Author : Dr Dheeraj Bhar
BRIJNANDAN SINGH BHAR & CO
Technology and Communications Law in Malaysia
Information and Communication Technology (ICT) businesses in Malaysia include hardware and software developers, database management services, digital content developers for websites, DVDs and CDs, internet-based business application development (including email and website hosting services), system integration services, call centres, and computer-assisted manufacturing services.[1] Malaysian companies that provide ICT services are required to incorporate their businesses under the Companies Act 1965.[2] Companies providing management consultancy services in the ICT industry must obtain a Services Tax License pursuant to the Service Tax Act 1975, provided that the companies generate a total annual sales turnover of at least RM150,000.[3]
The most comprehensive laws governing telecommunications and digital services providers in Malaysia are the Malaysian Communications and Multimedia Act 1998[4] and the Malaysian Communications and Multimedia Commission Act 1998.[5] The latter Act creates the Malaysian Communications and Multimedia Commission (“Commission”), a regulatory body that is granted jurisdiction over communications and multimedia activities in Malaysia, including the authority to enforce laws and to supervise the conduct of providers of communications and multimedia services.
Other laws pertaining to ICT include the Digital Signature Act 1997 and the Computer Crime Act 1997. Laws giving particular incentives to ICT businesses were enacted to facilitate the MSC Malaysia program. This article provides an overview of those laws and others governing communications and related technology in Malaysia.
The Communications and Multimedia Act 1988
The Communications and Multimedia Act 1988 (“CMA”) was enacted to establish a licensing and regulatory framework while promoting Malaysia as a global center for communications and multimedia information and content services.[6] The CMA applies to four kinds of businesses: network facilities providers (owners of the infrastructure for communications technology, including transmission towers, digital and fibre optic cables, telephone lines, satellites, broadcast facilities, and similar facilities and equipment); network services providers (a business or service that provides a connection between different networks); application service providers (providers of network services to consumers, including internet, telecommunications, and date transmission but not including web hosting); and content applications service providers (suppliers of content to consumers, including television and radio broadcasts and information services, but not including websites or other internet content).
The Commission is given general authority to regulate the installation of network facilities in order to minimize damage to land and natural resources and to control the impact of network facilities on landowners, roads, and public utilities.[7] The other regulatory aspects of the law are divided into four categories: economic, technical, consumer, and social regulation.
Economic regulation
Individuals and entities that own network facilities or provide network or applications services are required to obtain an individual or class license.[8] Network services are services that carry communications by means of electromagnetic radiation (including radio waves and microwaves).[9] Broadcast television, radio, mobile phones, wireless networks, and satellite communications systems are examples of “network services.” Network facilities consist of the equipment and infrastructure needed to provide network services, other than those owned by the customer.[10] An applications service is any service provided to consumers by means of a network service.[11]
Licenses are issued by the Minister of Information, Communication, and Culture after considering the Commission’s recommendations.[12] Licensing requirements generally apply to networks that serve the public, rather than private or Local Area Networks.
Licensed providers must comply with conditions established by the Commission.[13] Licensees are prohibited from engaging in anticompetitive conduct,[14] from entering into collusive agreements,[15] and from requiring customers to obtain (or refrain from obtaining) other products and services as a condition of receiving the provider’s services.[16] The Commission can determine that a licensee is in a dominant position in a relevant market and can direct that licensee to cease activities that lessen competition in that market.[17] Notwithstanding the prohibition against anticompetitive conduct, the Commission is empowered to authorize conduct that will lessen competition if a licensee applies to engage in such conduct and if the Commission determines that the conduct would serve the national interest.[18]
The Commission can require a licensee to make its network facilities or network services available to other providers of network services, applications services, and content applications services, upon terms and conditions that the Commission deems reasonable.[19] The Commission must be notified of, and is empowered to resolve, access disputes.[20]
Technical regulation
No network service may be provided using any electromagnetic wave frequency (collectively known as the “spectrum”) without obtaining the Commission’s permission in the form of a “spectrum assignment.”[21] Any transfer of a spectrum assignment must be approved by the Commission.[22] The Commission can confer an “apparatus assignment” that permits the use of the spectrum to operate a network facility on designated frequencies.[23] Apparatus ssignments must be consistent with an overall plan for the spectrum that the Commission is required to formulate.[24] The Commission is empowered to resolve disputes about interference,[25] to create (or supervise the creation of) technical standards that are compiled into a technical code,[26] and to register agencies that can certify compliance with the technical code.[27]
Consumer protection
Licensees are given the rather broad command to “deal reasonably with consumers” and to “adequately address consumer complaints” at the risk of facing criminal penalties.[28] The Commission is ultimately responsible for the preparation of a consumer code that includes an alternative dispute resolution procedure, creates procedures for protecting consumer information, and provides for the compensation of aggrieved consumers.[29] The Commission has the authority to resolve consumer complaints concerning customer service and consumer protection.[30]
The government is empowered to require the provision of certain application services, including emergency services, directory assistance, operator assistance, and services for disabled customers.[31] The government may also take action to promote the widespread availability of services across Malaysia.[32]
Providers may set and publish their own rates in accordance with market rates but those rates must be fair and oriented toward costs, and must not contain discounts that are unreasonably prejudicial to competitors.[33] The government may intervene in rate setting if deemed necessary to further the public interest.[34]
Social regulation
A service provider that provides content (text, pictures, videos, sound, and the like) to the general public (other than website or internet content) is limited by the terms of its license.[35] No content may be provided that is “indecent, obscene, false, menacing, or offensive in character with intent to annoy, abuse, threaten or harass any person.”[36] The Commission is ultimately responsible for the creation of a content code that addresses restrictions on unsuitable content, methods of classifying content, procedures for handling complaints about content, and the representation of Malaysian culture and identity.[37]
Digital Signatures Act 1997
In simple terms, a “digital signature” is an electronic means of authenticating the identity of a message sender or the signer of a digital (electronic) document. Digital signatures are used to assure that electronically-transmitted documents were actually sent by the person purporting to send them and that the transmitted document arrived intact and without alteration. A “digital certificate” allows the secure exchange of electronic information over the internet. A digital certificate is issued by a trusted authority and contains the digital signature of that authority.
