BANGKOK—Global companies are growing increasingly worried that Thailand’s recent clampdown on Internet traffic might drag down the country’s economic potential and make it more difficult to expand here.

Internet monitoring laws introduced four years ago were designed to root out online fraud and boost e-commerce in this tropical Buddhist kingdom. But critics say the legislation is being used to police the Web for political content. That is starting to alarm investors, including a key industry group that includes such global names as Google Inc., Yahoo Inc. and eBay Inc., many of which operate here.

The Internet has had a big impact in Thailand, which is Southeast Asia’s second-largest economy and a major hub for multinational investors. Thais can buy groceries and order pizzas online, and many also have taken to the Web to weigh in on the country’s coups, riots and other political upheavals.

Thai authorities say some people overstep the line and break the country’s strict laws prohibiting criticism of 83-year-old monarch King Bhumibol Adulyadej and his family. There’s been a jump in prosecutions in recent years, undermining the country’s democratic credentials, analysts and free-speech activists say.

The Internet industry is particularly worried about a case involving Thai webmaster Chiranuch Premchaiporn. Ms. Chiranuch, 44 years old, is on trial for allegedly violating Thailand’s Computer-Related Offenses Act by being too slow to delete antiroyal messages at a popular Web forum she runs. She faces 20 years in prison if she is convicted, and denies the charges against her.

Other businesses fear they, too, could fall end up in prosecutors’ sights, chilling the growth of online commerce.

“By holding an intermediary liable for the actions of its users, this case could set a dangerous precedent and have a significant long-term impact on Thailand’s economy,” the Asia Internet Coalition said recently. The group, based in Hong Kong was founded last year by Google, Yahoo, eBay, Nokia Corp. and Microsoft Corp.’s Skype unit to lobby on Internet policy issues around Asia.

“Changing the way the Internet works in Thailand by denying intermediaries the protections they are granted in most countries around the world could have a significant detrimental impact,” the group said, without quantifying the economic toll of the stringent laws. The member companies declined to comment beyond the coalition’s statement.

One provision of the Computer-Related Offenses Act requires companies to collect and store computer traffic for 90 days. “The hardware and software required to store all computer traffic would be extremely costly,” said Sawatree Suksri, a professor of Internet and media law at Bangkok’s Thammasat University.

Some chambers of commerce in Thailand hold private briefing sessions about the risks involved in conducting any kind of online business here.

“It’s deeply ironic that a law whose stated aim is to create stable e-commerce environment is achieving completely the opposite result,” said Tyrell Haberkorn, a research fellow at Australian National University in Canberra who follows Internet issues in Southeast Asia.

Songkran Taechanrong, a spokesman at the Ministry of Information and Communications Technology, defended the use of the law and played down its economic costs. The law, he said, “defends against criminal activity such as credit-card fraud, and this helps promote online business.”

Thailand’s complex relationship with the Internet is mirrored across other parts of Asia as governments look for ways to cope with more people going online. As broadband connections and mobile Internet services spread, countries such as Vietnam and China frequently block access to social-networking sites such as Facebook and the Twitter microblogging site.

A former U.S. ambassador to Hanoi, Michael Michalak, warned in 2009 that restricting Facebook could disrupt mushrooming commerce between business people in Vietnam and the U.S. Other countries, such as Malaysia, take a different approach by eschewing Internet-specific statutes but invoking other sedition laws to regulate what happens online.

Thailand, though, has struggled more than most to come to grips with the Internet. Once a beacon for democracy in Southeast Asia and one of the oldest treaty signatories with the U.S., Thailand in recent years has seen a wave of political unrest.

The success of populist politicians—such as former leader Thaksin Shinawatra and his youngest sister, current Premier Yingluck Shinawatra—has increased tensions in a country where military leaders and royalist civil servants traditionally held sway. Both sides have used the Internet to win hearts and minds as they debate Thailand’s direction.

Political analysts said the country’s political and military leaders are competing to demonstrate loyalty to King Bhumibol by prosecuting people who allegedly post critical comments online, even though the king himself has said Thais should be able to discuss the role of the monarchy without fear of arrest.

Ms. Yingluck’s recently elected populist government is stepping up prosecutions under the country’s laws governing computer crimes and lèse-majesté, or crimes against the sovereign. Deputy Prime Minister Chalerm Yubumrung is heading a new 40-member “war room” to monitor antiroyal messages conveyed over the Internet. Government officials also are training online monitors to flag any disrespectful comments they find while surfing the Web.

The country’s attorney general’s office sent 36 lèse-majesté cases to prosecutors last year. That was double the number sent to court in 2005.

