Regulating for a Digital Economy - Understanding the Importance of Cross-Border Data Flows in Asia

The world is experiencing unprecedented increases in connectivity and global data flows. This is underpinning the so-called fourth industrial revolution. Cross-border data access, usage and exchange is essential to economic growth in the digital age. Every industry - including manufacturing, services, agriculture, and retail - relies on data and on the global flow of that data. A number of studies have been published that highlight the scale and importance of cross-border data flows. While the economic and trade opportunity from connectivity and data flows are significant, governments are increasingly introducing measures which restrict data flows - data localization measures. Such measures will have economic and trade costs.Governments restrict cross-border data flows in order to achieve a number of objectives. The main goals of data localization are as follows: 1. Protecting or improving citizen personal privacy. 2. To ensure rapid access to data by law enforcement officials. 3. Protecting or ensuring national security.4. Improving economic growth or economic competitiveness.5. In order to level the regulatory playing field. The key focus for all government when designing regulation to achieve legitimate goals should be to manage risk - whether to privacy, from cyber-attack or the impact of delays to law enforcement agencies - to an acceptable level relative to the economic and social benefits, including innovation, expected from these activities. While it is up to each government to determine its acceptable level of risk, in most cases, data localization is sub-optimal in that there are ways to achieve legitimate regulatory goals with less impact on economic growth and trade