3 Important Things to Consider in a Digital Economy’s Regulatory Environment
It is estimated that over the next ten years, in the era of the Fourth Industrial Revolution, Asia’s digital economy could add up to USD 1 trillion to ASEAN’s GDP. It is envisioned that our ASEAN community in 2025 would entail the region being a cashless society and a global leader in smart cities. The rise of digital natives (those born into our fast growing digital age) through 100% financial inclusion and digital literacy, along with fast and efficient public services through digitized IDs for all also represent some realities the region can look forward to. Moreover, gone will be the days where companies run their businesses “the old fashioned way”. Rather, “smart manufacturing”, competing with Silicon Valley, and borderless digital services, will make up the regional market situation. With such realities already on the way to being developed in Asia, the regulatory environment plays a defining role in how quickly and efficiently the region’s digital economy is being built. Three important things governments and businesses will need to consider include:
Intellectual Property Protection (IPR)
Piracy was and still remains a major concern for most businesses and governments when considering the digital economy. While the global Internet space has provided the creative community with a highly interactive platform to share their creations and connect with fans, piracy is projected to increase and to cost business communities a lot more in the future. Consumers and users can share almost anything instantaneously today (BitTorrent anyone?). For the business community, this has meant that cooperation with regulators as well as across industries to tackle copyrights violations has become crucial. We see this with global corporations like Google who have put in place better tracking systems to identify copyrights violations and track down perpetrators more efficiently. However, while some Intellectual Property Protection is needed to create digital markets, the uncomfortable fact remains that this creates an artificial monopoly, restricting access to digital products that can be used by everybody simultaneously. Monopolies, of course, are bad for consumers and stifle innovation. Overzealous IPR risks criminalizing harmless sharing of content for non-commercial purposes. Therefore, a careful balance has to be struck between the need for some IPR and the interest of an open digital market. Finding the right balance between innovation, free speech, fair competition, and digital creativity will therefore lie in the hands of regulators, the business community, as well as netizens in the region.
Number of procedures to enforce a contract
While the idea of a digitized economy rests on the principles of highly efficient work flows and processes, regulators and governments will also need to consider the number of procedures that have to be conducted before a contract comes into force. This again poses a unique challenge since businesses and citizens require a secure digital space to engage in the digital economy but at the same time having too many procedures can discourage participation. Regulators need to consider what security measures they can take while governments need to consider investments in securing their countries’ digital infrastructures. These would help in promoting more secure transactions with fewer procedures that both businesses and citizens have to engage with.
Efficiency of legal systems in settling disputes
The widespread existence of cybercrimes in all its formats has meant that thousands of cases are reported on a daily basis. It is up to governments and regulators to set up systems that can process these cases efficiently and effectively so as to improve the regulatory environments of digital economies. This would also give confidence to both businesses as well as the public. However, this is easier said than done. With the varied and complex nature of some cybercrimes, governments are not just presented with the challenge of volume but also the intricacies of the different types of cybercrimes and the implications of some cybercrime settlements on others. Engaging all stakeholders in setting up highly efficient legal systems would therefore be a cornerstone for governments to better understand the nature of cybercrimes and improve their efficiency in settling disputes.
With the rapid expansion of our global digital economy, to ensure fair market practices while fostering innovation and creativity, governments need to pay close attention to their regulatory environments. International regulatory bodies along with regional and local regulatory organizations need to better engage governments, business communities, and broader public in improving the regulatory environment. This would ensure that the regulatory environment is not too restrictive for businesses to operate in, but not allowing them opportunities for monopolistic behavior, while encouraging the broader public to be more responsible netizens when dealing with cybercrimes like piracy.