Which current legal provision/regime creates the greatest impediment to economic development/commerce?

Technology (second edition)

Indonesia Small Flag Indonesia

The impediments to economic development mainly relate to the lack of clarity in the e-commerce regulations, specifically the definition of web portal for commercial purposes. The Negative Investment List (Daftar Negatif Investasi or "DNI"), which stipulates the business fields that are closed for investment or open with requirements, requires a web portal for commercial purposes with over 49% foreign ownership to have an investment value of at least IDRl00 billion (approximately USD6.8 million at current exchange rates). However, the DNI does not provide a definition of “investment value.” Consequently, there is uncertainty about what is considered “investment value” – on one hand, some government officials have interpreted “investment value” to mean issued and paid-up capital, while others are of the view that “investment value,” in the context of a web portal for commercial purposes, only encompasses the fixed assets of the company. Foreign investors required to invest such a large amount of money are likely to rely on loans as opposed to just capital, and this uncertainty is a hindrance that could drive them from Indonesia.

The Netherlands Small Flag The Netherlands

As contract law is not harmonized within the EU, it is still very difficult to offer a one-stop shop offering throughout the EU. Uncertainty as to the applicable legal framework when entering new markets within the EU and the legal risks involved may hamper economic growth as it raises the threshold for entering new markets.

Brazil Small Flag Brazil

We believe that the Brazilian tax system imposes high complexity for technology companies, notably when different taxing authorities believe that a certain service revenue may be subject to State VAT and Municipal taxes (according to applicable tax laws, it should be either State or Municipal taxable revenues, not both). So companies are forced to litigate and handle onerous proceedings and unsubstantiated tax assessments due to this “tax war” among Brazilian authorities.

Another risk that we envision relates to certain areas of the Government which wishes to regulate (and therefore, tax) OTT just as traditional service provider. Several barriers have to be lifted and a more competitive environment needs to be put in place to allow the development of IoT products and services.

Luxembourg Small Flag Luxembourg

It is difficult to pinpoint an exact legal provision as the greatest impediment to economic development or commerce within Luxembourg. In general Luxembourg is a very open economy and the government heavily invests in the development of digital services, aiming to create a favourable legal environment.

What companies sometimes view as frustrating is the tendency of the Luxembourg legislator to implement EU legislation without any gold plating, meaning that certain elements of the law remain vague and subject to multiple interpretations, which may lead to uncertainty in some areas until additional guidance is issued.

Romania Small Flag Romania

By and large, EU and Romanian legal framework are very favorable to commerce and development. Therefore, while there is always room for improvement in our view, there is at present no regulatory major impediment to economic development and commerce.

Spain Small Flag Spain

In relation to data protection matters, it is important to highlight that the AEPD is quite active in imposing data protection sanctions and specifically the Telecommunications sector is the most sanctioned industry by the AEPD, as telecommunication operations deal with huge amounts of personal data.

Also, the revised Payment Services Directive (PSD2) will require online platforms operating as central portals that, acting as intermediaries, enable payment transactions between buyers and sellers - without themselves selling the product or service - to obtain an authorisation as a "payment service provider" from the relevant authority, which in Spain is the Banco de España.

This would mean that marketplaces such as Amazon or Ebay will be required to obtain an authorisation and will not be exempted anymore, as they were under PSD1 , if they wish to continue providing this "payment service" to buyers and sellers.

India Small Flag India

The data localisation order of the Reserve Bank of India (RBI) in 2018 requires all payment system operators to store their transactional data within the country. It has been criticised immensely for being anti-commerce. While the RBI states that its intention is to have unfettered supervisory access to all transactional data in the payments eco-system to protect users in the said eco-system, industry experts estimate that such a mandate has the potential to slow economic growth.

Turkey Small Flag Turkey

In terms of IT Law provisions under Turkish Law, provisions regarding data localization requirements are found to be the most limiting and hard to comply by the general practice.

Sweden Small Flag Sweden

As a member state of the EU, Sweden implements and applies all EU legislation. National Swedish laws, not emanating from the EU, do not create any major impediments to economic development.

Some legislation regarding taxation, employment protection and permits for the construction of buildings could be seen as hindering. Long processing times with the authorities is also an impediment to economic development that is difficult to contradict.

Switzerland Small Flag Switzerland

Legal ownership of digital objects is not established under Swiss law and ownership generally requires an object to be tangible for the owner to be in a position to claim legal title and exercise factual control over such object as property. Digital information is not tangible and can therefore, according to current Swiss law, not be subject to legal ownership. However, "ownership" of digital objects is often allocated in contracts, as between the parties (i.e. with effect for the parties of the respective agreement only), to one of the contracting parties. Similarly, there is as of yet no public faith in the digital records of the assets and of the transfer as registered by means of public ledger technology (blockchain). Acknowledging such public faith will require legislative changes. A working group led by the Federal Department of Finance has been mandated to provide suggestions on recommended further steps, including with respect to appropriate legislative changes. The working group is expected to report to the Federal Council by the end of 2018.

China Small Flag China

No information indicates any specific law or legal provisions in China creates obvious impediment to economic development.

Mexico Small Flag Mexico

Our current General Law of Mercantile Corporations (Ley General de Sociedades Mercantiles) dates from 1934 and has been scarcely amended as to corporate government and other relevant corporate mechanisms. This has led to significant regulatory slippage regarding voting and decision-making processes to say the least, driving legal uncertainty and cumbersome corporate practices into corporations, causing investors and/or potential shareholders to seek for exit strategies and/or re-think their investments.

