GROUP OF 77
GENEVA

STATEMENT BY H.E. MR.MASOOD KHAN, AMBASSADOR AND PERMANENT REPRESENTATIVE OF THE ISLAMIC REPUBLIC OF PAKISTAN, ON BEHALF OF THR GROUP 77 AND CHINA, AT THE TENTH SESSION OF UNCTAD's COMMISSION ON ENTERPRISE, BUSINESS FACILITATION AND DEVELOPMENT
Geneva, 21 February 2006

Mr. Chairman,

I take the floor on behalf of the Group of 77 and China. I congratulate you on your assumption of the Chairmanship of this 10th Session of the Commission on Enterprise, Business Facilitation and Development. We have confidence in your leadership and assure you of our full support in your endeavours. We also congratulate other office bearers on their election and thank the Secretariat for the preparation of background documents.

Mr. Chairman,

The G-77 and China reiterates its support for UNCTAD as the principal organization within the UN system for an integrated treatment of trade and development and related areas of finance, technology and investment. Each of the three pillars of UNCTAD's mandate is equally important. The Commissions form an important part of the intergovernmental machinery and are linked to the consensus building pillar of this Organization's mandate. In accordance with the role of UNCTAD to provide development oriented solutions to the existing and emerging challenges faced by developing countries, it is important for substantive discussions at UNCTAD's Commissions to yield substantive outcomes. This year Mid Term Review of the Sao Paulo Consensus will give us the opportunity to revive the spirit of Sao Paulo. We are determined to let this spirit guide our work at this Commission and all other events in UNCTAD's calendar for this year. We urge our partners to join us in this endeavour. We hope that, as we go along, our developed partners will meet us half way and match our initiatives with reciprocity. It takes two to tango.

Let me now turn to the three items on the substantive agenda of this Commission.

First, item 3 on improving the competitiveness of SMEs through enhancing productive capacity.

Mr. Chairman,

Trade liberalisation is not an end in itself. Its ultimate objective should be to raise the living standards of people, between and within nations, through accelerated growth and income opportunities. Trade has to be necessarily linked to industrialization In pursuit of this objective. This would enable developing countries' enterprises integrate into global production chains and add value to their processed exports.

SMEs are a proven catalyst for employment generation and sustainable economic growth and have a crucial role to play in this respect. The need for

government intervention to assist SMEs must be understood in the context of market failures. Lack of access to finance, information, technology and markets prevent capacity building of domestic enterprises. Specific policies, programmes and appropriate institutional frameworks are needed to help SMEs overcome these failures.

From a strategic perspective, we subscribe to the need for systemic and sequenced policy interventions aimed at improving the investment climate and attracting FDI. Strengthening the local absorptive capacity and developing domestic SME suppliers form an important part of such interventions. We, therefore, encourage UNCTAD to carry out further research to identify replicable best practices for enhancing SME competitiveness by means of business linkages with foreign affiliates.

It is important to look at both the policy space and policy options available to developing countries. The G-77 and China look forward to discussing the findings of UNCTAD's research on this matter.

Mr. Chairman,

On Item 4, Efficient transport and trade facilitation to improve participation by developingcountries in international trade, the G-77 and China believe that Trade facilitation is conducive to development. Experience suggests that capacity building is often the necessary first step to initiate a virtuous circle. Trade facilitation contributes to export driven development, and this development in turn is instrumental in enhancing capacity to introduce further trade facilitation measures.

The ability to deliver our exports efficiently and inexpensively is a crucial condition for integration into the world economy. For most developing countries, the cost of moving goods internationally has become more than the Customs tariffs in destination countries. It has been estimated that international transport costs alone tend to be two to three times higher than average import duties. UNCTAD's assistance and substantive research and analysis of trade and transport-related issues affecting developing countries, continue to play an important role.

Mr. Chairman,

At the World Trade Organization (WTO), negotiations on trade facilitation have entered a "text-based" phase. These negotiations could benefit from modalities addressing fears that developing countries and the LDCs may not be in a position to comply with future commitments. UNCTAD has provided assistance through the Trust Fund Project on "Capacity Building in developing countries and least developed countries to support their effective participation in the WTO

Negotiations Process on trade facilitation". It is important to note that significant additional support will be required when it comes to implementing the committed facilitation measures.

The Expert Meeting on Trade Facilitation as an Engine for Development placed particular emphasis on the role of information and communication technologies - ICTs - in international transport and trade facilitation. We believe that the role of ICTs in trade and transport facilitation deserves increased attention in UNCTAD's future work.

Mr. Chairman,

On Item 5 of the agenda, the G-77 and China would like to emphasize that Information and Communication Technologies (ICTs) form a bridge between the emerging information society and the ongoing process of globalization. It is essential for governments, civil society and the business sector in the developing countries to integrate ICTs into the process of development. The WSIS process has highlighted the need to harness the potential of ICTs to promote the Millennium Development Goals. ICTs are cross-cutting tools that can support the achievement of all these goals. For example, ICTs can help reduce poverty by creating economic opportunities (Goal 1) or enhance the universality of primary education (Goal 2).

The Summit in Tunis highlighted the growing impact of ICTs on trade in goods and services and on the productivity of enterprises, SMEs in particular. An increasing share of trade transactions, especially between businesses, relies on information technology to enhance profitability by reducing transaction costs and enabling outreach to international markets. ICTs facilitate significant improvements in enterprise competitiveness and labour productivity and establishment of profitable business relationships between enterprises in geographically remote markets, niche sectors, or among firms relying on intermediaries to overcome knowledge and information barriers.

Mr. Chairman,

The WSIS also drew attention to the role of free and open-source software in supporting the development of the information society. The FOSS model permits free copying and redistribution as well as adaptation and customization to local languages, usage cultures and commercial and administrative requirements.

While governments and civil society are central actors in formulating and implementing policy and promoting the adoption and use of ICTs, e-business merits a high profile in the digital development process. Adoption of e-business practices is one of the most powerful transmission mechanisms for economy wide distribution of fruits of ICTs. This is being clearly employed in several

economic sectors- most obviously in the tourism, or "e-tourism" sector. The Group of 77 and China welcome the outcome of the expert meeting recently held in UNCTAD on this matter.

The G-77 and China recognize the need to devise and implement a strategic approach to developing information economies by enhancing e-business activities through well informed national and international policy debates and deliberations. ICTs carry a vast potential to promote international trade and investment. ICT development strategies must, therefore, include policies and measures to increase the adoption of ICT across all economic sectors.

Devising and coordinating such a complex policy is not simple and evaluating it without the benefit of hard data compounds the difficulty. Efforts to initiate a process for the development and formulation of e-business and information society measurement and statistical data need to be supported with particular emphasis on achieving their international cross-comparability. UNCTAD has been playing an important role in raising awareness about the importance of ensuring proper assessment of the reality of ICT usage in developing countries. The Group of 77 and China request the secretariat to inform the Commission about the future direction of activities in this area, particularly in the context of the Partnership on Measuring ICT for Development and its possible role in the follow-up to WSIS.

Mr. Chairman,

Let me conclude by reiterating our support for your endeavours towards reaching a substantive outcome based on our deliberations at this Commission. The G-77 and China will take a constructive approach with an open mind.

I thank you.