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Thailand faces economic costs of social media censorship

Vision of vibrant '4.0 economy' could founder amid official crackdown on internet freedoms

| Thailand
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Student activists are detained during a silent protest after Thailand's election commission filed charges against a group for posting "foul and strong" comments online criticising a military-backed draft constitution, in Bangkok on April 27.   © Reuters

Recent moves by Thailand's military-backed government to tighten controls over social media are as much an international investor issue as a domestic political concern. Since it seized power in May 2014, the government of Prime Minister Prayuth Chan-ocha has frequently encroached on basic rights and has challenged dissenting voices, sometimes detaining people for days under the pretext of "attitude adjustment." But as the digital era has gained momentum, the junta has increasingly trained its sights on social media.

The most alarming harbinger of more tensions ahead centers on the government's current showdown with Facebook over more than 300 posts it deems sensitive to the country's monarchy, in violation of the country's Computer Crimes Act and lese-majeste law. So far, Facebook has complied with 178 of the 309 requests to remove content, demanding a court order in each case. While the government's battle with social media sites is unlikely to end there, the chilling effects on business operations have begun to reverberate in the form of cost considerations and perceptions of a growing Thailand risk premium.

Amid increased regional competition for foreign direct investment, the junta must learn that host countries must balance their local-specific practices with international norms and standards if they want to be seen as a competitive investment venue. Recent government efforts to remove sensitive material from digital platforms have taken the level of social media control to new heights. Attempts to block Facebook or to seek out and warn people who merely view prohibited social media content send alarming signals to investors, particularly those who are keeping a close watch on the progress of Thailand's digital economy.

Not only could these official actions be considered arbitrary, and lacking transparent enforcement mechanisms, censoring information flows is also counterproductive for innovation and knowledge generation -- the very mechanism that the government itself has acknowledged is essential to transform Thailand into its "4.0" vision of a digitally advanced society. Indeed, extreme measures to censor social media, like the recent announcement by the Central Investigation Bureau chief that his police force will use technology to identify viewers -- even if they do not leave comments on forbidden web pages -- could backfire on the government's drive to gain more investor confidence and investment.

To justify the continuation of its rule, the military regime claims that the peace and stability restored since it seized power on May 22, 2014 contributes positively to othe country's economic environment. To support this claim, Thailand's economic growth rate of 2.9% and 3.2% in 2015 and 2016 is often compared to the 0.7% recorded in 2014 when the administration of former Prime Minister Yingluck Shinawatra was in power and street protests were rampant. Despite being the slowest growing economy in Southeast Asia, Thailand's officials often emphasize that the country is still growing, albeit at a slower pace.

A less obvious but important issue is the decline of inward foreign direct investment that has hit Thailand in recent years. Its contribution to the economy, as measured by percentage of inward FDI to gross domestic product, has been sliding steadily. Within a decade since 2006, when the coup preceding the May 2014 takeover occurred, the ratio has slid, reaching new lows of less than 1% in 2014 and 2016. As much as the government would like to claim that Thailand remains welcoming to foreign investment as usual, the figures suggest that investors may think otherwise. This shows how Thailand's protracted political conflicts incur serious economic costs.

It is no surprise therefore to see the country slipping in its global competitiveness ranking. The World Bank's 2017 country report sent a strong message that within a single decade, Thailand lost its status as a target country for foreign investment in the region and has become just another option for investors. On top of conventional risk factors like political instability, corruption, and the country's southern conflict, the latest World Economic Forum's executive opinion survey identified more urgent concerns such as insufficient capacity to innovate, inefficient government bureaucracy, and policy instability as among the top 10 obstacles to doing business in Thailand.

These results go against the country's 4.0 vision, the 20-year national strategy announced in July 2016, in which knowledge-based and higher value-added activities are supposed to drive the economic engine, in place of the more basic agriculture (categorized as "1.0"), light manufacturing (2.0), and heavy manufacturing (3.0). To achieve that goal, Thailand cannot simply rely on a myriad of tax incentives, its Eastern Economic Corridor project to create clusters of the 10 targeted industries, or its new scheme of special economic zones along the border to attract foreign investors.

More important to foreign multinational enterprises are factors that induce them to locate their higher value-added investments in Thailand. If Thailand wants to move from a resource-driven economy to one led by efficiency and innovation, its political and economic environment should accommodate that vision.

A knowledge-based economy requires a healthy and dynamic environment that can enable a country's transformation into a digital society. Likewise, an innovation-fostering environment is not one characterized by a climate of fear, but one that is supportive of critical thinking and constructive debates. The junta's increasing intolerance toward social media and freedom of expression however is going in the opposite direction, in effect deterring creativity and innovation.

The scope of the risks involved is not restricted to social media platform operators alone, but extends to other businesses in general

On top of these philosophical rationales lie tangible liabilities that would accompany increased social media censorship. The scope of the risks involved is not restricted to social media platform operators alone, but extends to other businesses in general. First, the junta's hypersensitivity toward an internal, Thailand-specific issue that might not be commonly understood elsewhere makes it more difficult for social media platform operators to understand where to draw the line.

The Thai government's recent foray against Facebook is not directed against content internationally condemned as offensive , such as live suicide, child pornography, or do-it-yourself bomb construction. Rather, the junta's main targets in its social media campaign are those deemed insulting to the country's revered institution of the monarchy, a crime under Thailand's strict lese-majeste law.

While Article 112 of Thailand's criminal code, also known as the lese-majeste law, has been adopted since the first criminal code was penned in 1908, the recent surge in the number of charges -- reaching 68 since May 2014 compared to an average four to five cases per year during 1990 to 2005, along with the severity of the penalties, with the 15-year maximum jail term comparable to manslaughter, has raised international concerns. For social media platform operators, removing all content deemed inappropriate by the junta borders on complying to the most draconian forms of censorship of users.

On a more practical level, monitoring Thailand's 47 million active Facebook users would be technologically complicated and financially cumbersome, not to mention the risk of setting a disturbing precedent for other authoritarian regimes. Having to tread a very fine line of content censorship increases operational risks for social media platform operators, especially ones whose fundamentals and competitiveness are based on open connectivity and transparency.

Second, social media censorship creates deadweight costs for all internet-active businesses-large and small, foreign and domestic. Investments need to be made in hardware and software to comply with restrictive laws in monitoring content posted by their own personnel, their customers and users. In legal challenges, there are daunting expenses to engage in costly court battles that also negatively affect a company's corporate image and brand names. These scenarios are already untenable in normal business circumstances, and even more nightmarish in the digital era in which such resources could otherwise be used to invest in creating more value.

Proponents of such a strong-hand approach to social media censorship may argue that such restrictions do not apply to people and businesses that abide by the law. Nevertheless, Thailand's leaders should realize that going against data flows and freedom to publish online in the age of information globalization is tantamount to a soldier standing tall in fluorescent uniform on a vast battle field -- it increases costs and invites risks. If Thailand wants to remain economically competitive, managing political concerns should not defy economic realities. The lesson here for the country's rulers is that political repression does not engender growth and innovation.

Pavida Pananond is associate professor of International Business at Thammasat Business School, Thammasat University in Bangkok.

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