Millennium bug risks seen in RI, India, China and Thailand
Millennium bug risks seen in RI, India, China and Thailand
HONG KONG (Reuters): Warburg Dillon Read warned investors on Monday that Indonesia, India, China and Thailand were ill- prepared for the millennium bug, and said Hong Kong and Singapore were most ready in the region.
"We caution investors on the risks inherent in the state of Y2K readiness in Indonesia, India, China and Thailand," said Sean Debow, head of regional valuation and accounting research.
In an interview with Reuters, Debow said he was most concerned about the poor state of readiness of power producers and transportation systems in less-developed markets and the potential fallout on the rest of the region.
Debow, whose assessments were based on an eight-week survey of some 230 companies in almost all Asian countries, said decision makers in some companies showed only superficial knowledge of Y2K risks connected to the turn of the century.
The Y2K bug stems from a programming practice of using only two digits to denote the year. Older computers could mistake 2000 for 1900 and crash at the start of the new year.
Many respondents in the survey seemed to think they had solved the problem merely by installing new Y2K compliant computers and software, Debow said.
Except for Hong Kong and Singapore, and top-tier firms in South Korea and Taiwan, many companies elsewhere seemed unaware that "embedded chips" in their systems and manufacturing processes could derail operations in the new millennium, he said.
"Our general feeling in Asia is that we are more concerned about embedded chips than we are about anything else. There's not enough focus on that," he said.
Non-compliant embedded chips, if left unrectified, may cause major problems in basic infrastructure such as power and water supplies and transportation, which would then have a domino impact on other vital services and manufacturing processes.
"China has been complacent and the power sector is a long way behind global standards in its preparation for Y2K," Debow said. "The country may well suffer a partial breakdown of its electricity provision system, with loss of generation and blackouts likely," he said.
On India, Debow said its key sectors such as power, ports and railway have stated they were unlikely to be Y2K compliant until near the end of the year. "This is a risky prospect," he said.
On sectors, Debow said property was safest but the power sector was fraught with risks in the less-prepared countries.
In the airline industry, Debow said flag carriers such as Singapore Airlines Ltd, Thai Airways International, Taiwan's China Airlines, Cathay Pacific "should be ready to put aircraft in the air on January 1, 2000."
One exception was China's China Eastern Airlines Corp Ltd.
"According to the airline's publications to date, its initial testing shows that flight information, ground communication, ticketing system and certain electronic devices are not yet Y2K compliant," he said.