Revisiting Globalisation

I. Introduction

“US has lost 400,000 IT jobs”, “India wants WTO protection from ban on outsourcing”, “WTO plays down fear of IT offshoring” and “Outsourcing to affect 4.1m jobs by 2008” are some of the headlines we have been reading in the local newspapers and foreign news since 2004.

If these are the results of globalisation, surely it must be bad. Thus, should we resist globalisation at all costs? Before we attempt to answer this question, we need to have a better understanding of what is globalisation.

Globalisation means different things to different people around the world. It also affects different people, communities or nations of the world in different ways.

II. What is Globalisation?

Globalisation is a term that has been receiving some bad publicity. It has created fear, uncertainty and doubts in both developed and developing countries. Globalisation has resulted in individuals, in certain industries, in certain countries to lose their jobs.

The supporters of globalisation see it as the integration of economic, political and cultural systems across the world. Opponents of globalisation see it as the Americanization of world culture and U.S. dominance of world affairs via economics.

The supporters consider it to be a force for economic growth, prosperity and democratic freedom. The opponents consider it to be a force for environmental devastation, exploitation of developing countries, and the suppression of human rights.

However, the sure thing is that globalisation involves trade liberalisation. To the multi-national corporations (MNCs), globalisation is about how they continue to grow by reaching new markets and leveraging resources around the world to provide customers everywhere with great value, and shareholders with increasing returns on investments.

Hence, globalisation is about creating value on a macro scale. Since the values can be economic, political, societal and cultural in nature, different countries or nations view globalisation differently in relation to their respective values.

In the 19th century, the Chinese considered the arrival and influence of the Westerners e.g. the British, Portuguese, Spaniards and French for trade as bad for China, which later lead to the Opium Wars (1839 – 1842 and 1856 – 1860), and saw Hong Kong ceded to Britain until 1997.

Today, China’s values towards international trade and economics have changed. Together with India, they represent the top two emerging markets in the world.

Thus, globalisation is not totally new, as international trade has been in existence since man traveled the globe for e.g. Marco Polo and the Silk Road.

Thus, I can define globalisation as the acceleration and intensification of interaction and integration amongst the people, companies, and government of different nations via international trade and management.

III. Key Characteristics and Drivers of Globalisation

1.0 The key characteristics of globalisation are:

• Liberalisation of international trade


• Growth of foreign direct investments (FDI)


• Large cross-border financial flows


• Introduction of new technology

The above characteristics coupled with changes in economic and political decisions have contributed to increased competition in global markets, thus creating the enabling conditions for globalisation.

1.1 Liberalisation of international trade

International trade has expanded rapidly in the last two decades. Since the 1970's, it has grown significantly faster than the world gross domestic product (GDP) as shown in Figure 1.

Furthermore, in the 1980's the extent of trade liberalisation, especially in developing countries began to accelerate (Figure 2).

However, the trade expansion was not uniform across all countries, as the industrialised countries and a group of twelve developing countries gained the most (Figure 3).

1.2 Growth of FDI

Since the 1980's, FDI also grew rapidly, both absolutely and as a percentage of GDP as shown in the previous Figure 1 and in the following Figure 4.

The number of countries adopting liberalisation measures towards attracting FDI also increased (Figure 5).

However, despite the rapid growth of FDI flows to developing countries, the investments remain concentrated in about ten countries (Figure 6).

1.3 Large cross-border financial flows

The past two decades also witnessed the rapid integration of financial markets. Although the Bretton Woods system of closed capital accounts and fixed exchange rates collapsed in the early 1970's, it was not until the early 1980's that saw increased capital flows among industrialised countries.

Financial liberalisation took place in the late 1980's with increased investments in the equity markets of developed countries by investment funds, increased bank lending to the corporate sector and short-term speculative flows especially into the currency markets, and increased lending through the international bond market.

1.4 Introduction of new technology

Industrialised countries are the source of technological revolution that facilitated globalisation. The introduction of new technology changed the international competitive landscape by making knowledge an important factor of production.

Thus, the knowledge intensive and high-tech industries are the fastest growing sectors of the global economy today, and successful economic development requires countries to be able to enter and compete in these sectors. The countries must invest in education, training and the diffusion of knowledge.

2.0 The key drivers of globalisation are:

• Increasing competitive landscape: Cost and resource maximisation


• Increased adoption of information and communication technology (ICT)


• International customers


• Governments striving for greater economic growth

2.1 Increasing competitive landscape: Cost and resource maximisation

As discussed above, the liberalisation of trade, the increased FDI and cross-border financial flows, and the introduction of new technology had created the enabling conditions for globalisation.

