Impacts of data localization policies and lessons for Bangladesh

Abstract

The emergence of digital technologies, especially the Internet, has led to a significant increase in digital data covering all aspects of human life. The expansion of digital data entails enormous benefits but raises serious concerns about data privacy, data security, and data protection. In response to these challenges, some governments attempt to implement data localization policies, which restrict data transfer to particular countries, regions, or territorial jurisdictions. The rationales behind the implementation of these policies are often rooted in the belief that they would ensure the preservation of national sovereignty, security, public interest, and data protection.1 This stance reflects concerns surrounding US-led surveillance programmes implemented globally. Growing anxieties about potential US government access to user data through major tech companies like Alphabet, Amazon, Apple, Meta, Microsoft, and Yahoo have led to scepticism among some foreign governments. This concern has eroded trust in the services provided by these companies, prompting some foreign leaders to re-evaluate their reliance on them. In 2013, a Guardian report demonstrated that the National Security Agency (NSA) of the USA and the Government Communications Headquarters (GCHQ) of the UK, along with their foreign allies, continuously monitored people’s data under the guise of law enforcement.2 In 2015, Amnesty International and Privacy International compiled a list of 10 surveillance programmes led by the USA and its allies, which constantly monitored people around the world and processed data about them.3 Even though governments worldwide increasingly block cyberspace over concerns about privacy, data security, effective surveillance operations, and domestic law enforcement grounds, this approach does not effectively safeguard data privacy and security. However, data localization policies in the legal regime of Bangladesh could have adverse consequences, negatively impacting local trade, businesses, productivity, and the prices of products and services that are heavily reliant on digital data. Specifically, adopting data localization measures might weaken Bangladesh’s capacity to leverage digital data and technologies for national growth and development. The recent economic analysis conducted by the Information Technology and Innovation Foundation (ITIF) reveals that the implementation of restrictive data policies in countries like Bangladesh, Hong Kong, Indonesia, Pakistan, and Vietnam would result in a significant increase in import costs and a reduction in trade volumes, thereby undermining the overall economy. These policies pose a lose–lose situation particularly for Bangladesh, negatively impacting its economic interests.4 Given the current circumstances, there exists an urgent necessity to conduct a comprehensive and econometric study on the implications of data localization policies in Bangladesh to determine the appropriate course of action. This article seeks to make a significant contribution to the ongoing policy discourse surrounding data localization requirements and their potential consequences. It also aims to provide a comprehensive overview of data localization policies and their broader economic impacts, both in Bangladesh and in other relevant economies. The findings of this study will be highly valuable to policymakers, businesses, and academics in Bangladesh and beyond. Bangladesh and other countries with similar data privacy concerns can use the lessons learned from this analysis to develop their data protection frameworks. This article is structured as follows: The section ‘Data localization: Meaning, history, and rationale’ explains data localization policies, including their meaning, history, and rationales. The section ‘Data localization policy in Bangladesh’ details data localization policies in Bangladesh, while the section ‘Overall impacts and lessons learned’ examines the overall impacts of data localization policies in Bangladesh. The section ‘Alternatives to data localization’ proposes alternatives to data localization policies, and finally, the section ‘Conclusion’ offers a precise conclusion.