IT giants cash in on service exports - information technology

Business Asia, August 30, 1999 by Cameron Cooper

A new drive to export cutting-edge services has helped Victoria weather Asia's financial crisis and foster new markets.

Minister for Information Technology and Multimedia Alan Stockdale said international companies such as Microsoft and Hewlett-Packard, which have bases in Melbourne, were expanding on their role as hardware manufacturers.

"More and more these companies are diversifying into services and we have huge potential for the export of software and computer services," he said.

Stockdale said exciting new software solutions were being developed in Victoria, while an emerging semiconductor industry provided further optimism. Korea is developing a semi-conductor presence in Victoria, while Robert Bosch Australia, an arm of the German-based multi-national, has also set up a silicon chip manufacturing plant in Clayton.

Stockdale, who will retire from politics after the next election, has won praise for driving Victoria's embrace of information technology.

The government's latest program, Global Victoria, will pump A$19 million into the IT sector over the next few years. It builds on the successful Victoria 21 strategy, which is credited with bringing A$2 billion worth of technology investment into the State.

Global Victoria aims to get more people to use IT.

"Increased usage will attract investment to the State, encourage innovation within the business community, drive demand for better telecommunications infrastructure and lead to better skilled workers and more jobs in technology-related industries," Stockdale said.

The Minister cited call centres as an example of Victoria's growth potential, while another "smart" industry is the growing Australia-Asia education link.

He noted that most Victorian universities have "twinning" arrangements with Asian counterparts. There was a ready market for Australian education material into Asia, which he said was wary of "even unintended cultural imperialism" from America.

"Much of our output, particularly in the content area, is less culturally threatening than the mass of material coming out of the US," he said.

Stockdale said Australia had defied the critics and "avoided the knock-on of the Asian crisis".

"I think they underestimated the change in the Australian economy over the last couple of decades," he said. "We are now a very substantial producer and exporter of services. We've shifted our economy into elaborately transformed manufactures (ETMs) and we've added value down the production chain. Commodities are still important but our exporters, particularly in Victoria, gained the benefit of the reform of the economy over the last decade."

Stockdale said Australia's diversification into US and European markets during Asia's downturn would pay continuing dividends when Asia recovers.

"I think there's an enormous opportunity for us in Asia and if the pick-up does continue -- and if as I expect there is now not a second round of problems in the banks and financial institutions -- then I think Australia will benefit from Asia added on top of what we have achieved through diversifying our markets."

Stockdale said pressure from the World Bank and Asia's yearning for a return to high growth would ensure that necessary reforms went ahead.

He even remained upbeat about Indonesia -- the worst hit of the crisis economies -- saying the Indonesian community is "crying out" for the expertise Australia can provide.

With Victoria likely to go to the polls within the next couple of months, the sun is setting on Stockdale's distinguished political career. However, he won't be idle: IT companies are already courting his skills.

Victorian Premier Jeff Kennett has promised to maintain his government's commitment to IT in the post-Stockdale era.