet.

Barriers to growth

Even though, strong economic growth, affluence, and the need for information suggest that the Internet should grow explosively in Asia, barriers to connectivity still exist and must be considered.

Language has been an impediment to growth. An official at I-Net Technologies, an Internet access provider in South Korea, was quoted as saying: "It's not only English you have to understand but American culture, even slang. All in all, there are many people who just give up" (Straits Times, 1995.) But that is changing as the various interfaces accommodate the Asian scripts and there is more content in Asian languages.

In addition to cultural and linguistic barriers to the Internet, Asian countries face other barriers. First, much of Asia lacks advanced infrastructure. Second, telecommunication charges are higher than in, say, the United States; a T1 line can cost 10 times that in the United States. This is attributable, in part, to existing monopoly telecommunication.

For developing nations to get even modest telephone line densities by western standards, the most populous nations are, for the most part, starting aggressive telecommunication development programs, the primary objective usually being to establish basic telephony service. The average density of telephone lines for the world is around 10%, or 10 lines per 100 people. In industrialized nations, the average is about 50%. In such countries as China and India, densities are at 2.2% and .9%, respectively. About 40% of the world population resides in these two countries, 2 billion+ people. Getting to the world average in line density would require about 180 mil lines and plans are not that aggressive.

Furthermore, Asia is not one concordant whole. Apart from the observable differences in culture, sometimes even those of similar cultures are hostile to each other: witness North and South Korea, or China and Taiwan. Also, there are uneven patterns of economic and national development in Asia. The difference may be as stark as, again, North and South Korea, or less stark as between Hong Kong and China's neighboring southern provinces. Often, the differences are evident just in physical infrastructure, such as roads and railways, alone. The differences are exaggerated when it comes to advanced infrastructure such as telecommunication lines for the Internet. Thus, until there is ubiquity, it will be difficult for businesses and consumers to take full advantage of electronic commerce.

The barriers, however, are being lowered over time as Asia develops, and the Internet in Asia will grow at an increasingly rapid rate. In addition to technological innovations, the push toward educational and commercial uses of the Internet, and economic reforms, action is being taken to improve the telecommunications infrastructure throughout the Asian region. This facilitates internet access and electronic commerce capabilities.


Asia is undergoing a boom in demand for telecommunications. Countries involved in the boom include China, Taiwan, Malaysia, Singapore, Hong Kong, Thailand, South Korea, Australia, New Zealand, Japan, Cambodia and India.

Technological innovation and economic reform are stimulating the growth of telecommunications throughout Asia. Innovations include new types of wireless telephone and high-speed communications capable of conveying video, while reforms include deregulation and privatization intended to do away with monopolies and government control. Innovation in turn enables relatively poor countries such as Cambodia and Bangladesh to more quickly catch up with advanced neighbors. Telecoms companies are looking to Asia with great interest due to the expected massive expansion in service.

There are major plans for the rapid deployment of new communications infrastructure in the emerging economies of the world. For example, three IAPs have formed a consortium, Asia Internet Holdings, to establish a pan-Asia Internet backbone to link Japan, Hong Kong, Singapore, and the United States with high-speed T3 (45 megabits per second) lines. The new venture will be responsible for establishing an Internet 'backbone' network in Asia. The network, which turned operational in early 1996, will kick-off with global leasing circuits. The intent is to help multinational corporations use the Internet as a platform for their respective private networks (Newsbytes, 1995b).


Since 1993, China began installing a new network, CHINAPAC. CHINAPAC is intended to be the major public data network backbone in China. It covers all provincial capital cities of the Mainland. CHINAPAC and its international link runs at 64Kbps backbone rate. The major wide area network in China, used to use X.25 packet switched (PS) equipment. CNPAC was designed to carry data at speeds varying between 1.2 and 9.6 Kbps. User links vary from 1200bps through 64Kbps. Also, users can connect to CHINAPAC through leased lines or through dial-up.

Also, BTA ( Beijing Telecommunication Administration) is now managing the high speed fiber optic link among Beijing, Shanghai and Guangzhou and was officially operational in the summer of 1994. Also, ChinaNet started running in spring of 1995, they provide WWW as well.

