Canadian Group Warns Of Tech Drain To Asia

TAIPEI, Taiwan — A recent warning by one of North America’s largest technology advocates indicates that the U.S. isn’t the only one nervous about rapidly developing Asian countries.

The Information Technology Association of Canada (ITAC) said earlier this week that public policy makers must pay close attention to the incentives countries like China, , Japan, South Korea, Taiwan and India have put in place to lure high-tech investment and well-educated expatriates to their shores. It also noted that select European countries are asserting themselves as well.

Among the findings of an ITAC report issued this week were:

In 2003, Japan introduced tax incentives designed to stimulate investment by Japanese companies in information and communications technology (ICT) machinery and software. Firms investing in ICT have the option of either a 10 percent tax credit or a special depreciation allowance equivalent to 50 percent of the acquisition cost of technology. China deploys a range of measures including depreciation schemes, investment allowances and allowances for technological innovation. South Korea offers a tax credit for acquisition of machinery and equipment by small companies. It also offers a tax credit specifically for productivity-enhancing facilities of 7 percent. South Korea is also one of a number of countries that offers tax credits for training in ICT use. Others that offer incentives for ICT training include France, Austria and the Netherlands. ITAC said Canada is lagging in its incentives for technology investment and training, and described measures taken in Asia as “alarming” because they may prove very effective in shifting technology investment overseas. "The link between ICT investment and productivity growth is well established," said ITAC President and CEO Bernard Courtois. "We believe that if the government is serious about improving productivity, we need to take serious measures to stimulate the adoption of ICTs. But technology alone isn't enough. A real barrier to the full exploitation of the benefits of technology — especially among small and medium-sized enterprises — is having the skill to use technology effectively.