As to other legal issues that translate into economic development disincentives, our jurisdiction often shows a serious lack of coordination between Federal, State and Municipal levels, as well as between the legal competences of different regulatory authorities, which under certain scenarios could lead to redundant, unproductive and expensive compliance situations, including without limitation (i) excessive (sometimes duplicative) paperwork; (ii) long waiting response times from the authorities; (iii) uncertainty upon authorizations and/or licenses requests; (iv) contradictory criteria; and (v) legal uncertainty in general, among others.

Malaysia Small Flag Malaysia

Various regulatory requirements to conduct business in Malaysia often deter foreign investment into Malaysia which in return reduces economic development. The requirements for certain licences would typically include the incorporation of a company in Malaysia, the imposition of various equity and shareholding requirements, minimum Bumiputera (a term which includes Malaysians with cultural affinities indigenous to the region, mainly the Malays in West Malaysia and various other indigenous natives of Sabah and Sarawak) participation in companies and/or local directorship and local workforce requirements, amongst others. Control over meeting these requirements is exercised twofold, in that (i) committees are set up under various governmental ministries and are given the task of procuring guidelines to advise on these requirements; and (ii) equity ownership is controlled through the issuance of licences, permits and employment passes or in the purchase of real property and acquisitions of any interest in real property, and Bumiputera participation is enforced via administrative discretion exercised under legislative authority.

While the government has largely liberalised major sectors of the economy, strategic sectors of national interest will continue to be safeguarded through sector regulators. Furthermore, the stringent licensing regime in Malaysia would also have a hand in restricting economic development and commerce in Malaysia. Entities engaging in commerce would need to apply for various licenses and registrations with various authorities in order to conduct business. If the operations of a company or business in Malaysia require such licences and registrations, equity conditions or restrictions may be imposed vide the issuance of such licences by the relevant authorities. More often than not, these licenses and registrations are interconnected, for example, participants in the distributive trade sector require a Wholesale Retail Trade licence and ancillary business licences in order to operate, and such licenses are required before distributive trade companies can apply for work permits for foreign employees. The application processes for such licenses are time-consuming and the requirement for stringent compliance with directorship and equity stipulations by the relevant authorities would need to be streamlined and simplified to facilitate economic development and commerce in Malaysia.

France Small Flag France

The French tax regime appears to be cumbersome for many projects, due to its complexity and tax impact. As an example, while efforts are being made to foster the development of Initial Coin Offerings in France, the tax regime applicable to such type of transactions appears not to be fully settled. Should a token be considered as a share or an interest in future revenues, it might then be subject to income taxes, which would act as a deterrent compared with other countries.

Germany Small Flag Germany

One of the greatest legal impediments to economic development/commerce are the consumer protection regulations governed by German civil law in sections 312 et seqq. BGB. These sections contain very complicated consumer protection regulations for e-commerce and distance selling which are almost impossible to comply. Therefore, a simplification and reform is needed.

Singapore Small Flag Singapore

The Singapore Government strives to support the economic development and the promotion of commerce and Singapore's legislative framework reflects this. Singapore is widely considered to be an easy and efficient place to do business.

Australia Small Flag Australia

The information-privacy dichotomy has been consistently debated in recent years. The recent debate in Australia surrounding the introduction of My Health Record – an electronic record of each Australian citizen's health records to be accessible by medical practitioners, hospitals and various government agencies – is testament to the distrust a significant percentage of the community have in the use of their personal information by corporates and the government.

Since 2014 there has been increased regulation of information privacy, together with an increase in tension between the value of data and the value of privacy. Pro-privacy regulations have been (or will be) introduced as a response to this tension. In February 2018 the Notifiable Data Breach Scheme was introduced, which requires organisations to report 'eligible data breaches' to the Privacy Commissioner and affected individuals. Following the Review into Open Banking in 2017, the Government recently announced its intention to legislate a Consumer Data Right, which empowers individuals to specify the parties to whom they authorise disclosure of their data, and the purposes for which their data may be used. The first sector to be regulated is likely to be financial services, closely followed by the energy and telecommunications sectors.

Despite the increased regulation of privacy in Australia, government and regulators understand the value of data to the Australian economy. Looking through that prism, increased regulation can be seen as an opportunity to unlock the value of data as an asset in a more certain way. In that respect, regulatory responses have generally been conciliatory in enforcement approaches, and permissive in issuing guidance around the achievement of compliance where roadblocks to economic development have been perceived.

United States Small Flag United States

The increasing momentum for privacy protections that fail to address big data and use of artificial intelligence will create impediments to economic growth. Businesses are just beginning to develop and deploy artificial intelligence solutions that rely on ingestion of very large data sets to capitalize on the network effects of AI. Omnibus data privacy statutes, such as the recently enacted California Consumer Privacy Act of 2018, severely limit secondary usage of personal data. Then salutary effects of giving individual consumers more control over the use of their personal data may come at a cost of curtailing the evolution of artificial intelligence.

Japan Small Flag Japan

One of the greatest impediments to economic development and commerce is vertically segmented legal and regulatory systems. Although cross-sectoral, innovative businesses and services are expected to develop, the current legal and regulatory systems are still sector-oriented and rigid, which tends to create grey areas of law and inefficiency of compliance and regulations. The government initiated a study group to consider the possibility of reframing the legal and regulatory systems to address such issues.

Poland Small Flag Poland

One of the greatest impediments to economic development/commerce is the legal uncertainty caused by the sheer number of legal provisions being introduced, amended, or repealed. Therefore, anyone conducting business in Poland must take into account the fast-changing legal environment in order to stay up-to-date with new requirements and obligations. That is especially true with regard to tax provisions, particularly because of the fact that their interpretation may be subject to change even if their wording remains the same.

Updated: February 7, 2019