Furthermore, in China, the plan is to install 10 million telephone lines a year, from 1995 to 2000, reaching 5% density. The government of China plans a very aggressive fiber-optic transport network to link the eastern provinces where population density is greatest. Provinces themselves have very aggressive fiber-optic infrastructure plans. The majority of the fiber-optic system to be deployed in China are plesiochronous digital hierarchy (PDH)-based. In the years 1996-2000 the plan is to go rapidly to synchronous digital hierarchy (SDH). They will put up add-drop muliplexers along the fiber-optic backbone along with terminal multiplexers and repeaters at line rates that will range from synchronous transfer mode (STM)-1 to STM-16. More than 7 mil km of fiber is to be laid by 2000 and the number may go up.


In 1992, Thailand's gross domestic product grew 10% annually, even though the country had only 3 telephone lines for every 100 people. Thailand plans to have 10 for every hundred by 2000. TelecomAsia is building the lines and will run the system for 25 years before giving it back to the government and was granted the license to build the first cable-TV network.

Thailand's TelecomAsia (TA), a dominant force in Asia's telecommunications sector, is a joint venture between Thai conglomerate Charoen Pokphand Group and US firm Nynex. Its projects vary widely, ranging from telecom equipment manufacturing to satellites to cellular phones. They are geographically dispersed, with operations stretching from China to India and the Philippines. TA's expansion strategy in Asia relies on telecom privatization and deregulation, the provision of value-added services, and a focus on China.

It is evident by the examples of China and Thailand, that plans for telecommunications infrastructure improvement are continuing and is being implemented. Finally, improvement of infrastructure will facilitate Internet growth in Asia.

Internet Usage in Asia:

In general, Asian users have a more purposeful attitude toward the Internet than their Western counterparts. This attitude is reflected by the more deliberate approach of both governments and users. Governments want to use the Internet the way they use traditional media--as a form of control for national development, however that may be defined. Net access in Asia therefore tends to be more centralized, dominated by educational and government or government-related institutions.

Pricing may have played a part in conveying the perception that it is expensive, and therefore more suited for "serious" purposes. A recent survey by the Telecommunication Authority of Singapore, which licenses Internet Access Providers, found that 38.4 percent of subscribers cited communication as the main reason for using the Internet. This was followed by the ability to access databases (32.9 percent) and research (16.6 percent). In other words, more than 85 percent of users gave these three functions as key reasons for their subscribing to the Internet. Also, users want to use the Internet for commerce, and where there is a commercial push, Internet growth is strong.

 Table 4. Principal Reasons for Subscribing--Singapore (multiple reasons not allowed)

Communication           38.4%

Access databases        32.9

Research                16.6

Curiosity                3.7

Discussion groups        2.7

Low cost                 2.4

Recreation               1.2

Business                 1.1

Other                    1.0

Source: TAS, September 1995.

These are much more "serious" reasons than those given in the Hermes survey (see Table 5), which found that browsing, and fun and games continue as primary reasons for using the Web. Of course, the two surveys are not directly comparable. Nevertheless, the results are, at the very least, suggestive of different attitudes toward the Internet.

Table 5. Principal Reasons for Subscribing--Hermes (multiple reasons allowed)

Browsing             79%

Entertainment        64

Work-related         52

Educational          50

Business research    40

Academic research    35

Shopping             11

Source: 4th Hermes Survey on Commercial Uses of the Web.

The different attitudes suggest that it is more the "knowledge function" than the "entertainment function" of the Internet that has the will to spur growth. Japan illustrates this clearly: commercial applications of the Internet were the spark of growth.

Growth in Asia

The Internet is in its infancy in Asia. The first Asian institutions to use something that resembled the Internet were Japanese universities that linked themselves up through a computer network in 1984, just over a decade ago (Lammers, 1995).

The diffusion pattern suggests that Asia is only beginning the stage of explosive growth. Table 1 shows that in 1994, Asia recorded the second lowest Internet domain growth rate between 1994 and 1995, lower even than Africa. In the table, compiled from a report by Mark Lottor of consulting firm Network Wizards, only the Pacific countries had a lower growth rate. But in the first half of 1995, Asia's Internet growth rate shot ahead, second only to Africa. In contrast, the growth rate of the industrialized countries has slowed.

