Frost & Sullivan analyst Manoj Menon said that pump priming is a common reactionary measure by governments take to nurse their economy to health during an economic downturn. This does not just cover building of bridges and roads--it also includes IT spending.
"With the growing emphasis on the information and communication technology (ICT) industry we are seeing governments not only spending on infrastructure but also on IT projects," Menon said in a telephone interview.
"Governments in Hong Kong, Singapore, Malaysia, Australia and South Korea, which have vied to become the ICT hub in the region, have been initiating such implementation, to help local companies," Singapore-based Menon added.
One IT company CNETAsia interviewed revealed that it has experienced a significant growth this quarter, especially after the September 11 tragedy in New York.
Supercomputer maker SGI said that it has seen a 30 percent to 40 percent sequential growth from its government & defense business between its third and fourth quarter. The sector contributes about a quarter of the company's total revenue, worldwide and in Asia Pacific.
"Government expenditure is moving faster than before. They used to release a tender for a project, and it takes a few months before a sales is made," SGI Asia Pacific business development manager for defense Mick Martin said.
"After the September 11 tragedy, governments are more ready to spend immediately to make their countries and homes safe from terrorist attack," Australia-based Martin noted.
"Now, governments are more receptive to the idea of unsolicited sales. They are more open to hearing what we (vendors) have to say," he added.
Some analysts have also cited IBM's recent sale of 40,000 notebooks in Victoria, Austalia as an example government spending during an economic slowdown.
As reported on CNETAsia last month, IBM Australia bagged a tender worth A$92 million (US$47 million) from the Australian government for the notebook deal.
According to Tokyo-based International Data Corporation Asia Pacific analyst Gary Koch, IT spending by Asian governments is expected to grow by 17.7 percent year on year to US$9.39 billion in 2002. This year, the spending is expected to hit US$7.98 billion.
The growth for next year is suppose to be bigger but was affected by the drastic devaluation of Asia currencies against the greenback, Koch said in a phone interview.
The Chinese government will lead in Asia, with government IT spending to hit approximately 38.99 billion yuan (US$4.7 billion). In terms of growth rate, China tops the list at 29 percent.
Meanwhile, Menon of Frost & Sullivan remarked: "Another trend is that governments are not only initiating new projects--it is expected that they will accelerate or bring forward projects which were scheduled for a later date."
Commenting on Malaysia, Frost & Sullivan program leader for technology practice Shamir Amanullah said: "The incentives set in Budget 2002 for the ICT industry are plausible. More than US$90 million has been allocated for the Multimedia Super Corridor (MSC) and related projects."
Set up five years ago, the MSC is Malaysia's IT and multimedia industry hub--its own "Silicon Valley."
"Technoprenuers will be delighted that more funds are available in the dot-com arena. This will possibly tone down negative vibes of the economy heightened by the war," Kuala Lumpur-based analyst Amanullah said.
He added that the budget highlights the Malaysia government's determination to push the country towards the knowledge-based economy. And the funds allocated for smart schools and tax reductions for going online underline the determination of the government to promote the ICT industry.
"Considering the economic slow down across the globe, the ICT industry still remains a focal point of the government's plans and they have done well to continue investing in it," Amanullah noted.
Meanwhile, the Singapore's Housing Development Board (HDB), which houses about 86 percent of Singapore population, expects to spend up to S$2 million (US$1.1 million) per year on storage from next year. This includes tape solutions, disk storage and storage area network (SAN) components.
At present, HDB uses an automated cartridge library system (ACLS), with approximately 20 terabytes of storage that carries the data of the residents of HDB estates island-wide. The storage system has 1,500 cartridge slots that can accommodate up to 40GB of space.
Looking forward, HDB is conducting a feasibility study for the next six to 12 months on implementing SAN technology to its existing storage infrastructure, Kwan noted.
By October 2002, the housing body expects to run a six-month pilot test of SAN and the full implementation of the technology will begin as soon as April 2003, he added.
Last week, in what look like a subtle indication of a stimulus package, the Singapore government announced the enhancement of two financial assistance programs for Singapore-based companies.
One of these--the Pilot and Trial Hotspots (PATH) initiative, which was set up by the Info-communications Development Authority of Singapore (IDA) in May to accelerate the development of info-communication infrastructure applications and products, will have its fund expanded to S$48 million (US$26.2 million) from the initial S$9 million (US$4.9 million).
IDA assistant chief executive Khoong Hock Yun said: "One of the reason for the expansion of the PATH package is to function as a stimulus package."
Without reveling specifics, he said that there will be more such initiatives in the future.
Industry observers note that increased government spending is not exclusive to Asia.
According to a CNET News.com report, the US$20 billion stimulus package proposed by senate Democrats may include US$1 billion to bankroll an information-technology fund.
As proposed by Senator Joseph Lieberman, the US office of management and budget will administer the fund and award money to projects that aim to protect the country's critical infrastructure, improve the security of government computer systems, or harden the nation's defenses against natural and manmade threats.
After all these spending, skeptics argue that this effort will only benefit the big boys. However, analysts disagree.
"The smaller companies will definitely get their fair share of the pie through a trickle down effect," an industry expert remarked.
This is because "the structure of the IT industry is so complex, big scale projects require input from small outfits to large multinational corporations," he explained. "There will be companies who provide the hardware, the software, consultancies, system integrators and infrastructure providers."
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