KUALA LUMPUR – Putrajaya should take a balanced approach when policing social media and they should also consider regulating individual users, especially accounts conducting business on these platforms in order to prevent scams, said an economic consultant.
While Global Asia Consulting senior consultant Samirul Ariff Othman said this, other economists expressed caution on regulating individuals to preserve an open business environment.
However, Samirul said regulating users who conduct business on these platforms could also create a safer digital economy, given that many users – including influencers – make a living on social media.
Speaking to Scoop, Samirul said that given the high number of online fraud cases reported, regulating individual social media users or accounts can foster a more transparent online environment.
“Regulating individual users who generate significant income through social media platforms could yield economic benefits and ensure a fair and transparent digital economy.
“This regulation could be structured by implementing an income threshold for mandatory registration and regulation, targeting only influencers and online businesses earning above a certain amount annually.
“This approach ensures that only those with substantial economic impact are regulated, preventing overreach and undue burden on smaller content creators.
“Taxation and reporting requirements for influencers and online businesses above the income threshold would ensure fair taxation, contributing to national revenue while reducing tax evasion and increasing transparency,” Samirul said.
In 2023, there were 34,495 online fraud cases reported, according to Bukit Aman’s commercial crime investigation department (CCID).
In the last four years, the CCID also reported a staggering RM1.4 billion in losses due to online fraud cases.
Samirul said social media accounts offering promotions, sponsorships and advertisements should be made to provide clear disclosures.
“This would enhance consumer trust by ensuring followers are aware of paid content,” he said, adding that these were examples of honest and ethical business practices.
For other types of social media content, having guidelines on the use of the intellectual property would protect creators’ rights, he added – noting that original content should be valued and respected.
Continuous engagement sessions with stakeholders must be held, including with local businesses, he also said.
“This inclusive approach allows local entrepreneurs and startups to voice their concerns and shape a regulatory environment that supports their growth and success,” said Samirul.
He was asked to comment on Putrajaya’s move, through internet regulator Malaysian Communications and Multimedia Commission (MCMC), to require licensing for social media platforms and instant messaging services, effective January 1.
On August 1, MCMC said it was in the process of holding stakeholder sessions to finalise a regulatory framework for the required annual licenses, which are aimed at curbing cyberbullying, scams and other illegal activities online.
Communications Minister Fahmi Fadzil has said the regulation applies only to service providers, not individual users.
Earning a living on social media
Meanwhile, Geoffrey Williams, founder and director of Williams Business Consultancy Sdn Bhd, argued against regulating individual users as it would discourage those who earn an income using social media platforms.
“Social media businesses and e-commerce platforms offer new business opportunities for millions of people, which are now available through these sharing economy platforms.
“Many people make good, legitimate income from these enterprises and it should be encouraged.
“They are generating income which is subject to tax, and as long as they pay tax, don’t break existing laws on content, and do not abuse their viewers and customers, there is no case for further regulations. The current law is already sufficient,” said Williams.
Carmelo Ferlito, chief executive officer of the Centre for Market Education, echoed a similar sentiment, saying if the government regulates users, it would create the impression that Malaysia practices closed market approaches.
“Specific regulations are often detrimental to the economy – they restrain development and create loopholes, among others. If any regulation should be applied to influencers, it should be just the application of current regulations.
“For example, influencers could have their own company or ‘Sdn Bhd’ and invoice their services through that, so they are subject to taxation.
“However, it must be kept in mind that enforcement and control of these activities will be quite complicated.
“The regulation proposed for social media platforms gives the impression that Malaysia is more interested in controlling rather than promoting businesses and entrepreneurship.
“Furthermore, online platforms are fluid and difficult to be subjected to a specific geographic place. I don’t think that the proposed regulation will be beneficial under any perspective,” said Ferlito.
Besides online scams, MCMC also received 9,483 reports of cyberbullying from January 2022 until June this year.
From now until December 31, MCMC will be holding engagement sessions with stakeholders, –including social media and messaging system providers – to establish a code of conduct and outline actions for non-compliance with the new licensing requirements.
Failure to comply with the licensing directive could result in charges under Section 126 of the Communications and Multimedia Act 1998, which carries a maximum penalty of a RM500,000 fine, five years in prison, or both.
Providers could also be fined RM1,000 for each day the offence continues. – August 7, 2024