State-Sponsored Economic Cyber-Espionage for Commercial Purposes

The Australian Strategic Policy Institute (ASPI) has launched the world’s first capacity-building initiative dedicated to raising awareness about the threat of economic cyber-espionage in key emerging economies across the Indo-Pacific and Latin America.

Through a series of research reports, case studies, and learning materials, this initiative highlights how economic cyber-espionage is not just a concern for advanced economies—it is a growing risk for emerging economies like India, Brazil, and Indonesia, which are rapidly digitizing their industries.

Download report.
Download report.
Download report.

What is Economic Cyber-Espionage?

Economic cyber-espionage refers to the state-sponsored theft of intellectual property (IP) via cyber means for commercial gain. As nations undergo digital transformation, securing knowledge-based industries is critical for economic security. However, many countries—especially those with lower cybersecurity maturity—are increasingly vulnerable to cyber-enabled IP theft.

In the modern economy, local businesses that trade internationally, critical national industries, and start-ups as well as universities, research and development organisations and public services rely on secure data, digital communications and ICT-enabled systems and applications.

But trust and confidence in the digital economy is threatened by the practice of some states that deploy offensive cyber capabilities against industries, organisations and individuals in other states. Those who operate in environments with lower levels of cybersecurity maturity are particularly vulnerable to fall victim to cyber-enabled theft of intellectual property.

Project Activities and Findings

This project has included a series of workshops and engagements in India, Southeast Asia, and Latin America, bringing together officials and experts to discuss cyber threats that endanger national economies and innovation sectors.

For this project, ASPI has also published three reports, which can be downloaded on the right.

  1. State-sponsored economic cyber-espionage for commercial purposes: Tackling an invisible but persistent risk to prosperity (2022): Highlights how state-sponsored cyber-espionage has intensified, with more targeted industries and universities now based in emerging economies
  2. State-sponsored economic cyber-espionage for commercial purposes: Assessing the preparedness of emerging economies to respond to cyber-enabled IP theft: Evaluates the readiness of 11 emerging economies—including Argentina, Brazil, India, Indonesia, Malaysia, Mexico, the Philippines, Thailand, and Vietnam—to counteract cyber-enabled IP theft.
  3. State-sponsored economic cyber-espionage for commercial purposes: Governmental practices in protecting IP-Intensive industries: Reviews how governments around the world are responding to the threat of economic cyber-espionage and considers how states are employing, among others, legislative, defensive, and reactive measures.

On 15 November 2022, ASPI also issued a Briefing Note recommending that the G20 members recognise that state-sponsored ICT-enabled theft of IP remains a key concern for international cooperation and encouraging them to reaffirm their commitment made in 2015 to refrain from economic cyber-espionage for commercial purposes.

Videos and Podcasts

Explore the videos and podcasts we have produced to help you make sense of economic cyber-espionage.

Project Team

This team is led by CTS Deputy Director Bart Hogeveen and CTS senior analyst Dr. Gatra Priyandita. We thank the support and contributions of other serving and former ASPI staff, including Urmika Deb, Dr. Ben Stevens, Dr. Teesta Prakash, and Shivangi Seth. This project involved input from researchers from across the world, including those in South Asia, Southeast Asia, and Latin America. We thank them for their contributions.

Blake Johnson

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Stepping up military support to humanitarian assistance in the Pacific

On October 3 the South Pacific Defence Ministers Meeting (SPDMM) endorsed the establishment of the Pacific Response Group (PRG), a novel multinational military cooperation initiative that will seek to address the need for more efficient and effective cooperation between Pacific militaries to deliver military support to Humanitarian Assistance and Disaster Relief (HADR).

In the coming years, the PRG will have to address challenges surrounding the potential expansion of the group and its mission, including into areas like stability operations, and Australia will need to commit greater resources to ensuring that it successfully adapts to the region’s needs. It is important that the thinking, consultation and some of the planning for that starts now.

Any decisions regarding the PRG will be made by SPDMM members as a collective, but each member state will have its own perspectives on the group’s development. This report provides 12 recommendations focused on areas including resourcing, encouraging a whole-of-government support, and expansion of the group in size and in scope. The report is intended to inform policymakers in Australia as a contributing member of the PRG, but many of the recommendations could also be valuable for, and hence adopted by, other members of the group.

A summary of the recommendations contained in the report are as follows:

Recommendation 1: PRG members states should consider the need for an expansion of the PRG beginning as soon as the 2025/2026 high risk weather season and must be able to deal with concurrent disasters.

Recommendation 2: The end goal of the HADR component of the PRG should be dedicated forces from each military able to be readily deployed in immediate response to natural disasters in the region.

Recommendation 3: PRG member states should consider ways it can guarantee capabilities for PRG use in the high-risk season from Australia, New Zealand and France for much needed transport, including maritime and air assets.

