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


United States Small Flag United States

US laws addressing critical technology issues tend to fall into one of two groups. The first group -- including the Electronic Communications Privacy Act, the Stored Communications Act, and the Computer Fraud and Abuse Act, all originally enacted in 1986 – include specific prohibitions and permissions, but are outdated and inapplicable to modern internet, data sharing and storage practices. Efforts to apply these laws to current practices have led to splits among the circuit courts, and confusion and frustration among the US technology companies as to what conduct they may engage in.

The second group of laws – including those intended to protect consumer financial and healthcare privacy (the Gramm-Leach-Bliley Act and HIPAA), as well as the Federal Trade Commission (“FTC”) Act, which has been interpreted to permit the FTC to regulate privacy and cybersecurity – suffers from the opposite problem. Rather than incorporating specific provisions that can become outdated, these laws suffer from vagueness and overbreadth, prohibiting such things as “unfair or deceptive” practices and admonishing companies to ensure they have “reasonable and appropriate administrative, technical and physical safeguards” or face legal sanctions. Companies subject to these broadly worded laws are forced to guess as to how they will be applied in a rapidly evolving technological and business landscape.

Malta Small Flag Malta

The most common factor that impedes economic development is generally legal uncertainty. Currently we are anticipating the implementation of the 4th Money Laundering Directive by the Members States of the EU and also the coming into force of the General Data Protection Regulation in 2018. These two pieces of legislation will definitely require businesses to adapt to the new requirements, however, until it is certain how these will be interpreted and implemented, uncertainty prevails which undoubtedly effects negatively economic development and commerce in general.

Norway Small Flag Norway

While it is difficult to pinpoint an exact legal provision as the greatest impediment to economic development/commerce within Norway, a number of Acts can be deemed as impeding the economic development caused by digitalisation, for instance by imposing requirements on physical and/or original documentation or identification in matters pertaining to insurance, accounting, debt enforcement, money laundering and financial agreements etc.

Turkey Small Flag Turkey

It is not possible to point out one specific regulation or regime as the greatest impediment to economic development/commerce. We believe putting in place less restrictive regulations for certain sectors (i.e. telecommunications, e-payments, data protection) may help bring more foreign investment.

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

Regarding e-commerce and technology development, Mexican laws or provisions does not discourage their use or development. However, the main impediment may be the distrust of consumers in the use of new technologies to carry out day to day operations/transactions. The main concern of consumers is always on their privacy and related to cybercrimes.

United Kingdom Small Flag United Kingdom

One might argue that the data protection regime does most to hinder the free development of digital business (albeit with the best of intentions!). This is because data and its manipulation/exploitation lies at the heart of digital business and transformation, and so companies would very much like to treat data as an asset which they can then try to monetise (an approach more in line with the US). However, the Data Protection Act (and its EU antecedents) takes a different approach which instead gives priority to the rights of individuals (Data Subjects).

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.

Italy Small Flag Italy

In certain areas, like for example banking and finance, transport, tourism, there are still laws and regulations which do not yet take into due account the latest technology developments and the needs arising out of the new sharing economy, causing impediments to the success of innovative ideas in these areas.

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 government which wishes to regulate (and therefore, tax) OTT just as traditional service providers. 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.

Indonesia Small Flag Indonesia

While the impediment is not great, the data-onshoring requirement as contained in GR 82/2012 and its implementing regulations poses an obstacle to foreign investment. Due to the broad wording of “public services,” as explained above, potential foreign investors, especially those handling data and its processing, tread lightly in investing in Indonesia. In our experience, foreign investors prefer to keep and maintain their data outside of Indonesia, particularly in countries that are renowned for their advanced and more detailed data protection regulations or in countries where the investors already have a data centre set up and running. While for major players the data-onshoring requirement may seem like a small sacrifice for the investment returns, to newer players in the market with less capital, the data-onshoring requirement may be the tipping point that drives their business away from Indonesia.

