AIC exposes flaws in digitalisation laws

Report warns against data localisation, predicts economic impact, increase in cybersecurity risks

ISLAMABAD:

The Asia Internet Coalition (AIC) has presented a critical report to Pakistan’s IT Minister, highlighting significant flaws in the draft Data Protection Bill 2023 and painting a bleak picture of the country’s digitisation laws.

The report, reviewed by the Express Tribune, contradicts the optimistic portrayal by the Ministry of IT & Telecom, which had emphasised, in a statement released on Thursday, its commitment to boosting IT exports to $25 billion. Despite the ministry’s positive outlook, the AIC report underscores substantial challenges that could hinder Pakistan’s digital economy.

During a roundtable discussion on data protection and Pakistan’s digital economy held at the Ministry of IT, Minister for IT & Telecom Shaza Fatima Khawaja reiterated that data regulation and cybersecurity are top priorities for the current government. She assured that, following the prime minister’s directives, the private sector is receiving full support to transform Pakistan into a digital economy.

The meeting was attended by Managing Director of AIC Jeff Paine, representatives from Google and Meta, Digital Pakistan Committee Convener Tania Aidrus, and Secretary IT Aisha Humera Chaudhry, alongside representatives from the Pakistan Software Houses Association (P@SHA).

The AIC’s report on “Data Localisation’s Impact on Pakistan’s Digital Economy” was a focal point of the discussion. The report cautions that data localisation could lead to lower productivity, slower economic growth, and reduced employment. It argues that cloud services established locally, whether by government agencies or private sectors, cannot match the security and efficiency of global players like Google and Amazon.

Rohan Samarajiva, the author of the report, warned journalists about the serious implications of data localisation, stressing that local companies are at a disadvantage compared to international cloud service providers.

The report predicts a 4.7% decline in labour productivity by 2025 if the Personal Data Protection Bill, based on its May 2023 draft, is enacted in 2024. This reduction could translate into a significant economic loss, estimating a $16.5 billion decrease in GDP by 2026. Additionally, it highlights that compliance costs for local cloud services could increase by 70%, exacerbating economic strains.

Human resource constraints and skill gaps in the local market further challenge Pakistan’s ability to compete with global cloud service operators. “The most serious issue of forcing data localisation is the increased vulnerability to cyber threats,” Samarajiva remarked. “Storing all key public and private data in one location makes it an attractive target for hackers.”

The AIC report recommends against mandatory data localisation, arguing it will not attract global players to the Pakistani market. Instead, it calls for more open and transparent laws to report data breaches, which would help minimise such incidents.