Recommendation 4: The Australian government should acknowledge that the PRG is not designed to address all of Australia’s domestic HADR demands so should consider other solutions to bolster its domestic disaster response.

Recommendation 5: The Australian government should consider how a whole-of-government approach can actively coordinate across departmental initiatives so that the PRG, and other initiatives, can make the best contribution to regional environmental security concerns.

Recommendation 6: SPDMM member states participating in the PRG should address the potential for the inclusion of police units or paramilitary from countries such as Solomon Islands and Vanuatu in the future.

Recommendation 7: The PRG should think ahead and consider outlining a role for SPDMM observers such as Japan, the UK and the US in supporting the group without changing its core makeup. This could include financial support for transport, maintenance or infrastructure and supplies.

Recommendation 8: Australia should be willing and ready to support the expansion the PRG mission as desired by its member states to address instability through a coordinated multilateral response, provided this is desired by other members of SPDMM.

Recommendation 9: If there is an expansion of the mission to include stability operations, Australia should lead the way in the development of a multilateral security agreement that formalises the PRG’s approach to stability operations in any SPDMM member state.

Recommendation 10: Together, PRG members should publicly push-back against any narratives that suggest this initiative is competition driven and remind other states that successful security initiatives inevitably lead to a reduced need for other external support. Australia should also be more transparent about its concerns with a greater Chinese security presence in the region.

Recommendation 11: Australia should encourage some of the region’s key partners to support the PRG with supplies, funding and – if needed – additional vessels and aircraft for transport.

Recommendation 12: If, in the future, the PRG is requested to support alongside Chinese security forces, Australia must combat potential narratives pushed by China of welcome cooperation and partnership between Australia as a PRG-member and China in the region that legitimise a Chinese security presence while respecting the sovereign decision making of recipient countries.

Regional security and Pacific partnerships: Recruiting Pacific Islanders into the Australian Defence Force

The security and stability of the South Pacific and Australia are deeply intertwined. Australian Government policies have for more than a decade consistently prioritised the Pacific for international engagement, including in defence, development and diplomacy. The Australian Government’s ‘Pacific Step-up’, first announced in 2016, delivered a heightened level of effort by Canberra in the region, as did Australia’s strong support for the Pacific Islands Forum’s Boe Declaration. The Albanese government’s increased policy focus on the region, and on a coordinated whole-of-government approach to the Pacific, demonstrates the centrality of our immediate region to the Australian Government’s strategic planning.

Australia’s 2023 Defence Strategic Review (DSR) outlined the need for innovative and bold approaches to recruitment and retention in the Australian Defence Force (ADF), which is seeking to grow by 30% by 2040 but is not yet hitting existing recruitment targets. Budget figures released for 2023 show that ADF personnel numbers dropped by more than 1,300, or more than 2% of the total force. The Budget projections for 2024 to 2026 indicate that the government requires more than 6,000 additional personnel—in addition to replacing those lost through attrition in the next three years—to meet stated growth requirements. In the context of a competitive recruitment environment in Australia, especially for skilled labour, that trend indicates that the Defence organisation will struggle to meet forecast requirements using existing recruitment options and will need to seek alternatives. This challenge of competition for talent and to retain skilled workers is not limited to defence nor Australia. It is an economy wide issue, and global.

As a result, there has been an ‘on-again, off-again’ public debate about whether the Australian Government should consider the recruitment of foreigners into the ADF, with a specific focus on Pacific islanders. Obviously, such an initiative could help the ADF’s recruitment numbers, but, importantly, it could open up economic, skills and training opportunities for Pacific islanders. It could also provide a powerful cultural and practical engagement opportunity for the ADF, while also providing Australia with avenues to help shape the region’s security environment in positive and culturally relevant ways. Such recruitment—especially if it involves bilateral agreements between governments—would also put Pacific Island governments in a unique position to inform Australia’s security assessments and contribute to shared outcomes. Those outcomes could include enhanced regional interoperability, especially for humanitarian assistance and disaster relief (HADR) and supporting combined stability operations, and stronger two-way cultural and social engagement, bolstering familiarity and understanding between the ADF and Pacific Island countries (PICs). There are, of course, arguments against such recruitment. For example, the recruitment of Pacific islanders to fight for Australia could be viewed by some as ‘colonialist’ in a region understandably sensitive to that history. But this concern could be addressed through PICs retaining agency through bilateral arrangements. In addition, any scheme seeking to relocate workers to Australia could be seen as taking skills from a much smaller nation, and risking brain and skills drains. We look at these, and other, considerations in this report.