The conditions in turn caused increased global competition among companies involved in international trade, especially the MNCs, and created the need for global business strategies, and cost and resource maximisation remains the critical factors of economic value creation.

Thus, the MNCs look towards the following to maintain their global competitiveness:

• The different locations or countries and costs of raw materials and skilled labour


• Building and maintaining economies of scale


• A developed telecommunications infrastructure


• Transportation i.e. logistics efficiency


• Outsourcing capabilities


• Tax benefits

2.2 Increased adoption of ICT

Rapid developments in ICT contributed to the acceleration of globalisation. The introduction of Internet technology and proliferation of the World Wide Web spearheaded the adoption of electronic commerce technology.

Third generation enterprise resource planning (ERP) solutions utilizing Internet and electronic commerce technology further made information, resource management and decision making easier, faster and more accurate and efficient across international boundaries.

2.3 International customers

Customers in the global market having common needs favour globalisation, and through globalisation, firms or producers/suppliers reach customers in the global market.

2.4 Governments striving for greater economic growth

Governments are also the catalysts for globalisation. Changes in or the regulation and de-regulation of trade and economic policies favouring international trade, and attracting FDI will support globalisation.

The need to ensure that the home country’s products meet international technical standards, for e.g. ISO and other regulatory compliance standards promotes globalisation.

The promotion of the home country’s products at international trade fairs and the creation of grants and funding for business expansion, ICT adoption and skills development to meet global competition encourages globalisation.

IV. Competitive Advantage of MNCs

Globalisation is constantly being driven by MNCs, initially with local competition when they began corporate life, then growing regional, and finally global in their quest to create, sustain and maximise economic value from scarce resources.

In order to be successful, a company needs to develop and sustain competitive advantage. A company needs to conduct regular environmental scanning or audits using proven methodologies such as Porter's Five Forces to evaluate and sustain their competitive advantage for continuous profitable growth.

Competitive advantage can be developed from proper and careful strategic planning, execution and continued development of a company's resources and processes. The efficient and effective acquisition and utilisation of resources coupled with the company's unique capabilities can create distinctive or core competencies that are difficult for competitors to emulate.

Further adoption of one of two industry-wide strategies or focus segment strategy (Porter’s Three Generic Strategies), can enable a company to create and maintain value creation. As the company grows and expand, the strategies take on a global perspective i.e. the company evolves into a company with globalisation intentions i.e. an MNC.

V. Competitive Advantage of Nations

Globalisation does not only depend on companies adopting global strategies. In the preceding two sections, I discussed that governments also act as a driver or catalyst of globalisation.

Since governments are the custodians and managers of nations, how can I expand on the government factor in relation to their countries in the subject of globalisation?

Michael Porter argues that every country can develop and possess competitive advantage. [Porter, 1990]

Porter used a diamond-shaped diagram as the basis of a framework to illustrate the determinants of a nation’s competitive advantage. The diamond shape represents the national playing field that each country establishes for their industries.

The four points of the diamond affect four aspects of national competitive advantage:

• The availability of resources and skilled labour


• Information that companies uses to decide which opportunities to pursue with the available resources and skills


• The goals of the companies


• The pressure on companies to innovate and invest

1.0 Demand Conditions

When the market for a particular product is larger locally than in foreign markets, the local companies devote more attention to that product than do the foreign companies, leading to competitive advantage when the local firms begin exporting the product. Thus, a more demanding local market leads to a national advantage that enables local companies to anticipate global trends.

1.2 Firms’ Strategy, Structure and Rivalry

Local conditions affect a company's strategy, for e.g. German companies tend to be hierarchical. Italian companies tend to be smaller and are run more like extended families. Such strategies and structures help to determine in which types of industries a nation’s companies will excel.

In Porter’s Five Forces model, low rivalry made an industry attractive. While a company prefers less rivalry, in the long term, more local rivalry is better as it puts pressure on companies to innovate and improve. More local rivalry results in less global rivalry.

1.3 Factor Endowments

A country creates its own important factors such as skilled resources and technological base. Local disadvantages in factors of production force innovation. Adverse conditions such as skilled labour shortages or scarce raw materials forces companies to develop other methods i.e. to innovate, and this leads to a national advantage.

1.4 Related and Supporting Industries

When local supporting industries are competitive, companies enjoy more cost effective and innovative inputs. This effect is further strengthened when the suppliers are also strong global competitors.

Thus, countries that are more competitive are more conducive to globalisation and can better attract FDI.