A former government official, Jakrapob Penkair, fled the country to avoid prosecution under the law while a Thailand-born American, Joe Gordon, has been charged for, among other things, posting a link on his blog to a banned biography of King Bhumibol. He has denied the charges.

Some 75,000 websites were blocked last year, 57,000 of them for containing material considered disrespectful to the monarchy, according to i-Law, a local group which monitors Internet censorship in Thailand. In 2007, when Thailand’s dragnet ramped up sharply, officials blocked YouTube after some users posted videos making fun of King Bhumibol.

The number of people accused of violating the Computer-Related Offenses Act by allegedly using the Internet to spread antimonarchy sentiments is stacking up, too.

Police last week arrested local computer programmer Surapak Phuchaisaeng for posting allegedly defamatory comments about the monarchy on his Facebook page. Mr. Surapak, who hasn’t been charged, has denied insulting King Bhumibol.

“There’s a real sense among people that they are being watched, and it’s changing the way people look at the Internet,” said Prof. Haberkorn, of Australian National University.

James Hookway at [email protected]

Clouds Looming Over New Computer Crimes Act

The proposed new Computer Crimes Act, which will supersede the 2007 Computer Crimes Act, has been introduced in an attempt to fill loopholes in the current legislation.

The new draft is aimed at those who perpetrate offenses and who have previously evaded liability. But there are concerns over whether the new law would be overly zealous in handing out harsh punishment to all offending parties, regardless of the severity of the crime involved.

Although the draft Act has similarities to the current Computer Crimes Act, there are new key sections that have been introduced, including definitions for “system administrator” and “Board” under Section 4. There have also been important additions to Sections 16 and 25 of the law, which detail offenses relating to any person who is found to be copying another person’s computer data and the penalties for possessing child pornography.

Section 16 of the draft has caused particular concern among the media, service providers, webmasters, companies, and even students, university professors, and other users because it stipulates that “copying” another person’s computer data will now be deemed a criminal offense.

This article analyzes Section 16 and highlights the possible repercussions of the proposed additions.

Section 16 of the draft provides that “any person who copies another person’s computer data illegally, in a manner that is likely to cause damage to such other person, shall be punished with imprisonment of not more than three years, or a fine not more than 50,000 baht, or both”.

The definition of “computer data” refers to data, statements, or sets of instructions (including electronic data) that are contained in a computer system, the output of which may be processed by a computer system, according to the Law of Electronic Transactions.

But the draft does not provide a definition for “copying”. As a result, “copying” could be interpreted to mean copying data, materials, or downloading a file from the internet, regardless of whether such material is copyrighted. Even accessing the internet and having temporary storage caches in a computer without consent could be deemed an offense. Such copying offenses will carry a maximum penalty of three years’ imprisonment.

The provision of Section 16 in regard to “illegally copying another person’s computer data, in a manner that is likely to cause damage to another person” is relatively broad in terms of its interpretation of the scope of an act that is “likely to cause damage”.

Copying or downloading text materials or images from the internet would seem to be a common everyday occurrence. Under the Thai Copyright Act, if materials or images are copyrighted, any copying or downloading of such materials or images from the internet will be regarded as reproduction, which requires permission from the copyright owner. Otherwise, it will be regarded as an infringement of the exclusive rights of the copyright owner.

But the Thai Copyright Act acknowledges certain exceptions, including the fair use exception for infringements such as “research or study of the work, which is not for profit” or “reproduction, adaption, exhibition, or making available such materials by a teacher for teaching purposes, when not done for profit”. The fair use exception can be applied provided that:

1. Such use of the copyrighted work does not conflict with normal exploitation of such work by the copyright holder; and
2. It does not unreasonably prejudice the legitimate interests of the copyright holder.

The definition of a “system administrator” in the draft Act refers to a person “who has the right to access computer systems which provide services to permit others to access the internet, or to enable parties to connect by means of a computer system, regardless of whether this administration is for his or her own benefit or for the benefit of other persons.”

Internet service providers usually set up their automatic backup proxy servers when providing internet services to users. When accessing web browsers, the servers or computers will temporarily store information to allow quicker access to the internet. By having the information stored temporarily in such caches, the system administrator can unknowingly cause damage to other persons, and thus could face liability under Section 16, even without intending to use or knowing that the information is stored in the caches. The system administrator that is responsible for the computer system would face half the penalty under Section 16, which is an imprisonment term of 18 months, a fine of 25,000 baht, or both.

Under the provisions of Section 16 and the definition of “system administrator”, any user, internet service provider, or system administrator who has previously enjoyed copyright exemption could now be held liable under the new proposed draft.

It is likely that Section 16 will require further clarification before its promulgation, particularly the definition of the term “copying” and the scope of actions that will be specifically deemed an offense under the new Computer Crimes Act.