Table 1. Internet Growth by Region

(1) % of world, January 1994

(2) Growth %, January 1994 to January 1995

(3) % of world, January 1995

(4) Growth %, 4th Quarter 1994

(5) % of world, July 1995

(6) 6-month increase to July 1995, %

Region           (1)     (2)      (3)     (4)      (5)    (6)


North America    68.06   100    68.11      26     68.4     35

Western Europe   22.25    89    19.71      22     22.0     40

Pacific           4.58    70     3.19      25      3.8     31

Asia              3.28    87     2.84      19      3.5     51

Eastern Europe    0.80   132     1.06      40      1.00    45

Africa            0.44   148     0.65      29      0.62    53

Middle East       0.28    98     0.28      33      0.29    41

Total            100      96     100       24     100      37


Source: Mark Lottor, cited in Internet Society, 1995a and 1995b.

Growth, however, was mainly in six countries: Japan, Korea, Taiwan, Hong Kong, Singapore and Thailand. They are among the 50 countries with the highest number of Internet hosts (Internet Society, 1995b). (See Table 2.)

Table 2. Internet Hosts and Their Growth

(1) July 1995 new hosts

(2) 6-month growth %, January 1995

(3) 1994 new hosts

(4) 1994 growth %

(5) 3-year growth %

Country           (1)    (2)    (3)     (4)    (5)


Japan           159,776   40   96,632    86   1,029

Korea            23,791   24   18,049   101   1,103

Taiwan           16,166   10   14,618    83   1,710

Hong Kong        15,392   19   12,437    52   2,725

Singapore         8,208   36     *       *     *

Thailand          2,481   19     *       *     *

USA             113,226   67   37,615   475  31,155


Source: Mark Lottor, cited in Internet Society, 1995a and 1995b.

* Data not available in February 1995 report.


Japan is the Internet giant in Asia. Two-thirds of the more than 150,000 Internet hosts in Asia are in Japan. Initially, Japan was slow getting into the Internet. It was in 1989 that the first Japanese universities got onto the Internet. But in 1991, US firms began using the Internet for commerce and the Internet began to develop. Public access started in September 1993 (Terry, 1994), and growth took off in mid-1994 with the promotion of commercial Internet applications. Compared with the United States, however, Japan has a way to go. With a population half that of the United States, Japan had 3.2 million registered Internet users. In contrast, the United States, with twice the population, has an Internet community estimated at 35 million. It is estimated that there are more than 50 Internet access providers (IAPs) in Tokyo, though half of them are small, serving perhaps as few as several hundred users (Market Intelligence Center, 1995b).

The major difficulty has been language. Most of the communication on the Internet in Japan is in Japanese. A recent Japanese version of Netscape has helped. Many of those who venture into the English-writing world can read but not write English, so they are often lurkers.

There may also be cultural forces at play: the Japanese apparently prefer to receive than to send information. A recent survey of Internet use found that "Receiving information is more common" accounted for 63.7 percent, compared with just 6.4 percent who responded that "Sending information is more common" (Nikkei Weekly, 18 September 1995).

Further, fewer than one-third of Japanese companies are connected or considering connecting to the Internet. Most of these are larger companies. Apparently, Japanese companies think that the Internet is affordable only to large companies (Nikkei Weekly, 18 September 1995).

Contributing to this idea is the monopoly local telecommunications provider, Nippon Telephone and Telegraph (NTT), which reduces any prospect of drastic change. The Internet, however, is changing that aspect of Japanese culture. It has made it acceptable to exchange information among the Japanese academic community. Before, information as given on a need-to-know basis (Lammers, 1995).


China is a newcomer to the Internet community. The first Internet link was established only in 1993 at the Institute of High Energy Physics in Beijing (Carrol, 1995). Public access was launched in January 1995 with the help of the US long-distance telephone company Sprint (Economist 1995a). The program, unofficially titled the China Internet Project, or ChinaNet, is run by the Ministry of Posts and Telecommunications. It aims to provide, eventually, Internet access to 360,000 state enterprises and 8.6 million private enterprises in 600 Chinese cities (Carrol, 1995). In early 1996, however, despite a population base of more than 1 billion, there were fewer than 100,000 users. Public subscribers in the two largest cities, Beijing and Shanghai, amount between 3,000 and 4,000 people in early 1996 (Yu and Huang, 1996b).