VI. The Effects of Globalisation on World Regions

The effects of globalisation on world regions are as follows:

VII. The Benefits and Costs of Globalisation to Different Sectors of Society

The benefits and costs of globalisation to different sectors of society are as follows:

VIII. Conclusion

I can draw the following conclusions:

1. Globalisation has increased the flow of money, goods, services, people and jobs across national boundaries


2. The trend of globalisation continues to accelerate


3. Globalisation requires an environment of geopolitical stability and a macroeconomic system to enable growth


4. The full impact of globalisation goes beyond national trade surpluses and deficits


5. Globalisation has tremendously impacted demand and supply with trade liberalisation


6. Globalisation has also resulted in the displacement of jobs, and certain communities have had significant environmental impact


7. The debate on globalisation and its impact is still ongoing

References:

Chang, Ha-Joon. (2003). Globalisation, Economic Development and the Role of the State. London, England: Zed Books

David, Fred R. (2005). Strategic Management: Concepts and Cases. (10th Edition). Upper Saddle River, NJ: Pearson Prentice-Hall

Gupta, Anil K. & Westney, D. Eleanor. (Editors). (2003). Smart Globalization: Designing Global Strategies, Creating Global Networks. San Francisco, CA: Jossey-Bass / John Wiley & Sons, Inc

Hodgetts, Richard M., Luthans, Fred & Doh, Jonathan P. (2006). International Management: Culture, Strategy, and Behavior. (6th Edition). New York, NY: McGraw-Hill / Irwin

India wants WTO protection from ban on outsourcing. (2005, June 7). Star InTech, p. 27

Outsourcing to affect 4.1m jobs by 2008. (2005, July 19). Star InTech, p. 29

Porter, Michael E. (1990). The Competitive Advantage of Nations. New York, NY: The Free Press

Rothenberg, Laurence E. (2003). "The Three Tensions of Globalization." [Electronic Version]. Globalization 101, No. 176, 2002 – 2003

Stiglitz, Jospeh E. (2003). Globalisation and its Discontents. New York, NY: WW Norton & Company

US has lost 400,000 IT jobs. (2004, September 21). Star InTech, p. 36

WTO plays down fear of IT offshoring. (2005, July 5). Star InTech, p. 27

Performance Measurement

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ACKNOWLEDGEMENT

This article was published in the New Straits Times on August 30, 2003
as a CIMA Business Talk article.

Reproduced here with permission from
The Chartered Institute of Management Accountants (CIMA Malaysia).
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The future of performance measurement is all about planning not reviews, answers not data, and “managing through measurement”.

Management’s obsession with measurement grows unbounded. The latest data from Gartner, the US-based research organisation, suggests that over 70 per cent of large US firms had adopted the balanced scorecard by the end of 2001. The recent Enron scandal has provoked a flurry of debate about corporate reporting, disclosure and the use of creative accounting practices to smooth income and earnings statements.

The software industry is also playing a significant role in driving the measurement agenda forward. There are now over 40 vendors worldwide that offer performance reporting solutions. Some of these performance reporting solutions are little more than glorified spreadsheets, while others enable executives to access immense amounts of data. The problem with many of the software reporting packages on the market today is that all they offer is data – not information or insight.

The problem is that too much is being measured. Executives are obsessed with quantification. They want everything described in numerical terms – customer satisfaction, customer loyalty, customer profitability, brand value, employee satisfaction, supplier performance, health and safety, efficiency, productivity, innovation, new product development, etc. This is becoming such a significant issue that some executives are now questioning what value they get from their organisation’s measurement systems. These questions become even more frantic when they think about how much their organisation's measurement systems cost them to run.

Recent research completed by members of the Centre for Business Performance at Cranfield School of Management, UK, found that Ford spent 0.7 per cent of sales, or USD1.2 billion annually on budgeting. Surprisingly the vast majority of executives have no real idea how much they are spending on measurement.

Everyone knows they are spending a lot, but no one knows how much. Just because you spend a lot on something does not mean that it is not worthwhile. However, organisations should think carefully about how they can best use their measurement systems to ensure that they deliver maximum value.

Broaden the agenda

Significant effort has been devoted to improving measurement methodologies. People have developed new methods of measuring financial performance and new frameworks to balance financial and non-financial measures. Research has focused on how to design and apply such methodologies and frameworks. These topics are important, but as we enhance our understanding of them, we need to broaden the agenda and ask: how do we make measurement pay?

More specifically we should do the following:

• Think in terms of performance planning not performance reviews
  
• In most organisations, measurement forms the basis of performance reviews, which are historic or backward looking in nature and – either implicitly or explicitly – designed to put people on the defensive

Why, in performance reviews, do people spend most of their time justifying why performance is as it is? They come to the review armed to the teeth with excuses about why they are where they are. For example: “We are only at 70 per cent of our target because our suppliers let us down, or our competitors have introduced a new product."