The Digital Signature Act 1997[38] specifies the circumstances under which a digital signature is legally valid, including the circumstances under which a digitally signed document is given the same force as a document with an original signature.[39] The law also creates presumptions that govern a court’s resolution of disputes involving digital signatures.[40]
The Malaysian Communications and Multimedia Commission is responsible for the licensing of certification authorities.[41] The Commission prescribes the duties and obligations of certification authorities and subscribers.[42]
MSC Malaysia
MSC Malaysia is a national initiative designed to attract international ICT businesses to Malaysia.[43] Companies granted MSC status are allowed to employ foreign “knowledge workers” without restriction. Knowledge workers are generally those with advanced educations or significant work experience in ICT-related fields.[44] Companies with MSC status may be eligible for certain incentives, including a complete income tax exemption for ten years or an investment tax allowance on capital expenditures. They can also receive an accelerated capital allowance for expenditures incurred in the acquisition of computers and other information technology assets. Malaysian companies can receive a double deduction for certain expenses related to the export of technology services. An industrial building allowance is also provided to certain owners of newly constructed buildings occupied by companies with MSC status.[45]
Computer Crime Act
The Computer Crime Act 1997[46] criminalizes certain acts that involve the misuse of computers. The law makes it a crime to gain or attempt to gain unauthorized access to the data held within a computer.[47] Penalties are more severe if the unauthorized access is gained or attempted with the intent to commit an act of fraud.[48] The law also prohibits modifying the contents of a computer, including the introduction of viruses or other harmful content, without authorization.[49] Finally, the law criminalizes the communication of a password or of other means of gaining access to a computer without the owner’s consent.[50] The law presumes that computer data was obtained unlawfully if it is possessed by a person who is not authorized to have it.[51] The law also permits police officers above the rank of Inspector to conduct warrantless searches to obtain evidence of a violation of the Computer Crime Act if the officer has reasonable cause to believe that the object of the search is likely to be frustrated if the search is delayed in order to obtain a search warrant.[52]
Other laws
The Telemedicine Act 1997[53] permits healthcare advice and consultation to be provided by means of electronic communication. The law regulates the practice of telemedicine and, in particular, requires healthcare providers who are not physicians (including midwives and medical assistants) to obtain a license.
The Copyright (Amendment) Act 1997[54] extended the protection of copyright law to multimedia works. Transmitting works protected by copyright over the internet without permission is defined as copyright infringement. The law also prohibits the removal of technological protections against the alteration or unauthorized reproduction of works that are protected by copyright.
The Electronic Government Activities Act 2007[55] facilitates the electronic delivery of information and government services to the public. It gives legal recognition to the use of electronic messages to fulfill legal requirements.
[1] Ministry of Trade and Industrial Development [MTID], Information and Communication Technology 2 (2012). [2] Id. at 3. [3] Id. [4] Laws of Malaysia, Act 588. [5] Laws of Malaysia, Act 589. [6] Laws of Malaysia, Act 588, § 3. [7] Id., §§ 214-230. [8] Id., § 126. [9] Id., § 6. [10] Id. [11] Id. [12] Id., § 30. [13] Id., § 127. [14] Id., § 133. [15] Id., § 135. [16] Id., § 136. [17] Id., §§ 137-139. [18] Id., § 140. [19] Id., § 149. [20] Id., §§ 82 & 151. [21] Id., § 157. [22] Id., § 162. [23] Id., § 164. [24] Id., § 172. [25] Id., § 175. [26] Id., § 185. [27] Id., § 186. [28] Id., § 188. [29] Id., § 190. [30] Id., § 195. [31] Id., § 192. [32] Id., § 202. [33] Id., §§ 197-198. [34] Id., § 199 [35] Id., §§ 205-207. [36] Id., § 211. [37] Id., § 213. [38] Laws of Malaysia, Act 562. [39] Id., §§ 62-66. [40] Id. § 67. [41] Id., §§ 3-21. [42] Id. §§ 22-61. [43] Multimedia Development Corporation, What is MSC Malaysia? (2012), available at http://www.mscmalaysia.my/what_is_msc_malaysia. [44] MTID, supra n. 1, at 4. [45] Id. at 8-9. [46] Laws of Malaysia, Act 563. [47] Id., § 3 [48] Id., § 4. [49] Id., § 5. [50] Id., § 6. [51] Id., § 8. [52] Id., § 10. [53] Laws of Malaysia, Act 564. [54] Laws of Malaysia, Act A994. [55] Laws of Malaysia, Act 680.
