‘Our laws are bigger’: Malaysian minister warns tech firms for resisting licensing regime in ‘strange’ open letter

KUALA LUMPUR: Malaysia’s Communications Minister Fahmi Fadzil on Tuesday (Aug 27) warned tech firms to comply with the government’s licensing regime if they wanted to continue operating in the country.
His statement comes a day after a coalition of tech companies issued its latest version of an open letter to Malaysian Prime Minister Anwar Ibrahim urging the government to reconsider its contentious licensing regime. 
The new framework will require social media and messaging platforms with over 8 million users to obtain an annual operating licence, with non-compliance potentially resulting in fines of up to RM500,000 (US$115,000).
The Asia Internet Coalition (AIC), a trade association founded to address public policy issues and facilitate the development of the internet economy in the Asia Pacific region, said the regime will hamper innovation and place “undue burdens on businesses”.
“It will hinder ongoing investments and deter future ones due to the complexity and cost of compliance,” said AIC, whose members include Meta, Google, Amazon and Apple. 
Civil society organisations like Malaysia’s Centre for Independent Journalism have also criticised the proposed regime as one that could stifle free speech and government criticism.
Mr Fahmi responded to these comments on the sidelines of an Orang Asli development event in Sepang on Tuesday, stressing that enforcement of the regime, which is slated to kick off on Jan 1 2025, will not be delayed.
“They are Big Tech, but our laws are bigger. So if they want to operate in Malaysia, they must respect and comply with our laws,” he said.
The minister pointed to recent examples in the United Kingdom and France as examples that have reaffirmed the Malaysian government’s decision to step up regulation of tech companies.
In the UK, social media misinformation on immigrants triggered widespread unrest and riots in July and August, while messaging app Telegram founder Pavel Durov was arrested in France on Saturday as part of a probe into child porn and drug trafficking on the popular encrypted messaging application.
Mr Fami said the charges levelled on Durov involved “many things that we are concerned about – that is, crimes that have migrated to social media”.
When CNA asked if the government had considered a worst-case scenario of tech companies refusing to comply and pulling out of Malaysia, Mr Fahmi said his ministry had “examined all aspects”.
He added that his meeting with tech firms in Singapore in late July on the licensing regime was “positive”, in that they were ready to discuss the matter.
“We will continue discussions … The government of Malaysia is very open to holding discussions, taking into consideration their views,” he said.
In the latest version of its letter, the AIC said the introduction of the licensing regime “without a clear roadmap or sufficient industry engagement” risks destabilising an ecosystem that relies on innovation, flexibility and openness.
“The absence of these critical discussions has created a great deal of uncertainty among the industry regarding the scope of the obligations and what exactly these platforms would be signing up for,” it said.
The AIC raised concerns about several aspects of the regime, including criminal liability on representatives of licenced service providers, and the “insufficient” five-month grace period for compliance before the regime kicks in.
It also raised concerns over stringent content moderation obligations, such as the requirement for religious content to be pre-approved by the Department of Islamic Development Malaysia.
Mr Fahmi noted that the AIC had issued three versions of its letter, all of which were reviewed by CNA.
The first version, dated Friday, contained the logos of all its 17 members and said the licensing regime would be “unworkable” for the industry.
Regional super-app Grab, one of its members, subsequently issued a statement distancing itself from the letter, saying that the proposed regulation would not impact its operations.
Grab focuses on ride-hailing and food delivery and thus would not be classified as a platform that needs to be licensed.
AIC then issued the second version of its letter dated Monday, containing the logos of only six companies as “applicable representation”. The third version, also dated Monday, did not contain any company logos.
The second and third versions also omitted the part that said the licensing regime would be “unworkable”.
In a statement released on Tuesday, the Malaysian Communications and Multimedia Commission (MCMC) said that it had “consistently engaged with a broad spectrum of stakeholders, including service providers, civil society organisations, non-governmental organisations, (and) law enforcement agencies.”
It added that “MCMC will be undertaking a public inquiry exercise to solicit feedback from all relevant parties to ensure that the final framework is fair, effective, and reflective of the needs of both the industry and the public”.
Mr Fahmi said MCMC had met AIC representatives in May to discuss the regime, and that AIC had on multiple occasions requested more time to respond, up until the open letter was published on Friday.
“What is clear is that AIC does not represent all the platforms; only some of them,” he said, adding that he continues to hold the opinion that tech companies had responded positively to discussions on the regime.
Mr Fahmi acknowledged it was “strange” that AIC had released multiple versions of its open letter, and that Grab’s statement saying it was not consulted on the letter made things “awkward”.
Nevertheless, Mr Fahmi said he continues to adopt an “open” attitude in giving the opportunity to AIC and any other company to meet and offer their views on the licensing regime.
“There is still room for discussion,” he said.
“The Malaysian government’s stand remains that social media platforms and messaging applications must be imposed with a regulatory framework to guarantee a safer internet for Malaysian citizens, particularly children and families.”