Such discussions are irrelevant, or at least relatively unimportant in comparison with focusing on how we are going to get to where we want to be.

Discussions about how we are going to get to where we want to be are not performance reviews. They are performance planning sessions. They require executive teams to understand the reasons why performance is as it is, and then focus on how they are going to make progress.

Ask for answers not for data

Why do people get sucked into performance reviews rather than performance planning sessions? A significant reason is that far too often the meetings themselves are structured as performance reviews. Far too often we simply present raw performance data to executives and expect them to analyse it there and then.

You would never conduct a scientific experiment that way. You never make a presentation to an audience without first analysing the data and understanding the messages it contains. Yet far too often that is what we do in performance reviews. We give people figures on profitability by customer segment, on absenteeism levels, on productivity. But nobody has been through the data and extracted the insights from it in advance.

David Coles, managing director of DHL UK used an excellent phrase to describe this in a recent presentation “numerical crosswords”.

He explained how his board used to spend all of their time at performance reviews trying to join up the pieces of the numerical jigsaw that they were presented with. Directors would look at a performance report and try to draw spurious correlations between different events to offer explanations for unusual observations.

When they realised this was what they were doing, DHL UK changed the structure of their board meetings, and defined specific questions that they wanted to be answered.

They now ask their performance analysts to come to the board meeting, armed not with raw data or excuses, but presentations that address questions of concern to the board.

The board’s role is to probe the quality of the analysis and, once they are comfortable with it, decide what they are going to do to move performance in the desired direction.

In changing the structure of their board meetings, DHL UK has eliminated the defensive behaviours associated with performance reviews and encouraged the creative dialogue associated with planning.

Build the capability of performance analysts

In adopting this new structure and format, DHL recognised that they had to upgrade the skills of their performance analysts. These performance analysts need to be able to manipulate performance data, interpret it, and present it in a way that engages and provides insight to others.

Research at the Centre for Business Performance has resulted in a concept called the Performance Planning Value Chain, which encapsulates a systematic process for extracting insights from performance data.

The analogy underpinning the Performance Planning Value Chain is of a journalist. When writing a story, a journalist is very careful to identify the “hook” that will capture the reader's attention. Rarely do we do this with performance reports.

This issue becomes even more important when the focus of measurement is shifted to systems not functions. Organisations consist of complex interdependencies. Marketing relies on operations. Operations rely on human resources, etc. Yet when it comes to measurement, we often ignore these interdependencies. Marketing looks at the marketing and customer satisfaction data. Human resources look at the people data, etc. It is as if we have functionalised measurement, just as we have functionalised everything else in organisations.

Yet the functionalisation of measurement is a mistake. Each part of an organisation affects others, so we have to recognise this interaction if we are to get the most from our measurement data. It should give us the big picture. This requires us to equip performance analysts with the skills to cope with this complexity.

Written by Andy Neely. The writer is director of Centre for Business Performance, Cranfield School of Management, United Kingdom. This article first appeared in Insight, an online newsletter for management accountants published by The Chartered Institute of Management Accountants (CIMA). Insight is accessible at www.cimaglobal.com/newsletters.

Adequacy of Malaysia's Cyberlaws to Address Cybercrimes and Cybertorts

I. Introduction

Since the birth of the 21st century, cybercrime has increasingly become recognized as a problem that requires the attention of governments, law enforcement authorities and legal systems of leading Asia Pacific countries. The explosive growth of the Internet and adoption of digital technologies for electronic commerce, electronic data interchange and electronic communication needs in the Asia Pacific region has also brought about an increase in cybercrimes.

Advanced countries in the West with highly developed information and communication technology infrastructures are also forced to constantly review the adequacy of their legal systems to deal with cybercrime. Other countries in South East Asia, such as Singapore, Thailand, and Malaysia, developing their information and communication technology system from a less advanced base are similarly forced to review the adequacy of their existing legal systems.

Existing criminal law, supported with commercial and intellectual property protection law may already inhibit a range of cyberspace misconduct. However, gaps and inadequacies of existing traditional laws necessitate the consideration and introduction of more specific laws to address cybercrime.

II. What is Cybercrime?

In Grabosky & Smith (1998), the following categories of crime were found to be emerging in the digital age:

• Illegal telecommunications interception (e.g. hacking, cracking, data manipulation)


• Electronic vandalism


• Electronic terrorism (e.g. viruses, denial-of-service attacks, spamming)


• Theft of data and communications services


• Telecommunications and associated intellectual property piracy


• Electronic distribution of pornography


• Electronic fraud (e.g. phishing)


• Electronic funds transfer crime


• Money laundering

Collectively, these crimes are referred to as “cybercrimes”.

