Steven Gan, editor-in-chief of Malaysiakini.com, said the plans - which require site operators to obtain new licences - will effectively silence the only dissenting voices in a country that rigidly controls its media.
Speaking at a conference in Australia, Mediating Human Rights and Democracy, Mr Gan described how the government has used a printing press act from 1984 to shut down newspapers, withdraw publishers' licences and indefinitely arrest anyone violating the law. In 1987 four major newspapers were shut down.
Now the government wants to extend the act to the internet, requiring site publishers to apply for licences which are handed out purely at its own discretion.
Mr Gan attributed the move to Prime Minister Mahathir's drive to attract foreign high-tech corporations into a multimedia corridor just outside Kuala Lumpur.
Malaysiakini.com has been subjected to a 'concerted attack' from the government via mainstream newspapers and TV, according to Mr Gan. He also attributes a sudden drop in advertising revenue to political pressure.
"We scoop the mainstream papers nearly every day," he said. "They come to us for their stories."
www.Malaysiakini.com
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