Adverse effects of online clampdown by SEA governments

Attempts by Southeast Asian governments to control online activity has become a matter of concern. — Picture courtesy of Digital News Asia
Attempts by Southeast Asian governments to control online activity has become a matter of concern. — Picture courtesy of Digital News Asia

KUALA LUMPUR, Aug 15 — In June, Singapore’s Media Development Authority (MDA) announced a licensing scheme for news websites, which sparked protests from civil society and Internet companies.

In Malaysia, two “sex bloggers” got into the soup over a Hari Raya greeting that was in bad taste, which resulted in their arrest under the Sedition Act. While tensions continued to simmer, a female Muslim dog trainer was arrested over a YouTube video she had made three years ago, but which was reposted by an unknown party recently.

In June, a suspect who had allegedly insulted the Yang di-Pertuan Agong on Facebook was tracked down and detained by police.

In Vietnam, the government has issued a new decree which curbs online free speech and forces foreign companies to keep servers inside the country.

In Thailand, things look especially dire with the government having threatened to jail Internet users for posting or “liking” political rumours on Facebook. Most recently, Police Maj-Gen Pisit Pao-in, commander of the Technology Crime Suppression Division (TCSD), announced a plan to check Thai citizens’ Line conversations.

According to a report by Tech in Asia, the police agency had asked Line Corporation in Japan to co-operate and if it agrees, all 15 million Line user names in Thailand, along with their conversations, will be sent to the police.

However according to an update on Twitter by The Next Web editor Jon Russell, Line has stated that it “has not received any official request from the Thai police.”

These moves by Southeast Asian governments to put in place control mechanisms for online activity is of concern, especially considering the much-touted critical role digital economies can, and will, play in propelling national growth.

A 2009 World Bank Report found that access to affordable, high quality Internet and mobile phone services enables development across all levels of the economy and society.

For every 10 percentage-point increase in high speed Internet connections, there is an increase in economic growth of 1.3 percentage points.

“Governments should proactively encourage the development of local IT services industries through policies and incentives directed at entrepreneurs and the private sector, and through investments in skills and infrastructure,” said World Bank economist Christine Zhen-Wei Qiang, editor of the report.

The report also identified the mobile platform as the single most powerful way to reach and deliver public and private services to hundreds of millions of people in remote and rural areas across the developing world.

According to a Mobile Economy report released by the GSMA, the number of unique mobile subscribers in Asia Pacific reached 1.5 billion at the end of 2012, and another 1.5 billion new mobile connections are expected by 2017.

“Mobile is already having a profound impact across all Asia Pacific countries, with spectacular growth in service penetration, driven by investment in infrastructure and continued innovation in devices and services,” said Anne Bouverot, GSMA director general.

Joint research unveiled by McKinsey and Google in May last year showed that the Internet contributes an average 1.9 per cent of gross domestic product (GDP) in aspiring countries — US$366 billion (RM1,171 billion) in 2010. By comparison, the Internet in developed countries contributes an average 3.4 per cent of GDP.

McKinsey defines “aspiring nations” as developing countries that “are on the cusp of becoming developed,” according to Nimal Manuel, principal at the research firm.

The report also revealed that 143,000 Internet-related businesses were started every year in 30 aspiring countries, and noted that various policies can help or hinder Internet ecosystem development.

“Regulatory barriers and firewalls can impede the free flow of information, which is a necessary precondition for empowering users to fully leverage the Internet. Well-intentioned and important controls on content and data management to safeguard children, for instance, can, however, be restrictive in business operations,” the report stated.

It also noted that protectionist barriers are another potential hurdle, blocking the ability of ‘foreign’ companies to compete using the Internet. “Such barriers can reduce the competitiveness of local companies. Consumers lose out when competition is reduced, and consumer surplus is among the most important forms of Internet impact,” it added.

The region lags

Despite the vast potential and benefits digital economies can bring to the table, the Southeast Asian region, and Asia in general, is still behind the curve in leveraging these technologies and tools.

An Economist Intelligence Unit report commissioned by the Asia Internet Coalition (AIC), released in July, sought to uncover why Asia’s Internet businesses seem to punch below the weight on the global stage.

The AIC is an industry association — whose members include eBay, Facebook, Google, Salesforce.com and Yahoo! — that seeks to promote the understanding and resolution of Internet policy issues in the Asia-Pacific region.

The report highlights two key findings, the first being that the fragmentation and underdevelopment of online payment systems are hindering business growth.

The second, and more worrying finding, is the rise of Internet regulation, which the AIC argues is having a negative impact on the business environment, with many governments focusing more on control than empowerment.

For example, in India and Thailand, poorly worded and confusingly interpreted laws on liability for carrying illegal or even merely controversial content carry high administrative costs and cause a great deal of uncertainty for businesses, hindering innovation and limiting the growth of the online economy, the report said.

The report also noted that the business environment for Asia’s Internet companies could be much improved with clearer regulation and a commitment to enable and empower the sector to grow.

In an email interview with Digital News Asia (DNA), AIC executive director John Ure (picture) said the association is “increasingly concerned” that governments within the region seem to be adopting laws and regulations which represent a step backwards into a pre-Internet culture when modes of communications were more “linear.”

“The Internet represents an entirely new paradigm of communications that governments are too often trying to tame,” he said.

Ure reported that the AIC has noticed a tremendous growing concern from industry and civil society groups over more restrictive attitudes towards the Internet.