How serious or damaging is cybercrime? Warren & Streeter (2005) reported that, “the Internet has become a non-stop source of crime stories. The Bank of America revealed it lost computer tapes containing financial data on 1.2 million federal workers, including US senators, and British police recently charged 28 people with involvement in a sophisticated identity fraud racket that swindled almost 2 million pounds from more than 100 private bank accounts.” “The US Federal Trade Commission revealed last year that 10 million US citizens had fallen victim to identity theft at a total cost of USD 50 billion, and that 2 million people were conned by phishing attacks.”

Phishing [Sullivan, 2004, p.24], first detected in 1996, has exploded in the last two years because it is easy to produce and easy to fall for. Fraudsters send fake or spoof e-mail to bank customers to obtain their logins and passwords or to trick them into visiting fake banking websites.

On the home front, cybercrime rate is on the rise [Rising cybercrime, 2004, p.2]. Chia Kwang Chye, former deputy minister of internal security said, “117 cases involving MYR451,000 in losses were taken to court, under the Communications and Multimedia Act 1998” for the period of January to September 2004, compared to 35 cases in 2003.

Chia also said that 857 cases were charged in court in 2003 under the Computer Crimes Act 1997, with loses totaling MYR2.9 million, while 355 cases were brought to court from January to September 2004.

In its first quarter 2004 report, the Malaysian Computer Emergency Response Team (MyCERT) said that, “Internet vandals went wild early this year defacing hundreds of Malaysian websites, with public sector sites the main victims.” [Sharif, 2004, p.3] The following charts A to E provide some statistics.

While some of these crimes can be prosecuted to a certain extend with the combination of existing criminal, commercial and intellectual property laws, the experience of many jurisdictions is that additional legislation is often required to address these Internet, computer systems and electronic communication related crimes.

III. What is Cybertort?

Before I embark on defining “cybertort”, let us first understand what is defined as a tort. “A tort is a wrong. It can be a spoken wrong or an act (action), or a nonaction (carelessness) that is wrong, with injury inflicted on a person or property.” [Baumer & Poindexter, 2002, p.119]

Thus, there is tortious liability when a tort is committed, and I can define tortious liability as, “Tortious liability arises from the breach of a duty primarily fixed by the law; this duty is towards persons generally and its breach is redressable by an action for unliquidated damages.” [Lee, 2001, p.189]

Torts include issues such as:

• Trepass to a person


• Trespass to land


• Trespass to nuisance


• Trespass to goods


• Negligence


• Defamation

The tort most relevant to cyberspace is defamation. Defamation may be defined as, “Oral or written statements that wrongfully harm a person’s reputation.” [Ferrera et al, 2004, p.345] Defamation committed orally is known as slander, and defamation committed in writing is known as libel.

Therefore, torts committed in cyberspace (or the Internet and/or the World Wide Web) are known as cybertorts. Defamation can easily be committed in the cyberspace via e-mails or electronic mails, articles or postings in Weblogs, messages and/or videos in social networking sites such as YouTube, Facebook, etc.

The legal remedy or suit against defamation requires several elements of proof such as:

• A false statement of fact, not opinion, about the plaintiff


• The publication of the false statement without a privilege to do so


• Intentional or due to negligence


• Damages – actual and/or presumed suffered by the plaintiff

IV. The Cyberlaws of Malaysia

With the arrival of the digital economy or knowledge economy as embraced by Malaysia, and the birth of the Multimedia Super Corridor (MSC), new laws introduced in 1997 covering computer crimes, digital signature, telemedicine, copyright were promoted by the MSC’s custodian – the Multimedia Development Corporation as a package of cyberlaws.

The cyberlaws are:

i) The Computer Crimes Act 1997

This Act provides law enforcers with a framework that defines illegal access, interception, and use of computers and information; standards for service providers; and outlines potential penalties for infractions.

ii) The Digital Signature Act 1997

Regulates the legal recognition and authentication of the originator of electronic document. This Act enables businesses and the community to use electronic signatures instead of their hand-written counterparts in legal and business transactions.

iii) The Telemedicine Act 1997

This Act empowers medical practitioners to provide medical services from remote locations using electronic medical data and prescription standards, in the knowledge that their treatment will be covered under insurance schemes. However, this Act is yet to be implemented.

iv) The Copyright (Amendment) Act 1997

This Act gives multimedia developers full intellectual property protection through the on-line registration of works, licensing, and royalty collection. Especially, the Act reinforces an author's work cannot be presented as the work of another, by adding a provision that the work must be identified as created by the author.

