Opening speech by h.e. minister of trade Kimmo Sasi in the Finnish-Korean ICT seminar in Seoul, 24 May, 2001

Your Excellency,
Ladies and Gentlemen,

It is a great pleasure for me to have this opportunity to wish you, Mr. Minister and all other participants warmly welcome to this seminar arranged by Finpro and the Embassy of Finland. I am also glad to have the possibility to take part in this seminar today here in Seoul and to address a distinguished audience about the Finnish ICT cluster.

Korea and Finland are global leaders and players in IT - sector. We have lot of common features in this area. Also, there is a growing interest in my country towards Korea and the opportunities it offers for trade and investment. That interest is well reflected in the large business delegation that is accompanying me on this visit to Korea.

Continuous dialogue and cooperation at every level - suppliers, operators and authorities - as well as common vision are more important than ever when developing the future of communications. And I am pleased to see the relationship between Finland and Korea flourishing also in this sector.

Let me first start by showing why Finland is regarded as a success story in the development of the ICT industry. This figure shows to you how the composition of Finnish exports has evolved during the last decades. We see that the structure of the economy has diversified and that the ICT is the leading driver of the economy today. However, this does not imply that we would neglect the other sectors. On the contrary, the government policy is to offer world class conditions for enterprises in every sector, and the government does not try to influence investment decisions.

We believe strongly that competitive and fair markets are the optimal drivers of economic development. We have also found evidence of this in the well-known international competitiveness studies that place Finland in top positions in the world. Certainly the ICT sector has been able to exploit these conditions best, and there are particular determinants for that development. Let me state here, however, that the real policy challenge is to see that the ICT is spreading throughout the economy. It is in the traditional sectors and in the small and medium sized enterprises that the real ICT revolution takes place, and were the productivity benefits are to be realised on a larger scale. In other words, the supply and the demand of the technology go hand in hand.

This has been a key determinant of the development of the ICT industry in Finland. For industrial policy we have during the last 10 years relied on a cluster development approach. This globally applied model looks at all the key elements of the competitive environment for enterprises. The idea is to guarantee that there is no weak links in the system. This figure shows how the cluster looks like. As I said the use of the ICT or the demand has been a key element in the development. The telephone market has been rather competitive and operators have tried to modernise and develop their services with new technology as a core of their competitive edge.

The government has contributed to this development by liberal policy maintaining openness with regard to import of advanced technology. Foreign and domestic companies have competed in the Finnish markets. Due to the limited size of the Finnish markets the foreign competition has always been a vital driver of development.

The legislative policy has been used to further the functioning of the markets. Finland was one of the first ones to start telecom liberalisation in the 1980s and this policy has been continued vigorously. Technical standards have been used to advance the connectivity. The most important single decision with regard to the development of mobile telephony technology was the introduction of the NMT standard between the Nordic countries in the early 1980s. This decision by the Telecommunication Administrators allowed the creation of the common Nordic markets where two of the world leaders of telephony technology have developed.

Another key factor has been the innovation system. There has always been the tradition of close co-operation between the research institutions and the industry. The level of investment in the ICT sector remained relatively low in the earlier decades due to the fact that a large part of the industry was concentrating on production processing sectors like pulp and paper, chemical and metallurgical industries. The government decided in the early 1990s that its role is not to support the enterprises through subsidies. Instead, it was decided that the resources should go into financing the R&D activities. This picture shows the change. What is fundamentally important is that the private sector has increased their share of turnover of the R&D activities substantially and the government funding plays rather a role of giving further incentives for this work. The method chosen for the national technology programmes is very much a bottom up driven, meaning that the National Technology Agency invites the actors to propose projects and research areas, and then tries to work as a facilitator for joint efforts. In particular in the ICT field it has been an important task to promote the application and diffusion of the new technologies to the economy.

The development of the innovation system has also benefited substantially of the expansion of the capital markets. In particular in the ICT sectors venture capital financing has emerged rapidly allowing for adequate capitalisation for shortening of the lead time for commercialisation of innovations, a key factor in the ICT field.

Another key element of the ICT industry is of course the development of the content. In the cluster development this is called the related industries part. It goes without saying that the success of the networks depends on the value that it can offer to the users. Culture plays an important role here and we have ambitious projects with regard to creating an environment conducive of commercialisation of digital culture applications. Health care services are another key area where digital tools can bring about substantial efficiency gains. The public sector plays a leading role in creating the conditions for innovative provision of services in this area. The two examples of the content industry also highlight an absolutely fundamental issue: the government has to be able to show the good example and put its own services on-line. Challenges remain in this area like in every country.

All in all we have been able to bring together all the main players of the ICT cluster. What is more important we have been able to produce an entrepreneurial culture into it. There are more than 15.000 enterprises in the ICT cluster if we account also the content providers. A large number of them have aimed at the global markets from the outside, a tendency quite natural for a country with small domestic markets. Liberalisation of the global market place is important for Finland. Accession to the European Union in 1995 was one decisive step taken by the government towards more open markets and competition.

You will have noted that our policy has been one of liberalisation and reliance on competitive markets. I should add that I was the Minister for Transport and Communications when the mobile phone licences were granted. We held the ICT sector development so vital for the economy that we decided that the licences should be granted by technical merits. We did not make the same decision as was done in so many other European countries where huge sums of licence fees were collected in auctions. High payments will slow down the introduction of the new standard. We have also paid close attention to the impact of technology on the development of the markets and have adopted decisions that are technology neutral.

We have a high level of penetration, almost 80 % in mobile telephony. Finland has also a very high internet connection rate: There are 148 host computers per 1000 people, more than 25 % of all households and almost 90% of companies with more than 10 people are connected to the internet. The level of education is also high: almost 2/3 of all the students go on to tertiary education. A solid foundation of a modern information society is in place.

I have been asked to comment on the Korean situation with regard to the important decisions about the licensing as seen from our perspective and the background outlined above. I think that it is evident that I support an open market policy with respect to the standards and technology decisions made for the deployment of commercial wireless systems. The markets should be allowed to lead this kind of development to the full extent.

Mr. Minister,
Distinguished participants,

I would like to elaborate a moment on the future co-operation possibilities between Finland and Korea in the field of ICT. This seminar marks the interest of both the Finnish business community and the government to develop practical and concrete co-operation between the countries. There is one element that goes wider to the international fora as an example of that co-operation. I have today discussed with several of my Korean colleagues the Asian European Meeting Trade Facilitation Action Plan in particular in the area of electronic commerce. The responsibility for this important project involving 10 Asian and 15 EU countries has been entrusted to Korea and Finland as facilitators. I hope that we will reach concrete results of this work and barriers for electronic commerce will be lowered.

We have also discussed in greater detail the initiative discussed between the presidents of our countries during the ASEM Seoul Summit last autumn about bilateral co-operation in the ICT sector between our countries. I think that there is great potential for that co-operation taken the high level of development of the sectors in our countries. We welcome the proposal made by Mr. Chang Che-shik, Minister of Commerce, Industry and Energy, to send a team of Korean experts to Finland to elaborate the potential of this initiative closer. I am sure that there are many areas where fruitful co-operation can be started. We need to identify the most appropriate actors and methods to bring about concrete benefits for our companies. I am sure that the Finnish Businessmen delegation agrees with this assessment and we will be able to elaborate on some of the results of such co-operation the next time we organise a seminar of this kind.

Ladies and Gentelemen , thank you for your attention. I hope that you will find this seminar interesting and that it helps to build new bridges between Korean and Finnish businessmen.

Thank you very much , kamsa hamnida.

Takaisin