US firms warn vs data localization

The Philippine government's efforts to implement a data localization policy for national security purposes could backfire and ultimately hurt the economy, with billions of United States (US) dollars in potential investments at risk, according to an influential American business group.

- BY DEXTER BARRO II

Data localization refers to the mandatory storing and processing of data within the country where it originated, especially those involving highly sensitive information.

In an Oct. 30 position paper submitted to the Office of the US Trade Representative (USTR), seen by Manila Bulletin, the United States Council for International Business (USCIB) flagged ongoing developments in support of such a policy in the Philippines.

USCIB, whose members include multinational companies, law firms, and sectoral business associations, stated that there is "increased pressure" within the government to pursue data localization.

The industry group cited the appointment of Henry Aguda as Secretary of the Department of Information and Communications Technology (DICT), as well as the increase in investments in data centers, for intensifying the push for the policy.

USCIB said recent legislative developments have further exerted pressure for the realization of the measure, particularly with the signing of Republic Act (RA) No. 12234, otherwise known as the Konektadong Pinoy (KP) Act.