India Small Flag India

Sadly, the inefficient judicial system in India has failed to keep up with the technological or economic developments that have been taking place at such a rapid pace. Indian courts are inundated with backlog and unlimited adjournments are the order of the day. Thus, the failure of court system as an effective dispute resolution mechanism, has been the greatest impediment to economic development. Among various legislations and legal procedures that are considered as “archaic” in India, perhaps the labour laws of India are often cited as being the most unfriendly to modern business and economic development. Most labour laws in India were drafted over half a century ago, and had been passed in the context of a socialistic model that India had adopted during the time. The fragmented nature of Indian labour legislations has led not only to complex and cumbersome procedures for the opening and operation of businesses in the country, but also to several conflicting obligations and requirements to be observed by companies. However, the current Government has shown intent to simplify, consolidate and modernise these laws, and reduce the financial and compliance burden on various establishments by adopting the Ease of Compliance to maintain Registers under various Labour Laws Rules, 2017, that replaces 56 registers/forms under 9 different labour laws with 5 common registers/forms. Today, there is an unprecedented amount of data collected and stored in the course of providing services. However, there is no specific comprehensive legislation in India that covers all aspects of data protection. Few principles of data protection are stipulated under the IT Act, TRAI, guidelines issued by Reserve Bank of India (RBI), among others. With data being so valuable for the opening and operation of businesses, the Government will soon have to come up with a comprehensive law in relation to data protection. Further, land-use administration and land acquisition procedures in India are complex. Conversion of land-use rights from agricultural to commercial or industrial use is bogged down by laws that are more than a century old, and these vary greatly from State to State. Allocation of tracts of land to companies requires several levels of approvals within the bureaucracy, and these are often delayed and made hard to obtain.

Israel Small Flag Israel

Bureaucracy and ease-of-doing-business stand out as the greatest impediment to economic development in Israel. For example, in terms of incorporating a new Israeli company as well as opening a bank account in Israel, the processes and timelines require streamlining and acceleration.

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.

France Small Flag France

The French tax regime provides for a few hundred different types of taxes (some estimates say about 360) and stretches through more than three thousand pages of tax regulations (for those that are codified; see www.legifrance.gouv.fr). The flavor of the day, however, consists of the labor code, that has about the same size and whose complexity is also decried as an impediment to economic development. Regardless, to keep focused on the area of e-commerce and the digital economy, cybercrime appears to pose a challenge of an ever increasing magnitude and remains largely out of reach for legislators and regulators alike, as its scale has become global.

According to Interpol’s president Mireille Ballestrazzi, “it is clear that the national scale is not enough, we must act at European and global level. We hope that the Budapest Convention, drafted by the Council of Europe in 2005, will be transposed at the global level (…). It is a long-term struggle, because countries do not all have the same vision of what cybercrime is and how it should be treated (…). The more new technologies enter our daily lives, the greater the potential for infringements, and the more complex the fight against attacks.”

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.

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.

Ecuador Small Flag Ecuador

In our opinion the legal framework or provision that to a degree limits, hinders or impedes the economic and commercial development of the country is the Constituent Mandate No. 8, whose purpose is to eliminate and prohibit outsourcing and subcontracting, as well as, any form of precarization of labor relations of the activities that a company or employer conducts.

In Ecuador there is a clear protectionism of the worker, which has impeded that certain types of contracts in the field of telecommunications be implemented. Such is the case of the managed services contract, through which a telecommunications services provider delivers network operation services with the personnel of the contracting party. This type of contract that has been implemented in several countries worldwide cannot be applied in Ecuador, precisely because of the labor restrictions that forbid the outsourcing of personnel. Several companies in Ecuador have been strongly penalized for similar conducts, and for this reason telecommunications operators and their providers have placed special emphasis in not implementing this type of contracts.

Additionally, the referred labor legislation has resulted in the increase of personnel costs of the companies, for both telecommunications operators and its providers, given that the impossibility of outsourcing tasks entails the need to have more workers on payroll. Telecommunications operators in the country place great care in avoiding the creation of a labor relationship between them and the employees of their providers, so a to prevent possible claims, lawsuits or fines that may arise as a result of the outsourcing of services to third parties.

Updated: October 10, 2017