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

Technology (3rd edition)

Armenia Small Flag Armenia

The Armenian legislation is quite liberal and usually has been adopting with the purpose of Armenia becomes more attractive for the investors. The main obstacle is the applying of the rules and regulation in particularly by the governmental authorities and officers, i.e. the issues are the correct understanding and clear following the requirements.

Dominican Republic Small Flag Dominican Republic

Our current legislation it producing an impediment to our economic regime because it does not include technologic tendencies such as mobility, social media, cloud-based services, content sharing, information search engines, big data and other factors, such as the development of digital abilities and the creation of content and applications. There is a growing conversation regarding the need to update Law No. 153-98, as it is now over 20 years old. Many of the provisions contained therein are outdated and need to be brought to current practices, especially as pertains to licensing, allocation of resources and application of its disciplinary regimen. INDOTEL has very recently signed an agreement with the ITU, who has committed to assist the Dominican government in its reform efforts.

Egypt Small Flag Egypt

As mentioned above, electronic communications are still not completely recognized by Egyptian law and thus, Egyptian courts. Accordingly, the enforceability of e-contracts is still to be tested before Egyptian courts. This uncertainty has a negative impact on e-commerce in Egypt.

In addition to that, as mentioned above, the increased use of A.I. in the absence of specialized regulations governing this technology may have a negative effect on its spread in Egypt.

Estonia Small Flag Estonia

From practical perspective, the impediment is not so much the existing legislation, but rather the absence of clear regulations. For example, the cryptocurrencies and activities with them – there are no clear rules how different cryptocurrencies should be dealt with. There is regulation for licensing regime, but actually no material law regulating leveraging blockchain technology.

However, regarding existing legislation, it seems, that the greatest impediment is AML regulation, that is going to be strengthened even further. The Estonian Commercial Code and the Money Laundering and Terrorist Financing Prevention Act regulation is already now very strict, and companies have issues to fulfil all the obligations, because there are too few guidelines, instructions and tools to follow the rules to a tee. The general aim to strengthen AML supervision has led to the situation where local banks are reluctant to even engage businesses operating in certain business areas, especially those dealing with virtual currencies.

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.

Israel Small Flag Israel

The Israeli telecommunications regulator is a government ministry, controlled by the government. As such, it is subject to the restrictions of the government apparatus, in terms of manpower and budgets. It is also dependant on government decisions when requiring confirmation. Since the Minister is appointed for a short period of term – 3-4 years, between the parliamentary elections, this invariably results in there being no long-term policy, which causes uncertainty in regard to the regulatory framework and prevents investment in developing the communications infrastructure. Delay in upgrading the infrastructure technology, especially the deployment of 5G technology in the mobile network and in fibre optics networks in the fixed-line sector, could harm the national economic growth which advanced communications networks can offer.

Italy Small Flag Italy

In general, the wide fragmentation of the EU infrastructure market and the very large number of EU players in the telecom infrastructure sector compared with those in each of the US or in China seems to be a substantial weakness of the EU telecom environment, also in terms of ability to support future investments and R&D. Similarly the absence of any major EU OTT compared with US and China show further weaknesses of the EU regulatory frame-work compared with such other leading jurisdictions

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.

Malaysia Small Flag Malaysia

Various regulatory requirements to conduct business in Malaysia often deter foreign investment into Malaysia which in return reduces economic development. Such requirements typically include corporate presence in Malaysia, and the imposition of various equity and shareholding requirements amongst others. Control over meeting these requirements is exercised twofold, in that:

(a) committees under various governmental ministries are given the task of procuring guidelines to advise on these requirements; and

(b) equity ownership is controlled through the issuance of licences, permits and employment passes or in the purchase of/acquisitions of interest in real property is enforced via administrative discretion exercised under legislative authority.

While the government has liberalised major sectors of the economy, strategic sectors of national interest will continue to be safeguarded through sector regulators.

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 and equity conditions or restrictions may be imposed vide the issuance of such licences by the relevant authorities. Such licenses and registrations are often interconnected with time-consuming application processes and the requirement for stringent compliance with directorship and equity stipulations by the relevant authorities would need to be simplified to facilitate economic development and commerce in Malaysia.

Malta Small Flag Malta

No obvious legal provisions or regime exists that appears to be creating a meaningful impediment to Malta’s economic development.

New Zealand Small Flag New Zealand

From a TMT perspective, there is not one particular provision or regime that specifically hinders economic development and commerce in New Zealand. It is more often the case that innovators feel they have a lack of certainty as to accepted practices and guidelines in relation to the development and implementation of new or emerging technologies, with such uncertainty acting as, in some cases, an impediment to innovation and development.

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.

Indonesia Small Flag Indonesia

Some laws that currently apply to digital industry were prepared and enacted before the arrival of new technologies. The regulators might not envisage the technologies and business model that are currently adopted by the company nowadays. Consequently, because the laws are lagging behind the development of technologies and business model in IT sector, it becomes difficult to companies to comply with these laws and regulations.