Below, we identify and assess the key recruitment and retention problems faced by the ADF that foreign recruitment, particularly the recruitment of Pacific islanders, may help to resolve. Our report then delves into various arguments for and against the recruitment of Pacific islanders into the ADF including background information that contextualises the current debate. Ultimately, there are many benefits to opening up pathways for Pacific islanders to serve in the ADF, with the clear caveat that any process to formally establish a program must be culturally and politically sensitive, be informed by detailed risk and impact assessment, and have strong monitoring and evaluation mechanisms in place.

We then explore three options for the recruitment of Pacific islanders:

  1. Direct recruiting from the Pacific region into the ADF
  2. Closer integration and operation between existing Australian and PIC forces
  3. A broader partnership model drawing on lessons from the US’s ‘compacts of free association’ and from the UK’s defence recruitment initiatives.

We analyse key impacts that those options may have, both in the Pacific and for the ADF. The potential policy options offered aren’t exhaustive. However, they are plausible and represent different approaches (which could be combined) to achieve outcomes related to ADF recruitment and retention as well as to improved regional collective security.

A critical consideration in developing these options was a two-way flow of benefit: from the Pacific to Australia and from Australia back to the region. For example, we recommend that, where possible, Pacific recruits receive focused training in HADR, which would help build sovereign PIC capabilities and facilitate the application of learned skills upon recruits’ return to their home countries.

An important part of this research was ensuring that PIC military and security personnel were engaged and could feed into and shape the development of this research report, including the three options put forward for potential recruitment. This occurred in multiple ways. We collected feedback and perspectives through a dedicated roundtable discussion, in a series of interviews and then during the research process to ensure that this report was informed by regional, cultural and local considerations (see details regarding some of that data collection on page 16). The report captures five specific insights from the Pacific island military and security community that are relevant in considering the implementation of any of the three recruitment options.

Finally, we acknowledge that further research is needed to resolve the complexity of some of the policy and legal issues associated with the options suggested. We nominate some specific areas that warrant further investigation.

Smooth sailing? Australia, New Zealand and the United States partnering in–and with–the Pacific islands

Australia, New Zealand and the United States should help create an ASEAN-style forum for Pacific island nations to discuss security and manage geopolitical challenges.

The call for a dialogue, modelled on the ASEAN regional forum, is one of several recommendations to improve security partnerships and coordination in the region, reducing the risk that the three countries trip over one another and lose sight of the Pacific’s own priorities as they deepen their Pacific ties out of strategic necessity amid China’s growing interest.

While focussing on those three countries, this report stresses that wider partnerships should be considered, including with France, India, Japan, South Korea, the United Kingdom and European Union.

The report states that the three countries will have to get used to greater Chinese involvement in the Pacific, even if they don’t accept it, much less like it.

ICT for development in the Pacific islands

Information and communication technologies (ICTs) as an invisible driver of socio-economic change have long captured the imagination of politicians, policymakers and aid professionals alike. 

Since the first fibre-optic submarine cable connected Fiji 20 years ago, many reports and studies have been written about the potential that the introduction of ICTs in the South Pacific would bring for reaching targets of poverty reduction and economic growth. 

The internet, mobile devices and e-commerce have already penetrated the Pacific, configured to the political, economic and sociocultural context of the various island nations. 

This report takes a step back and zooms in on one aspect of that digital revolution: e-government. 

E-Government is defined as a set of capabilities and activities that involves the use of ICTs by government to improve intragovernmental processes and to connect with citizens, businesses and industry. 

Fiji was the first island to get linked up to the global network of submarine communications cables in 2000. In 2020, all major islands in the region are connected through one or more domestic and international fibre-optic cables. The region is connected. 

This report finds that the potential of ICTs to enable stronger governance, effective public service delivery and better government services is there. In all countries that are part of this study, critical foundational infrastructure is in place: 

  • Government broadband networks that connect departments, schools and hospitals have been established.
  • Central government data centres have been built, public registries are being digitised, and the introduction of national (digital) identities is currently being considered.
  • All Pacific island states have introduced relevant strategy and policy documents and have reviewed, or are currently reviewing, legislation related to data-sharing, cybersecurity and universal access.
  • All islands have an online presence that is steadily professionalising. Government (information) services are increasingly provided online, along with tourism information, fisheries data, geological data and meteorological forecasts. 

But there’s still a lot to be unlocked. 

Increased internet connectivity, the availability of mobile devices and online services and access to information are creating a greater demand from users to their governments. International donors similarly focus on the delivery of ‘digital aid’, using ICTs to provide international assistance more efficiently and effectively. 

This report asks the following questions: 

  • What capabilities have been established and are in place?
  • What are the current policy issues?
  • What can the international (donor) community do to enhance its support for the digitisation process of the Pacific island governments? 

The report reaches five main conclusions for the implementation of e-government and digital government initiatives, and it concludes with four recommendations for future programming of international support in the area of ICTs and e-government.