“In part, this is because these issues are hitting this region hard for the first time, and local legislators and governments are not too sure about how to handle them. There are genuine problem issues that do need to be addressed, but they should not be allowed to over-ride the crucial importance of encouraging innovation entrepreneurship around the Internet,” he said.

Ure said that modern states arose from a linear world of top-down governance, top-down employment structures, top-down education systems and top-down religious orders, but the global economy is moving beyond that era into a non-linear way of living.

“People no longer expect jobs for life, no longer depend upon their news and entertainment through linear broadcasting and media systems, can educate themselves from various global sources, etc,” he noted.

Lim May-Ann, research director at boutique consulting and research firm TRPC based in Singapore, expressed similar concerns but pointed out that such control mechanisms have always been there — there are different types of censorship laws, rules around speech, responsible behaviour online, and so on.

“While it is worrying that there is a sudden increase in the number of policy changes in online expression, some changes are nothing more than extensions of offline policies being extended to the online sphere,” she said in an email interview with DNA.

“What is worrying is that sometimes these extensions do not make sense, because an offline policy sometimes does not naturally translate perfectly to fit the online world. Using the ‘old school’ rules would limit the possibilities that going online would provide people, especially businesses trying to take advantage of the low barriers to enter the global supply chain. Some of the new rules and control mechanisms stymie such entrepreneurial efforts,” she added.

To illustrate, Lim pointed to Vietnam, where the new requirement for websites (Decree 72) to have local servers host their information would limit local online business growth as they may be forced to source for a suitable local server, which may not be the best business solution.

When asked what he foresees as being the potential fallout from these developments, the AIC’s Ure said although the most obvious outcome is restricted growth of the local digital economy, the situation is different for each case.

For example, Singapore has a highly developed infrastructure and geographical location that has made it a hub for all sorts of business activities, including for data centres that serve as places to secure servers.

“For the foreseeable future that will not change, but if the ways in which the new regulations governing Internet news sites are not liberal, then this will [have an] impact upon the decisions of international companies on where to place their future investments,” he said.

When it comes to Malaysia and Thailand, Ure said that both nations have a chance to catch up over the coming years, but not if local entrepreneurs are constantly looking over their shoulders, worried that their content or the access they provide to content and services can be called into question.

Vietnam seems, at least on paper, to be taking major steps backward by making it illegal to share news content from overseas.

“In Vietnam, to start an Internet business the entrepreneur will be more concerned with finding a lawyer than a website designer,” Ure quipped.

When asked what the recent developments signal for the near future in Southeast Asia, Lim said the online community is quite vocal.

“In this age of increased transparency and calls for clear communication and consultation processes, it is going to be increasingly difficult for governments to implement gag policies without good warning or without consultation — not without paying a political price for it, as the Singapore government is finding out with the online news licensing scheme,” she said.

“The new regulations have passed, and to be fair, they’ve really only implemented these on 10 news sites, most of which were owned by parent media companies already under the licensing scheme anyway — but there is a political price to be paid for the perceived heavy-handedness in which the regulation was put in place,” she added.

When asked what the AIC has planned to address concerns over restrictions on Internet freedoms, Ure said the association was formed précisely to advise governments of the benefits to their economies and societies of a free and open Internet.

“We express our views to governments on their proposals to introduce laws and regulation, not to oppose laws and regulations as such, but rather to ensure they are proportional and practical and do not sacrifice the principal benefits of a free and open Internet.

“There are real problems, such as child pornography, which every society must tackle, but there are smart ways and not so smart ways. Laws used as a blunt instruments will not achieve anything useful but can always be misused. There are ‘best practices’ to be learned from globally, and the AIC hopes to share knowledge of these together with the practical operational experience our members have,” he said.

Economic suicide

These new regulations and restrictive moves across the region also complicate matters when factoring in the free trade agreements currently being negotiated, such as the highly contested Trans-Pacific Partnership agreement.

When asked for their thoughts on the matter, Ure observed that how these new regulations may arise during trade negotiations is “an interesting issue.”

“They definitively cut across the ethos of free and open trade. Longer term is anyone’s guess, because Internet technologies are so rapidly changing and ‘disruptive’ and the way people adopt and use the Internet is likewise always going to be a process of discovery of new things.

“Laws and regulations cannot withstand the tide of history, but they can severely impede it and make it a much less pleasant and less rewarding journey,” he added.

Lim noted that in any good policy process, there should be space for negotiation and consultations to occur and governments are hydras — many different departments working from the same body.

“The important thing for public policy practitioners and lobbyists is to try to connect the right heads together so that they talk to each other and come to some form of compromise which respects the need for some form of government control in the interest of public good and public safety, while still not flipping to the other end of the spectrum which is to ring-fence your Internet community,” she said.

Lim also pointed out that protectionism by any other name (data security, privacy concerns, requirements for local servers) will still slow down international entrepreneurship, and limit business-creators to their domestic market.

“In this age of globalisation, that may translate into economic suicide,” she added.

With the state of Internet regulation and freedoms across Southeast Asia still in flux, with a few policies only freshly minted, the true and measurable impact on rising digital economies remains to be seen.

Though in Ure’s personal view, 25 years into the future people will look back in puzzlement at “how non-comprehending many policy-makers were, and how fruitless their efforts to rein in the Internet.”

“Reining in the Internet is like reining in life itself. Maybe North Korea is the best example,” he added.

Or as Internet pioneer John Gilmore puts it: “The Net interprets censorship as damage and routes around it.” — Digital News Asia