Stable Policy Must To Spur Investment

Speakers at two strategy sessions on financing telecoms development in Asia Pacific held here over the past two days stressed the need for a stable policy backed by transparent regulatory systems to foster investment in the region.

They also called for bold initiatives from commercial banks and flexibility on part of lenders like export credit agencies (ECAs).

In an impressive presentation, Tadeshi Sekizawa, president of Fujitsu Corporation of Japan, espoused a strong linkage between the total credit of a country and its teledensity in the Asia Pacific region. The higher the total credit of the country, the higher the teledensity, and vice versa, he said. Teledenisty is the number of telephones per 100 persons in a country.

 

Sekizawa felt that the traditional sources of finance mostly government capital in countries with very low teledensity would not suffice in future for increasing their populations access to telephones. There has to be a deregulation of equity markets and flexibility by commercial banks and ECAs, he advised.

In debt financing, ECA deals need to be more flexible with longer grace periods and no restrictions on the limit of financing, the Fujitsu president said. ECA financing transactions at present have a three-year time limit and equipment vendors cannot finance more than 85 per cent of the total value of deals through ECA financing. ECA finances are critical in telecoms projects, where the cost of equipment is around 70-80 per cent of the project cost.

Indias telecoms secretary A V Gokak, in his keynote address, felt that government investment in the infrastructure sector, particularly the telecoms sector, was important even after deregulation of telecoms market.

In a view breaking from the conventional school of thought, William Markey, manager (international business development), Motorola multimedia group, said that telecoms development did not need government finance at all. He felt the sectors requirements could be easily met by private sources of capital. The government capital being invested in telecoms is better used being put into education, health etc, he said.