Many users feel it is difficult to acquire information from the Internet, and they also want useful information in Chinese, because reading English is not comfortable for many users. A survey shows that about 73 percent of online users use only e-mail services on the network, and most of them think information from the Internet is useful only for research (Yu and Huang, 1996a).

China, however, is a pioneer in Internet regulation. China's strategy for the Internet appears to be aimed at controlling access and not allowing foreign firms to offer information. In February 1996, new regulations were passed banning transmission of state secrets, information harmful to state security, and pornography over international computer links. But the new laws also required Internet users, including institutions, to register with the police and directed that all public Internet access go through computers managed by the Ministry of Posts and Telecommunications (Newsbytes, 1996). The laws make China the most regulated environment for the Internet in the world.

Already, China had allowed only sci.* and comp.* Usenet groups. Chinese officials have also told the first author that they plan to model the country's regulations after Singapore (Liu, 1995). It should be noted that the laws are targeted at international computer links. There appears to be an effort to develop a domestic information service. One of the main impediments to Internet growth is the high cost. So, domestic links, which offer cheaper rates, are growing. One online service reported that half its users do not use the full Internet service, which costs 40 yuan (US$2.90) an hour to use and is seen as confusing and foreign. They opt for just the domestic service at 3 yuan (US$0.22) an hour (Yu and Huang 1996a).

Second, despite the regulations, there is an effort to wire China for the Internet. In March, one month after new regulations to control the Internet were announced, it was reported that US Sprint signed a multimillion dollar deal with Jiangsu Provincial Data Communications Bureau to install network servers in 11 cities in the province. Jiangsu is the province that encompasses Shanghai. Also, the same article reported that the Ministry of Posts and Telecommunications has plans to set up the Internet literally in the four corners of China--west to Xi'an, south to Chengdu, northeast to Shenyang, and in the heart Wuhan, Shanghai and Guangzhou to the east. All are cities with established universities (Yu and Huang, 1996b).


Despite its widely declared intention to be a "wired island," Singapore was slow off the mark with the Internet. In typical Singapore style, however, once it was decided that the Internet was the thing to do, there was an official push and the Internet has taken off in a hurry. In 1995, Singapore was one of the fastest-growing Internet domains.

Public access of the Internet was available in 1994 and there are now three IAPs. Total subscribers number 100,000 out of a population of 3 million. Singapore recently promulgated new laws regulating content for the Internet. All contents of a "broadcast nature" are deemed to be licensed; content providers who breach the local laws regarding content (such as pornography) will be told to remove such objectionable content or have the license revoked (Singapore Broadcasting Authority, 1996).

Meanwhile, the Internet has revealed the inadequacies of laws dealing with the electronic media. An Internet user forged another user's e-mail address and posted material on the Usenet group soc.culture.singapore. Contrary to official expectations, no Singapore law had been broken. Instead, the victim of the forged postings is taking the perpetrator to civil court.

Hong Kong

As the city with the freest business environment, Hong Kong has the highest number of IAPs in Asia after Japan, 43 in early 1996. With such keen competition, prices have fallen to as low as HK$168 (US$21.70) per month for unlimited usage. More typically, commercial providers charge more than HK$180 (US$23) per month, with further charges levied for each minute the subscriber remains online (Armstrong, 1996). As these figures suggests, increased competition among IAPs decreases the prices of access, which in turn, fosters the growth of Internet usage.

In March 1995, regulators had closed down 30 Internet access providers on the grounds that they did not possess the proper regulatory documentation. But no such documentation existed and had not been required. Later, the Hong Kong government allowed them to reopen and granted them legal status (Armstrong, 1996).


E-mail through BITnet was made available by the Ministry of Education in 1987. As of September 1995, there are an estimated 250,000 to 300,000 users. Academic institutions are host to at least 60 to 70 percent of users. But if the trend in the West is any indication, this percentage is likely to fall as other IAPs come onstream (Market Intelligence Center).

