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Civil society groups in Malaysia have previously criticised the licensing system, arguing it could stifle free speech and criticism of the government, but authorities have reiterated that it is necessary amid rising cybercrime and a lack of effort by tech companies to combat it.
“Even if the Malaysian government stands firm, these tech companies may persist in challenging or at least seeking to amend the licensing requirements,” Dr Shafizam Mohamad, a communications lecturer at the International Islamic University of Malaysia, told CNA.
“However, I don’t think these companies will make too direct a request, given the significant financial implications of exiting Malaysia.”
UNHAPPY
The AIC, which was founded in 2010, released the latest version of its open letter on Monday (August 26). Urge the government to reconsider The upcoming licensing system has criticised the costs of compliance and said there would not be enough time to prepare before the regulations come into force on January 1, 2025.
Companies that fail to obtain a class license could face up to five years in prison and a fine of up to RM500,000 (US$115,650). Operators could also be fined RM1,000 for each day they fail to obtain a license.
The AIC also warned in the letter that the proposed regulations would hinder ongoing investments and discourage future ones, adding that the tech industry was ready to “partner” with the Malaysian government to address cybercrime on its platforms.
Dr Shafizzan said the letter, addressed to Prime Minister Anwar Ibrahim, showed that tech companies were “unhappy” with the government’s attempts to regulate their activities and were trying to make their voices heard.
“I would say the letter is a bit like a diplomatic protest from the industry. They want to protest, but in a nice way, telling the government that they are not trying to directly oppose or challenge the regulation,” she said.
“But they want the government to think more about it and allow them to contribute more.”
Dr Shafizzan said the AIC letter highlighted macro issues such as the impact on investment and innovation, hoping to convince the government that the harm caused by regulation to the economy would outweigh the benefits it would bring.
“We can see throughout the letter that they are really focused on the economic impact, the investment and so on, and that’s clearly the main argument they can use,” she said.
Dr Shafizan believes the AIC’s arguments about the implementation timeline “have some merit”, noting that public consultation on the licensing system was only completed in June and the details were announced in August, five months ahead of implementation, which is due to start early next year.
She added: “I think the whole process of implementing this regulation was pretty hasty.”
MCMC strikes back
But Communications Minister Fahmi Fadzil stressed on August 27 that the licensing regime would not be delayed. In a reply letter, the Malaysian Communications and Multimedia Commission (MCMC) said the five-month grace period was “reasonable and in line with international best practices”.
“This timeline was developed to strike a balance between the urgent need to address cyber threats and the practical requirements for online service providers to comply,” the statement said.
“Extending the grace period further would undermine the goals of improving user security and mitigating the rapidly growing risks in the digital sector.”
MCMC refuted claims that there would be a negative impact on investment and innovation, saying the licensing system was “carefully designed” to balance regulatory requirements and the need for flexibility.
“By holding online service providers accountable, the framework will enhance investor confidence, knowing that Malaysia prioritises a stable and lawful digital ecosystem,” it said.
The commission also rejected claims that the regulation was excessive, comparing it to similar laws such as Singapore’s Protection from Online Falsehoods and Manipulation Act (POFMA), and said Malaysia’s version was “proportionate”.
The licensing regime would only target “irresponsible” platforms that meet certain criteria (i.e. have at least 8 million users in Malaysia), thereby minimizing the regulatory burden on smaller or less influential services.
“If the unilateral implementation of community guidelines by network service providers can be considered a reasonable safety measure, there is no reason not to accept and comply with a regulatory framework based on the characteristics of security, transparency and accountability,” MCMC added.
Re-released letter ‘reflects badly on tech companies’
Taylor’s University media and communications senior lecturer Dr Benjamin Loh told CNA that the “main request” in the AIC’s letter appeared to be for the platforms to self-regulate, but he said this had not yet been fully achieved.
As an example, he pointed to the Cambridge Analytica scandal in 2018, when the British consulting firm was revealed to have harvested personal data of millions of Facebook users without their consent, primarily for political advertising. Meta is Facebook’s parent company.
“Personally, the main issue that still needs to be addressed, and the most important issue, is to increase and improve localized content review,” Dr. Lu said.
“There is no mention of improved content moderation (in the AIC letter) or how it would operate under these conditions. By simply describing it as ‘expensive compliance’, the letter essentially sidesteps the only major issue that needs to be addressed.”
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