Legislation is key to digital transformation

Creating the right legal landscape can help digital businesses to thrive, says DLA Piper

Tags: Banking and financeDLA PiperDigital transformationDigitisationUnited Arab Emirates
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Legislation is key to digital transformation Setting the right regulatory environment is essential to creating business confidence, says Burden.
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By  Mark Sutton Published  June 10, 2017

Digital transformation may be under way in the region, but more legislation in digital fields, and better awareness of the law governing these areas could provide an economic boost and spur greater development, according to law firm DLA Piper.

Speaking to .GOV at the company’s Middle East Tech Summit, Kit Burden, Global Co-Chair of DLA Piper’s Technology Sector, and Paul Allen, Regional Head of DLA Piper’s Middle East Intellectual Property & Technology Group, said that while developing legislation to manage the business environment has gained more attention from government in recent years, more efforts to create a strong legal framework for digital business could spur growth and increase confidence in regional economies.

“We’ve seen a great deal of growth and maturity from a legal perspective,” said Allen.

“We have been seeing stronger interest in the digital economy and regulation in relation to that digital economy. I think that government understands that businesses are looking for regulation in that space, businesses want to understand what they can and cannot do, and without regulation, it makes decision making more difficult.
“Data is a great example of that. We have seen around the region, new data laws come into effect. Government is realising the real potential value of data, and more regulation around that is emerging in this region, but it is already there in other parts of the world.”

Digital transformation has been a buzzword for several years, Burden noted, encompassing technologies such as cloud, Internet of Things, big data and so on, and organisations are now shifting into a phase of actual business transformation. New businesses are being formed based on digital technology and initiatives such as data sharing, and both the public and private sector are becoming more efficient and cutting costs through digitisation.

While the regulatory environment may be slightly behind, the government is playing a stronger role in innovation than the private sector in the region, Allen said, with programs such as Dubai’s 10X, smart cities and Happiness programs showing leadership from the government sector. This drive from the government to adopt new technologies, could be translated into an opportunity for the UAE to become a regional leader in new areas, if accompanied with an appropriate regulatory framework.

“We know that when the Dubai government says it wants to do something, then it moves towards that — I think that is very encouraging for the technology sector in terms of the types of opportunities that come up,” Allen said.

Initiatives such as Dubai government’s intention to deploy blockchain for all transactions from 2020 onwards are helping to build new communities around technology, he added, and point to future potential for areas such as FinTech. The UAE is already creating ecosystems with the legislation to support FinTech, with initiatives including Abu Dhabi Global Market’s RegLab (Regulatory Laboratory) and Dubai International Financial Centre’s The Hive FinTech accelerator creating environments where new ideas and innovations can be developed and tested within a more welcoming regulatory environment.

Governments can set the tone for innovation and technology ecosystems, Burden said, through the regulatory regimes that they implement: “One of the reasons why London became such a centre for the tech startup scene, was the fact that the Financial Conduct Authority and Prudential Regulation Authority were seen as being very light touch in terms of how they chose to apply regulation to the FinTech startups. They are allowing the community to develop [before they legislate].

“I wouldn’t underestimate the role that government can have to either encourage or be a drain upon development,” Burden added. “You could have a government which is very hands-off, you effectively do nothing, let industry and commerce do what it wants, that is fine. Equally you could do things like the German Federal Government, where they have introduced regulatory approaches in relation to data in particular, which are positively problematic, from the point of view of business. It is so difficult to deal with all of the requirements, it becomes obstructive.”

There have been a number of pieces of legislation in the UAE, Qatar and other countries in recent years that all impact on digital transformation, the pair noted. Digital payments, outsourcing, and data protection and privacy have all seen new laws put in place, and other areas such as cybersecurity could also benefit from legislation to build confidence in business and consumers to further drive digital transformation.

“Back in the late 1990s, with the commercial advent of the internet, the debate that was going on from a legislative perspective was ‘how do you create an online environment which people will put their trust and confidence in?’” Allen said. “If people don’t have trust and confidence in the online environment, then they won’t transact in it.

“At the time we saw new legislation, the first private sector privacy laws, the first cybercrime laws, the Electronic Transaction Act and distance selling regulations — all of these reforms were designed to encourage people to get into the online environment and to have trust and confidence in the online environment,” he added.

Allen said that government and industry need to work together to decide on how to approach legislation in areas such as cybersecurity, to enable future digital growth: “Today, if we want to foster and encourage innovation in the digital environment, what do we need to do around data protection and cybersecurity? Should it be something that is left up to the private sector to decide, or should the government have a role not just in protecting our citizens, but facilitating on a wider scale — that is the question.”

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