Industry Leaders Urge Canadians To Make E-Business Canada's Business

Press Release

Canadian E-Business Opportunities Roundtable issues e-report card Canada receives passing grade, but offers less than stellar performance

Toronto, February 23, 2001 - In its second report on Canada's prospects in the global Internet economy, the Canadian E-Business Opportunities Roundtable concludes that Canada has made some impressive gains in the past year, but has not moved far enough, fast enough to capitalize on the e-business opportunity.

Co-chaired by David Pecaut, President of iFormation Group and John Roth, CEO of Nortel Networks, the Roundtable urges Canadian businesses, governments and institutions to take up many of the e-business challenges that remain unmet. The Roundtable's report, Fast Forward 2.0: Taking Canada to the Next Level, says that while Canada has moved forward in many dimensions of e-business, the real challenge for Canada in the Internet economy is no longer raising awareness, but accelerating adoption and achieving leadership.

"The combined forces of globalization and the Internet revolution mean all businesses will have to become e-businesses. For Canada, there is no more business as usual. The Internet revolution has changed everything - not just for dot-coms, but for all parts of the economy," said Roth.

"Canada has made some impressive gains over the last year," said Pecaut. "There are now more people and more businesses online, venture capital is rising, and there have been significant improvements in our taxation environment. But if we're serious about building Digital North, we have to move at e-speed or risk other countries leaving us behind."

The Roundtable's second report draws on the activities of the six e-Teams that were formed to advance the Roundtable's initial strategy for e-business leadership, focusing on international investment, e-business acceleration, the talent pool, governments online, capital markets and the trustmark issue. It provides a snapshot of Canada's 'Net gains' over the past 12 months, detailing successes, stumbling blocks and emerging issues.

"The Roundtable is an example of the Government of Canada working together with the private sector to accelerate the adoption and use of electronic commerce," said Brian Tobin, Minister of Industry. "I would like to thank the members of the Roundtable for the report and for the hard work reflected in it. Both industry and government will draw upon these findings to further Canada's competitive edge in the knowledge-based economy."

Canada's E-Report Card 2000
The Roundtable reviews Canada's progress over the last year and notes that we are moving ahead on many fronts, though still lagging the U.S.:

The number of Canadians moving online continues to increase, though U.S. levels of connectivity are now outpacing Canada's.

More businesses are moving online. Mid-size businesses narrowed the gap with the U.S., while the percentage of large businesses online in both countries remained roughly equal. Small businesses in Canada continue to be under-represented online.

Venture investment is rising, having increased from $1.7 billion in 1998 to $2.7 billion in 1999 - a 59% increase. U.S. venture capital disbursements were 35 times larger than those in Canada by the end of Q2 2000.

Canadian Internet-related IPOs are still dwarfed by the number in the U.S. Given the size of our economy and population relative to the U.S., Canada should have seen between eight and 12 Internet-related IPOs in 2000. We fell short of even those modest expectations.

The pipeline for e-business talent is widening. E-commerce studies and programs are now being offered by postsecondary and research institutions across Canada. In addition, changes in immigration policies are enabling more technology workers to enter Canada and fill key positions.

Canada has made the greatest gains in improving the tax and fiscal environment over the last year. Changes in the treatment of capital gains, stock options, and corporate and personal income taxes over the last year have gone a long way towards levelling the playing field with the U.S. and making Canada a stronger draw for talent and investment.

"There is still a need to create a decisive Canadian advantage in a few key areas to make Canada a true magnet for talent and risk capital," noted John Eckert, Managing Partner of McLean Watson Capital Inc. and leader of the Roundtable's Capital Markets e-Team.

Despite the progress summarized above, the report warns that government online initiatives appear to be losing steam, online trustmarks are murky at best, and the country's global e-business brand is stalled.

The Roundtable notes that, as governments worldwide race to foster environments that will enable e-business, it becomes even more important to push these issues to the top of the national agenda. The report warns that to vault Canada to the forefront of the global Internet economy, we need "quantum gains, not modest ones."

Emerging Issues
The report explores the worldwide transition towards global enterprises, the development of a new breed of mid-cap high-tech companies that are driving wealth creation in Canada, and the continuing evolution of online marketplaces and concludes that technology continues to drive wealth creation in Canada and worldwide.

The report notes that, despite headlines proclaiming the death of dot-coms and the cooling of over-heated technology markets, e-business matters more than ever because the new economy has become the whole economy. Never has the competition for talent, capital or jobs been greater, not only across companies, but globally.

To capture its share of what IDC estimates will be a $4 trillion e-commerce market by 2004, Canada will need to accelerate its attempts to meet or exceed its target of five per cent of global e-commerce trade by 2003. One of the key issues facing Canada is facilitating the transition of existing smaller businesses into successful e-businesses. At the same time, Canada needs to ensure that all parts of the economy, not only business, have access to the Internet and the tools to participate in the online revolution to keep the digital divide from widening.

Taking Canada to the Next Level
The Roundtable's agenda for 2001 focuses on five 'high yield' opportunities for moving Canada to the next level of e-business leadership:

• Build Canada's international brand
• Accelerate e-business adoption in SMEs
• Make Canada a magnet for talent
• Close the venture capital gap
• Harness Government Online as an e-business driver.

"The Roundtable's agenda is a rallying cry to all Canadians to help take Canada to the next level," conclude the Roundtable members. "The next year will be a telling one. Canada will need to do more than catch up to other contenders in the Internet economy. It will need to overtake them."