Taiwan, however, only allows wholly Taiwanese companies to provide Internet service. Overall, signs are that steps are being taken to make it easier to access the Internet. Where rates and service are a problem, they are being addressed. Taiwan has held hearings on the handling of Internet access by the Directorate General of telecommunications, which has the mandate to control access. Users had been unhappy with the high rates and poor service (Carrol, 1995).


Of all the countries in Asia, the Philippines has the greatest potential to exploit the Internet. It is the third-largest English-speaking country in the world; it has fastest Internet access in Asia using asynchronous transfer mode (ATM) technology and an E1 link to allow transmission speeds of 2.4 megabits per second against Japan's 1.5 megabits per second using a T1 link (Newsbytes 1995a, 1995c).

Despite a deregulated environment that allows for 20 IAPs, the Philippines is projected to have only 40,000 users at the end of 1996, according to a study by the University of Asia and Pacific (ibid). Cost is probably the biggest obstacle.


The Internet was introduced into Indonesia by the academic community, but it is the commercial sector that has pushed its development. There are five IAPs, two government and three private companies and a waiting list of 15 others. Internet users in early 1996 totaled 20,000 to 25,000, concentrated in the capital Jakarta and the major high-tech town Bandung. Reflecting the commercial interest in the Net, almost half the users are businesses, as shown in Table 3 (Purbo, 1996).

Table 3. 1996 Internet Users Composition in Indonesia

Commerce                      42.8%

University                    29.5

Government                    20.9

Research                       5.8

Nongovernment organizations    1.0

Source: Purbo, 1996.

Growth among the users is estimated at 20 percent annually. At this rate, Indonesia will reach only 100,000 users in the year 2006 (Sari, 1996). The regulatory environment in Indonesia for the Internet is baffling. In 1994, for example, Indonesia closed down several newspapers and magazines for threatening national stability. Journalists in one of the banned publications, the respected Tempo magazine, took it online (http:/ Indonesian Information Minister Harmoko was quoted as saying, "They may enter the Internet, everyone may."

In sum, because there are no laws governing the Internet at present, Harmako let the online edition go ahead, rather than draft new legislation to extend the existing rules. Later, at a regional conference, he said, "The flow of information cannot be checked, but there is no need for us to be too concerned. Information flow through the Internet is sometimes positive, but at other times negative, such as pornography." Thus, although Indonesia appears to be aware of some of the negative material, it is not taking action (Newsbytes, 1996).


Malaysia's attitude toward the Internet has been uneven. It was the first country in South-East Asia to allow public Internet access. The primary gateway, JaringNet, is one of the few in the world that allows users to select their domain names. But as at mid-1995, there were only an estimated 5,000 users (Yap, 1995).

Things, however, are changing. The universities are beginning to allow greater Internet use and access. The Seventh Malaysia Plan will incorporate the Internet as a part of its National Information Technology policy. All schools are to be equipped with resource centers linked to the Internet. Malaysia has four IAPs (The Star, 1996).

On the regulatory front, the picture is less clear. On the one hand, the Deputy Prime Minister of Malaysia, at a conference in Kuala Lumpur where the Internet was discussed, said that they would not censor the Internet. That same week, the Information Minister at a meeting in Singapore, said his country was considering laws to sieve out "pornography and other nonsense" on the Internet. He said there might be a need to review Malaysia's broadcast laws, and added that his government was watching how other countries would implement new Internet laws (Business Times, 1996). And earlier, Malaysian ministers had publicly warned its scholarship holders that the scholarships will be terminated if they use the Internet to "disseminate false information and undermine the image of the nation" (Straits Times, 1995e).


The first users of the Internet in India were its leading universities, through a service called Ernet in 1989 (Straits Times, 1995a). Public access was made available in August 1995. It costs about US$160 for up to 250 hours for private individuals and four times that for companies. Although frequently proclaimed the world's largest democracy, Indian authorities have guarded control over information flow. Some reports suggest that Internet access providers have to use the Indian international telecommunications monopoly VSNL. The trend, however, is to privatize the broadcasting and telecommunications industry as part of the regulatory reform (Straits Times, 1995d). This suggests that communication services will become cheaper, thus, furthering Internet growth.