It was also decided that a regulatory body entrusted with the role to implement and promote the national objectives of the Malaysian Government for the communications and multimedia sector was needed. Hence, in 1998, another two acts were passed.

v) The Malaysian Communication and Multimedia Commission Act 1998

Provide for the establishment of the Malaysian Communications and Multimedia Commission (MCMC), a single regulatory body for an emerging and converging communications and multimedia industry. This Act gives the MCMC the power among other things, to supervise and regulate communications and multimedia activities in Malaysia and to enforce the relevant laws.

vi) The Communication and Multimedia Act 1998

The most significant legislation brought into force on April 1, 1999. This legislation provides the policy and regulatory framework for convergence of the telecommunications, broadcasting and computer industries. The Act is based on the basic principles of transparency and clarity; more competition and less regulation; bias towards generic rules; regulatory forbearances; emphasis on process rather than content; administrative and sector transparency; and industry self-regulation.

In addition, the government is also in the process of formulating another legislation presently called the Personal Data Protection Bill [Surin, 2003b, p.16-18]. This law will provide assurance of privacy of personal data. It will address the issues of collection, processing, maintenance and utilization of personal data.

The above cyberlaws serve two central purposes:

• To bolster intellectual property rights; and


• To create the right environment for the multimedia industry and for online transactions or electronic commerce to thrive in a continuously and increasingly competitive business environment

V. Adequacy of Legislation

In general, countries can be categorised according to whether they have:

1. Basic criminal and commercial laws


2. A developed system of intellectual property laws


3. Legislation directed specifically at computers and electronic commerce

Malaysia may be observed to fall within one or more of these categories, mostly satisfying the second category and having made some progress towards the third. Whether the existing legal system in any country can adequately address cybercrime depends on the precise scope and interaction of its criminal, commercial, intellectual property and computer-related laws.

The rapid development of information and communication technology and emerging electronic commerce pose challenges for the existing laws of Malaysia. Some key challenges created by the Internet or cyberspace in the enactment of statutes and development of the common law includes the identification of legal entities in cyberspace, the need to protect privacy and the issue of digital signatures that require close regulation.

1.0 Absence of Territorial Borders in Cyberspace

The jurisdiction of courts is based on the concept of territoriality. While we may call “cyberspace” in the singular, it is however, not a singular or distinct “place” but made up of many virtual locations constituting several business models from the real world that are recreated in computer-mediated communication infrastructures. Cyberspace crosses geographical and jurisdictional boundaries as we know it due to the cost, ease and speed of electronic transmission on the Internet that is almost entirely independent of physical location.

A major challenge for the law is created by the cross-boundary nature of cyberspace or in other words, its borderless nature. In relation to law, Johnson and Post (1996) outlined some cross-border issues:

• The power of local governments to assert control over online behaviour


• The effects of online behaviour on individuals or things


• The legitimacy of the efforts of a local sovereign to enforce rules applicable to global phenomena


• The ability of physical location to give notification of which set of rules apply for any given situation. Regional or national regulation by market authorities and other self-regulatory organisations are clearly less than satisfactory for the internationally active cross-border Internet

Hence, new legislation able to address cyberspace issues such as accountability and governance; proper usage, orderly conduct, structure and development; and cybercrime became very important due to the undermining of the feasibility and legitimacy of applying laws based on geographic boundaries.

Malaysia’s cyberlaws, as outlined in the previous section, governs the behaviour, content, business transactions, privacy, defamation, contracts, and intellectual property rights in a cyberspace environment, committed within and outside of Malaysia.

The Communication and Multimedia Act 1998, Section 4: Territorial and extra-territorial application provides for:

(1) This Act and its subsidiary legislation apply both within and outside Malaysia.

(2) Notwithstanding subsection (1), this Act and its subsidiary legislation shall apply to any person beyond the geographical limits 6f Malaysia and her territorial waters if such person –
(a) is a licensee under this Act; or
(b) provides or will provide relevant facilities or services under this Act in a place within Malaysia.

The Computer Crimes Act 1997, Section 9: Territorial scope of offences under this Act provides for:

(1) The provisions of this Act shall, in relation to any person, whatever his nationality or citizenship, have effect outside as well as within Malaysia, and where an offence under this Act is committed by any person in any place outside Malaysia, he may be dealt with in respect of such offence as if it was committed at any place within Malaysia.

(2) For the purposes of subsection (1), this Act shall apply if, for the offence in question, the computer, program or data was in Malaysia or capable of being connected to or sent to or used by or with a computer in Malaysia at the material time.

2.0 Computer and Computer-related Offence Provisions

The following Tables A and B presents a comparative analysis of computer and computer-related offence provisions available in Malaysia.

Computer and data offences

From the above, arguably, Malaysia can be considered as having a quite respectable segregation or classification of computer offences.