For example, the requirement to locate data centre and data recovery centre in Indonesia as stipulated in GR 82/2012 has become the subject to criticism by players in IT industry over the past few years. Some view that this requirement is no longer relevant because of increased need of cloud-based service in IT industry.

One issue that might hamper the development of digital business in Indonesia is the absence of certain laws and lack of clarity of the laws. This creates legal uncertainty for business players in carrying out their business in Indonesia. Nevertheless, the Indonesian regulators are working hard in preparing and issuing regulation/policy to respond to the development of technology.

Pakistan Small Flag Pakistan

The draft data protection legislation for Pakistan proposes to introduce data localization requirements. The same has the potential of being anti-commerce and may have the potential to slow economic growth. Having said the same, since the law has not yet been promulgated, the requirements thereunder are not yet applicable.

In terms of legal gaps which exist, if removed, could improve the pace of economic development/commerce with a specific focus on the technology regime, would be the introduction of legal framework(s) for developing technology (including technologies such as blockchain) so that the economy can benefit from the same.

Romania Small Flag Romania

By and large, EU and Romanian legal framework are very favourable to commerce and development hence the presence of numerous players as described at the previous point. Therefore, while there is always room for improvement in our view, there is at present no regulatory major impediment to economic development and commerce.

At this stage, there are no direct hindrances imposed by Romanian law on economic development. In that sense, while not finally resolved, matters such as accountability for the malfunction of A.I. (please see above at question 15) can be settled within the existing Romanian legal framework.

South Korea Small Flag South Korea

The current data protection and privacy laws and regulations such as the PIPA and Network Act are heavily focused on the protection personal information and thus impose stringent requirements on the processing of personal information. In principle, personal information may only be collected and used if the data subject’s consent is obtained, so services utilising big data are not yet considered commercially profitable in Korea.

Spain Small Flag Spain

In relation to data protection matters, it is important to highlight that the AEPD is quite active in opening up investigation proceedings. In this sense, the AEPD has recently publicly stated that its enforcement actions will be focused on the health and telecommunication sectors.

Also, the PSD2 will require online platforms operating as central portals that, acting as intermediaries, enable payment transactions between buyers and sellers and entering into possession of the funds - 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 may be required to obtain an authorisation and may not be exempted anymore, as they were under PSD1 (Directive 2007/64/EC of 13 November 2007 on payment services in the internal market), if they wish to continue providing this "payment service" to buyers and sellers.

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.

Taiwan Small Flag Taiwan

It could be the traditional license and permit requirements imposing on various existing industries. When innovated technology/business model emerges, oftentimes the regulatory barriers lie in the traditional license and permit system. As the business of the traditional license/permit holders is at stake, the government often times will need to protect the benefits of the existing businesses and force the innovated or emerging new tech businesses to follow the "brick-and-mortar" rules to operate their new businesses, which often will suffocate industrial creativeness and innovation.

Turkey Small Flag Turkey

Restraining approach to novel and disruptive technology and digital services, based on traditional regulatory reflexes and to maintain the current established traditional practice and legal landscape without fully adopting to the current needs and fast pace of the market creates the greatest impediment to economic development/commerce.

That said, the legal framework concerning technology, intellectual property, data protection are generally in line with the European Union’s laws on these matters. Therefore, in most of the cases, the letter of law does not constitute an impediment but the interpretation and implementation and the lack of established precedents in certain regulatory landscape that is newly implemented (such as data protection) provides obstacles or barriers to the economic development/commerce.

United Kingdom Small Flag United Kingdom

It is impossible to overlook the impact of the uncertainty over Brexit, which at the time of publication, remains unresolved. The severe commercial, legal and regulatory consequences for businesses in the UK can't be underestimated. Encouragingly we have seen clients act in a nimble, proactive way, and have adapted even without knowing the full future outcomes. Although one would think businesses which are primarily digital would be able to act independently, this doesn't account for the people, in buildings, with skills and experience who are physically located in the UK.

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 California’s CCPA, 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.

Australia Small Flag Australia

The information-privacy dichotomy has been consistently debated in recent years. Recent findings from the ACCC Digital Platforms Inquiry Final Report (DPI Report) highlight consumer concerns around current data practices, especially in relation to the collection of location data, online tracking and the sharing of data with third parties. The DPI Report suggests that there is a broken consumer bargain – the bargaining power imbalance between large organisations and consumers means that such organisations are provided with too much information at the expense of the privacy of individuals.

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. Further, the privacy recommendations in the DPI Report are sweeping. If the recommendations are passed into law, regulation in this area is set to tighten further. For example, the definition of personal information could be expanded and entities could be required to comply with stricter consent and notification requirements when handling personal information.

Another example is open banking. Following the Review into Open Banking in 2017, the Government recently legislated 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 banking sector will be the first sector to be regulated, likely to be 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. Current 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. However, organisations will need to closely monitor the Federal Government's proposal to strengthen the Privacy Commissioner's enforcement powers in the Privacy Act, as well as its response to the Digital Platforms Inquiry, to assess whether this approach will continue.

Updated: August 27, 2019