The Internet was introduced to Thailand in 1988, primarily for education and research. It began to take off when Thai Social and Academic Research Network (ThaiSarn) was founded and a permanent communication link to international networks was established. The public could first access the Internet in 1994 through Internet Thailand Company, set up by the National Electronics and Computer Technology Center (NECTEC), which has a mandate to promote information technology. There are four IAPs (Market Intelligence Center 1995b).


Internet access in Cambodia is being driven by international nongovernmental organizations (NGOs). As of early 1996, there was no Internet ramp in Cambodia and therefore no real IAPs. There are, however, some "store-and-forward" services with a little more than 100 users. The first such service was said to be started by Norbert Klein, a worker in an international NGO, in early 1994. He said, "I created it to make it possible for a Cambodian to participate in a two-year international Master of Science in Sustainable Tropical Agriculture degree program for which he needed e-mail connection."

Later in 1994, another store-and-forward system, the CCCNet, was created to serve the foreign NGOs in Cambodia. There are about 50 active users. It was also in 1994 that a commercial e-mail and fax-forwarding service, UniLink, started to operate. Cambodia recently registered .kh as its major domain name (Klein, 1996).


Mongolia was connected to the Internet only this year with help from Datacom, the new Internet Access Provider, as well as Sprint, PaAmSat, Comstream, and the National Science Foundation.

Patterns of Internet growth

There are about 60 million Internet users worldwide. It is estimated that Asia, with half the world's population, has about 10 percent, or 5 million, of the Internet users. Of these, almost two-thirds are in Japan (Asia Magazine, 1-3 September 1995).

Furthermore, the research above shows that Internet development is uneven in Asia, both within and among countries. Often, the Internet is introduced into a country by universities. Growth has been fastest where there is a commercial push and deregulated environments, aided by the availability of public access. Also, the pace of growth is often dictated by history, culture, language and economics.


In Asia, both government and users share a common interest in trying to reduce foreign domination of the Internet. For example, the path adopted by China suggests that it may be trying to develop a giant domestic Intra-net. Many countries have also declared that they are looking into regulatory issues.

More and more countries have said that they are looking into the issue of Internet regulation. However, Asian countries differ in the extent of liberalism. Some, like the Philippines, Hong Kong, and Japan, allow commercial IAPs to flourish, letting market forces decide the level and quality of Internet services. Others, like Singapore, Thailand, Taiwan, and Malaysia, are more careful about allowing commercial IAPs to proliferate. Whatever the case, Asia is not ignoring the Internet. It is wrestling with it.

First, many Asian countries aim to use all media, including the Internet, for national development. Hence there is a tendency to attempt to regulate the Internet. There are also attempts to exclude or reduce foreign domination of Internet access and content. China appears to be heading in that direction. Given the size of the consumer market, it could support a massive national Intra-net.

A major issue that many Asian countries are wrestling with is the regulatory environment. In all the countries where the Internet has been more widely used--Japan, Hong Kong, Taiwan and Singapore--the Internet has posed new legal issues. Japan recently made some arrests for pornography on the Net. In Singapore, the first lawsuit for a forged mail-header has been filed. In Taiwan, there have been calls for regulation after someone used a cybercafe terminal to hack into the Web page of the ruling political party, changing the text and hotlinking it to Playboy (Asian Pacific Networking Group, 1996).

The approaches shown by China and Singapore suggest that the Internet will be more regulated in Asia, as compared to the US, which is consistent with the regulation of the traditional print and broadcast media. Regulation may slow Internet growth in Asia. In time, however, the regulatory bodies of each country will learn how to better handle issues concerning the Internet.


In sum, Asia is undergoing tremendous change in infrastructure and economics, which is helping the Internet to flourish in the region. And although growth of electronic commerce is slow in Asia, it is becoming increasingly global and will improve. Businesses worldwide are engaging in this commercial evolution. Also, as technology for infrastructure and reliable electronic commerce transactions continues to improve, more businesses will join this trend. It is evident that Asia's presence in the electronic marketplace will become stronger as their telecommunications infrastructure continues to improve and economic and social reforms stimulate growth. Asia's future in this new market paradigm is definitely promising.


Asia Pacific Networking Group Meeting. 1996. Singapore.

Business Times. 1996. Other Asian Countries Considering Laws to Regulate Internet. 8 March.

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