Enabling Services: The critical role of infrastructure services in enhancing overall competitiveness
The interactive parallel session on enabling services was moderated by Dr Ninasapti Triaswati, a member of Indonesia’s National Economic Committee.
Infrastructure services, such as telecommunications, ports and roads, energy and financial services are fundamental to the competitiveness of the entire economy. They represent a major element of global GDP and trade. UNCTAD estimates that infrastructure services contribute 20% of global GDP, with the proportion reaching 37% or more in developed economies such as the US. They also generate 10% of global employment.
Participants agreed that an enabling regulatory environment must be created to promote infrastructure services and governments must promote innovation. The main conclusions of the session included:
- An effective way of boosting infrastructure services is to set up a coalition bringing together the main industry stakeholders, who may, through a public-private dialogue mechanism, identify the most important areas where interventions are required.
- The logistics infrastructure depends heavily on the supply of talent, which is part of the soft infrastructure. Education programmes need to be adjusted to be aligned with business needs in a rapidly transforming sector.
- Technology innovations in infrastructure services are important drivers for economic and social development. In Kenya, new mobile applications allow for financial transactions by entrepreneurs in the informal sector who do not have bank accounts.
- The internet is a key service enabler. Freedom and openness are vital to leverage the benefits of the internet as a logistics service. Security-related concerns should not automatically lead to regulation and control by government, but find solutions that are not detrimental to business.
Dr Peter Allgeier, President of the Coalition of Services Industries, from the United States, said that services are one of the prime determinants of a country’s competitiveness and, therefore, its overall ability to grow and provide jobs. Infrastructure services include banking, insurance, accounting, telecommunications, express delivery, logistics, ocean shipping, energy services, retail, wholesaling – as well as internet providers. All economies need efficient services to be competitive in today’s global economy, especially if they are to plug into the international supply chains that increasingly dominate international trade. Successful trading companies and countries recognize that free cross-border data flows are vital to their competitiveness and their export growth, he said. The question is what government policies best promote the opportunities created by the internet.
Ms Rapelang Rabana, Global Head of Resarch and Development at the South Africa-based TelFree Group shared the view of services are crucial as an enabler. She quotes research statistics that suggest that a 1% increase in telecommunication leads to 10% increase in GDP, she said. The liberalization of the telecommunications market in South Africa highlighted the importance of four key issues, interconnection, tariff regulation, access to scarce resources and anti-competitive practices. Access to scarce resources is arguably the most important of these and includes access to infrastructure, she said. There is a need to create a level playing field to facilitate the entry of new players and businesses that drive innovation, she added.
Dr. Robert de Souza, Executive Director of the Logistics Institute, Singapore, addressed three issues: how to attract foreign direct investment for logistics infrastructure, how robust the infrastructure is to disruptions such as disruptions of the global supply chain through natural disasters, and finally, the importance of producing the right talent for the industry. He explained that the Logistics Institute has developed a new approach to measuring logistics performance: a logistics capability index. The index is based on the World Bank Logistics Performance Index and addresses factors of responsiveness and costs. The analysis allows countries to determine key performance factors.
Mr R. J. Lino, President Director of the Indonesian Port Corporation said the Corporation is actively pursuing development of the country’s ports by focusing on hard and soft infrastructure at the same time. Soft infrastructure includes improvement of skills in handling and working methods. In terms of hard infrastructure, the port authority is expanding surfaces and creating new transport corridors and new facilities, particularly in the less developed eastern part of the country.