Computer-related offences

Although fraud and forgery can be prosecuted under the commercial and criminal laws whether committed using a computer or by more traditional paper-based means, it is good for Malaysia to have specific fraud and forgery offences addressed in the main computer crime legislation.

Ancillary liability

While not in the main computer crime law, computer child pornography, and copyright and related-rights are addressed in the Communications and Multimedia Act 1998 and Copyright (Amendment) Act 1997 respectively, which are collectively a part of Malaysia’s cyberlaws.

Special enforcement units

Recognising the highly specialised knowledge and skills required for investigation and evidence gathering in relation to cybercrime, some countries have moved towards setting up specialised computer crime units within their law enforcement agencies, for e.g.

• HITEC (HI-tech crime Technical Expert Center) established to act as a “cyberpolice force” by the National Police Agency of Japan
  http://www.npa.go.jp/cyber/english/policy/hightech_prog.htm
  http://www.npa.go.jp/english/index.htm


• Korean National Police Agency’s Cyber Terrorism Response Center and recently announced General Investigation Center of Computer Crimes under the Prosecutor-General’s Office

In this aspect, Malaysia does not yet have a specialist cybercrime law enforcement unit, thus cybercrimes are referred to the traditional Commercial Crimes department of the police force.

Forfeiture and/or Restitution

Apart from the imposition of terms of imprisonment and fines, cybercrime legislation can empower courts to order the forfeiture of equipment used and/or assets acquired, or to require restitution to victims. For e.g., in Taiwan there is a statutory maximum for damages that can be awarded to injured persons under the Computer Processing Personal Information Protection Law. In the Philippines, maximum penalties imposed for hacking or cracking under the Electronic Commerce Act are commensurate to the damage incurred.

In Malaysia, forfeiture and/or restitution is not clearly defined in the cyberlaws and usually falls back upon existing commercial and criminal laws.

Undercover Surveillance/Search and Seizure

Standard search and seizure powers for the investigation of criminal offences may not extend to the investigation of computer data or the interception and covert surveillance of electronic transmissions such as e-mail. Cybercrime legislation in Malaysia should provide for expanding the range of investigatory powers available to law enforcement.

International Agreements

There are currently no international agreements on the scale of United Nations conventions or treaties (e.g. for international trade, there is the World Trade Organisation) in relation to cybercrimes that Malaysia can actively participate in and/or contribute to. Such a platform can provide excellent benefits to Malaysia in formulating and advancing cyberlaws.

3.0 Prohibition on Provision of Offensive Content

Offensive content includes but not limited to pornography, indecent or unsuitable content for children, objectionable content, and defamatory articles and/or statements

The Communications and Multimedia Act 1998 provides legislation against offensive content and the Malaysian Communications and Multimedia Commission (MCMC) is thus empowered to act against offensive content by way of written requests to Internet Service Providers (ISPs) to take action against offensive content.

The following Tables C, D-1, D-2 and E summarises the relevant sections of the Act.

4.0 Intellectual Property Rights Offence Provisions

There is considerable overlap between cybercrime laws and intellectual property laws. For e.g., computer hardware may constitute a patentable invention, a registered design, or be protected under legislation relating to electronic circuit layouts. Computer software may similarly be protected under copyright law, and likewise with data and information transmitted or stored on files.

The following Table F shows the intellectual property rights offence provisions available in Malaysia.

Offence Classification

The classification of intellectual property laws into patents, trademarks, designs, copyright and computer circuit layouts is fairly standard, and it is somewhat worrisome that in Malaysia, most of the intellectual property rights legislation does not recognise infringement as a criminal offence other than those provided for under the Copyright Act 1987 and Copyright (Amendment) Act 1997.

Computer Software

Unauthorised duplication of computer software (except to make a back-up copy for personal use) is an infringement under Malaysia copyright laws. The Copyright Act 1987 was amended to give multimedia developers full intellectual property protection through the on-line registration of works, licensing, and royalty collection. The Amendment Act reinforces an author's work cannot be presented as the work of another, by adding a provision that the work must be identified as created by the author.

Optical Disc Piracy

Very few Asia-Pacific countries or jurisdictions have laws explicitly relating to optical disc piracy. A good example is Hong Kong’s Prevention of Copyright Piracy Ordinance, which prohibits the manufacture of optical discs without a valid licence, punishable by a fine of HK$500,000 and imprisonment for two years on a first conviction; and HK$1,000,000 and four years imprisonment on a subsequent conviction.

