* Malaysia to look at other ways of policing the Net.
* Earlier plans for Internet filter shot down by PM
* Fears filter could have been aimed at Opposition
By Niluksi Koswanage and Razak Ahmad
KUALA LUMPUR, Aug 12 (Reuters) - Malaysia's government on Thursday said it would seek other ways of curbing "the spread of lies and seditious materials" online after earlier plans for an Internet filter were apparently scrapped.
A source had earlier told Reuters the government was cancelling a tender for Internet filter that drew comparisons with China's "Green Dam" project and triggered an outcry from opposition politicians as well as criticism from industry bodies.
Information Minister Rais Yatim dismissed reports of any Internet filter, saying that three ministries have been asked to study alternative means of policing sedition, fraud and child pornography on the Internet.
"They have been tasked to look into the matter and report back on finding a better approach in solving the matter," Rais told reporters in country's administrative capital of Putrajaya.
Earlier, the Malaysian Communications and Multimedia Commission, which issued the tender, said it was a study on Internet usage so as to boost Malaysian content on the Internet and that reports of a filter were "sensationalised".
But a copy of the tender documents, seen by Reuters, appeared to contradict that statement.
The documents said the proposal was to: "Evaluate the readiness and feasibility of the implementation of the Internet filter at (the) Internet gateway level."
It would study gateway filters in countries that had implemented such measures and "find out (their) suitability for the Malaysian environment".
"The tender is going to be cancelled," said the source, who had direct knowledge of the tender but declined to be identified due to the sensitivity of the issue.
The Information Ministry came up with the proposal for the filter in April, but the idea was apparently blocked by Prime Minister Najib Razak, the source added.
Malaysia wants to double broadband usage to 50 percent of its 27 million population by the end of 2010.
That could bring more people not only into potential contact with pornography but also with the country's opposition. Last year, the opposition handed the government its biggest-ever losses in elections, spreading its messages via the Internet to get around Malaysia's generally pro-government mainstream media.
China backed down on its "Green Dam" software, which it said was aimed at halting the spread of pornography, under pressure from the U.S., human rights and industry groups.
News of the Malaysian Internet tender emerged after the government arrested almost 600 people in an anti-government protest earlier this month.
It raised concerns that the government would crack down on the Internet, a popular medium for voicing criticism of the National Front coalition that has ruled this Southeast Asian country for 51 years.
The firewalls, which the source said could have been introduced six to eight months after the study was completed at the end of this year, could have cost in the region of 200 million Malaysian ringgit ($57.01 million) to implement.
The issue of unfettered access to the Internet is important economically for Malaysia, which has attracted investment from technology companies with promises not to censor.
Its Multimedia Super Corridor, set up in 1996, attracts investments worth 1.6 billion ringgit ($458 million) annually, according to industry data.
Najib has announced a series of economic liberalisation measures to attract foreign investment and diversify Asia's third-most trade dependent economy away from its reliance on electronics and commodities exports.
He said last week that filters were not effective.
Boosting banking, finance and the knowledge economy, all of which are helped by fast Internet connections, are key planks of Najib's economic strategy.
($1=3.508 Malaysian Ringgit)