Microsoft president Brad Smith has warned companies are no longer comfortable storing customer data in Australia after the introduction of controversial encryption laws.

Key points: The Government last year passed laws to give intelligence agencies greater access to encrypted data

The Government last year passed laws to give intelligence agencies greater access to encrypted data But the technology industry has described them as overreach that will undermine privacy

But the technology industry has described them as overreach that will undermine privacy Brad Smith said it was in the Australian Government's interest to ease concerns about the legislation

Mr Smith told a Canberra audience the laws are too vague and are damaging the Australian technology industry and broader economy, as businesses raise concerns about privacy and look to overseas markets.

"When I travel to other countries I hear companies and governments say 'we are no longer comfortable putting our data in Australia', so they are asking us to build more data centres in other countries," Mr Smith said.

Late last year, with the support of the Opposition, the Coalition passed laws to give intelligence agencies greater access to encrypted messages sent by suspected criminals.

In some cases, these security agencies can demand companies build new capabilities to allow them to read the otherwise hidden messages.

The Federal Government argues these laws are crucial to combatting terrorism and serious crime, but the technology industry has described them as an overreach that will hurt the industry and undermine privacy.

Mr Smith said Australia had developed a reputation as a destination for companies to store customer data, although that been undermined in the past six months.

"We will have to sort through those issues but if I were an Australian who wanted to advance the Australian technology economy, I would want to address that and put the minds of other like-minded governments at ease," he said.

"It has not changed, to date, anything that we have had to do in Australia but we do worry about some areas of the law in terms of potential consequences."

Microsoft worried about privacy in Australia

Mr Smith said he did not believe the laws intended to create a so-called "backdoor" that would undermine encryption technology, but described the legislation as vague.

"There is this wonderful phrase about enabling companies to avoid creating a systemic weakness but that phrase is not defined," he said.

"Until it is defined I think people will worry and we will be among those who will worry because we do feel it is vitally important we protect our customer's privacy."

Mr Smith said it was in the interests of the Australian Government to ease concerns about the legislation or to amend it.

The Australian technology industry has this week renewed its calls for the laws to be amended before the election, arguing there should be more oversight and reduction in scope.

The Australian Signals Directorate (ASD) has rejected claims the laws give security agencies unfettered power, or that technology companies will be forced overseas.

"Australia is not the first country to enact this sort of legislation — and we will not be the last," ASD Director-General Mike Burgess said.

"Agencies in the UK already have similar powers and other nations are considering their options.

"The claims the legislation will drive tech companies offshore are similarly flawed."