Malaysia’s Optical Discs Act 2000 came into force on September 15, 2000. Section 26 provides for:

Section 26. Penalty.
(1) Any person who commits an offence under Part III except under section 15 shall on conviction be liable –

(a) if such person is a body corporate, to a fine not exceeding five hundred thousand ringgit, and for a second or subsequent offence to a fine not exceeding one million ringgit; or

(b) if such person is not a body corporate, to a fine not exceeding two hundred and fifty thousand ringgit or to imprisonment for a term not exceeding three years or to both, and for a second or subsequent offence to a fine not exceeding five hundred thousand ringgit or to imprisonment for a term not exceeding six years or both.

(2) Where a person being a director, manager, secretary or other similar officer of a body corporate is guilty of an offence under subsection (1) by virtue of section 30, he shall on conviction be liable to the penalty provided for in paragraph (1) (b).

Circumvention of Technological Protection Measures

Offence provisions in relation to the circumvention of technological protection measures such as encryption devices, user identification and electronic rights management information regimes are already introduced in leading Asia-Pacific countries such as Singapore, Australia, Hong Kong, South Korea and Japan.

In this area, Malaysia is also not trailing. The Copyright (Amendment) Act 1997 provides for fines of up to MYR250,000 and/or imprisonment for up to three years for the first offence, or MYR500,000 and/or five years for subsequent offences.

International Agreements

International agreements for the protection of industrial and intellectual property date back over 100 years. Malaysia is a member or signatory of the following main instruments administered by the World Intellectual Property Organisation (WIPO), and the United Nations Educational, Scientific and Cultural Organisation (UNESCO).

• Paris Convention for the Protection of Industrial Property 1883 (Malaysia’s membership: January 1989)
• Berne Convention for the Protection of Literary and Artistic Works 1886 (Malaysia’s membership: October 1990)
• Convention establishing the World Intellectual Property Organisation 1970 (Malaysia’s membership: January 1989)
• Agreement on Trade-related Aspects of Intellectual Property Rights 1994 (Malaysia membership: January 1995)

Sources:
WIPO http://www.wipo.int/treaties/en/
UNESCO http://www.unesco.org
WTO http://www.wto.org)

VI. Conclusion

Cybercrime legislation in Malaysia is still in the early stages of development, and exhibits overlap with general criminal, commercial and intellectual property laws. This is not surprising given the different historical, social and political contexts and needs within which these laws have evolved, and the differing levels of technological development compared to other countries.

However, it is a fact that cybercrime knows no national borders and, as a result, defences against the threats increasingly posed to computer and information infrastructures can only be as strong as the weaker links in the chain. Therefore, it is important for Malaysia to continually assess the adequacy of the cyberlaws and, where deficiencies can be identified, to reform those laws appropriately and quickly.

Therefore, it was a let down when Datuk Dr. Rais Yatim, former minister in the Prime Minister’s department, announced at the third MSC International Cyberlaws Conference held from March 2 to 3, 2004 that the three draft cyberlaws, namely the Personal Data Protection Act, Electronic Transactions Act and the Electronic Government Activities Act will be delayed [Khalid & Moreira, 2004, p.3].

“The first would regulate the collection, possession, processing and use of personal data, and ensure there are adequate measures for the security, privacy and handling of personal information. It aims to raise public confidence in conducting electronic transactions without their privacy being violated.”

“The Electronic Transactions Act is primarily targeted at boosting e-commerce by providing legal recognition of electronic transactions, including e-commerce transactions.”

“The Electronic Government Activities Act seeks to establish common protocols for electronic interaction between the Government and the public.”

Thus, these draft legislation are important additions to Malaysia’s cyberlaws and any further delays will eventually become detrimental for Malaysia to competitively position herself in an increasingly globalising economy. (The Malaysian government had released a draft version of the proposed Personal Data Protection Act for public comment in November 2000.)

Lawyer Wong Shiou Sien, a speaker at the conference, argued, “Despite being among the first countries in the world to introduce cyberlaws, Malaysia cannot afford to remain at a standstill. New developments in technology, products, and services related to wireless content will keep raising new legal and regulatory issues.” [Khalid & Moreira, 2004, p.2]

While there is no single model to be emulated in this process, guidance can be gained from legislation in force in countries or jurisdictions with longer experience of the threat, management and prosecution of cybercrimes, and the promotion of the effective and efficient use of cyberspace to increase the competitive advantage of our nation Malaysia.

References:

MyCERT statistics http://www.mycert.org.my/en/index.html

Computer Crimes Act 1997
Digital Signature Act 1997
Communication and Multimedia Act 1997
Malaysian Communication and Multimedia Commission Act 1997
Telemedicine Act 1997
Copyright Act 1987
Copyright (Amendment) Act 1997
Patents Act 1983
Trademarks Act 1976
Industrial Designs Act 1990
Optical Discs Act 2000
Layout-Designs of Integrated Circuits Act 2000

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