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KUALA LUMPUR: Malaysia’s Communications Minister Fahmi Fadzil on Tuesday (Aug 27) warned technology companies that they must comply with the government’s licensing regime if they want to continue operating in the country.
His comments came a day after a coalition of tech companies released the latest version of an open letter to Malaysian Prime Minister Anwar Ibrahim, urging the government to reconsider its controversial licensing system.
The new framework will require social media and messaging platforms with more than 8 million users to obtain an annual operating license, and failure to comply could result in fines of up to 500,000 ringgit ($115,000).
The Asia Internet Coalition (AIC), a trade association formed to address public policy issues and promote the internet economy in the Asia-Pacific region, said the system would hamper innovation and “place an undue burden on business.”
“It will hinder ongoing investment and discourage future investment due to the complexity and cost of compliance,” said the AIC, whose members include Meta, Google, Amazon and Apple.
Civil society groups such as the Malaysian Centre for Independent Journalism have also criticised the system for potentially stifling free speech and criticism of the government.
Mr Fahmi, who responded to the comments on the sidelines of an Orang Asli development event in Sepang on Tuesday, stressed that the system, which is scheduled to be implemented on Jan 1, 2025, will not be delayed.
“They are big tech companies but our laws are stricter. So if they want to do business in Malaysia, they have to respect and abide by our laws,” he said.
The minister noted that recent examples from the United Kingdom and France reaffirmed the Malaysian government’s decision to tighten regulation on technology companies.
In the UK, misinformation about immigrants on social media sparked widespread riots and unrest in July and August, while Pavel Durov, the founder of messaging app Telegram, was arrested in France on Saturday as part of an investigation into child pornography and drug trafficking on the popular encrypted messaging app.
Mr Fahmy said the charges against Durov “involve many of the things that worry us – namely crime that has moved to social media”.
‘Active’ discussions with big tech companies
When asked by CNA whether the government had considered the worst-case scenario, where the tech companies refused to comply and exited Malaysia, Fahmi said his ministry had “reviewed all aspects”.
He added that the talks he held with Singapore Technologies in late July on the licensing regime had made “positive” progress as they were ready to discuss the matter.
“We will continue discussions … the Malaysian government is very willing to have discussions and take their views into account,” he said.
In the latest version of the letter, the All-China Federation of Industry and Commerce said introducing a licensing system “without a clear roadmap or sufficient industry participation” could undermine an ecosystem that relies on innovation, flexibility and openness.
“The absence of these critical discussions has led to significant uncertainty in the industry about the scope of these obligations and exactly what the platforms will sign up to,” the report said.
ACBU has raised concerns about several aspects of the regime, including criminal liability for representatives of licensed service providers and an “inadequate” five-month compliance grace period before the regime comes into effect.
It also raised concerns about strict content moderation obligations, such as requiring religious content to be approved in advance by Malaysia’s Islamic Development Department.
Questions about the AIC letter
Mr Fahmy noted that the AIC had issued three versions of the letter and CNA had reviewed all of them.
The first version, published on Friday, included the logos of all 17 members and said the licensing system was “unworkable” for the industry.
Regional super app Grab, one of its members, later issued a statement distancing itself from the letter and said the proposed regulations would not affect its operations.
Grab focuses on ride-hailing and food delivery, so it is not a platform that needs to be licensed.
The AIC then released a second version of the letter on Monday, which included only the logos of the six companies as “applicable representatives.” A third version of the letter was also released on Monday, which did not include any company logos.
The second and third editions also deleted the part where the licensing system was “unworkable”.
In a statement released on Tuesday, the Malaysian Communications and Multimedia Commission (MCMC) said it had “been engaging with a wide range of stakeholders including service providers, civil society organisations, non-governmental organisations and law enforcement agencies”.
“MCMC will conduct a public inquiry to seek feedback from all relevant parties to ensure that the final framework is fair, effective and reflects the needs of the industry and the public,” it added.
Fahmi said MCMC had met with AIC representatives in May to discuss the regime, and that the AIC had repeatedly asked for more time to respond until the release of the open letter last Friday.
“It’s clear that the AIC does not represent all platforms, only some of them,” he said, adding that he still believed that tech companies had responded positively to discussions about the regime.
Mr Fahmi admitted that it was “strange” that the AIC released multiple versions of the open letter, and that Grab’s statement that it had not been consulted on the letter made things “awkward”.
Despite this, Mr Fahmy said he would continue to take an “open” approach and provide opportunities for AIC and other companies to meet and provide input on the licensing system.
“There is still room for discussion,” he said.
“The Malaysian government’s position remains that a regulatory framework must be implemented on social media platforms and messaging apps to ensure a safer internet for Malaysian citizens, especially children and families.”
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