Software industry a vital player in SE Asia economies

Software industry a vital player in SE Asia economies

JAKARTA (JP): Higher employment, more skilled workers.
Increased fiscal revenues in direct and indirect taxes. Superior
global competitive advantage. These were among the chief benefits
cited in the first comprehensive study on the economic
contribution of the software industry to the Southeast Asian
markets, covering Malaysia, Singapore, Thailand, Indonesia, the
Philippines and Vietnam.

The Business Software Alliance, which commissioned the
research, said that the study showed that the packaged software
segment achieve US$1.2 billion in retail sales and $2.1 billion
in total economic activity in 1996. Translated in tangible terms,
the industry was responsible for employing more than 14,500
people and generating over $280 million in fiscal revenues.

However, the study also showed that the high rate of software
piracy in the region accounted for some $598.4 million in market
value. With an average software piracy rate of 84.2 percent
across the markets covered by the study, this figure applies to
approximately 12 percent of the total packaged software market.

"The software industry has been one of the engines of growth
around the world. It will become even more important for the
Asean region as its respective countries participate in the
information Age," said Robert Holleyman, President of the BSA, in
a release available to The Jakarta Post.

"This study, the first comprehensive one of its kind of this
region, confirms the significant contribution made by the
software industry to each market, in terms of economic and
national benefits."

"More importantly, by removing the specter of software piracy,
the economic and fiscal contribution could increase significantly
between now and 2001," he said.

According to the study by leading accounting and auditing firm
Price Waterhouse, the Information Technology industry doubled in
size, by conservative estimates, between 1987 and 1998, and is
expected to growth an average of 19.4 percent per year from 1996
and 2001.

The software industry employed 14,597 people in Southeast Asia
in 1996, in jobs ranging from research and development to sales,
marketing and technical support.

In Indonesia, the research showed that 2,588 people were
employed throughout the software industry and at very
conservative estimates, a further 1,764 jobs by 2001 are expected
to be created.

"If the software industry were to grow at 19.4 percent in the
region, we would have an additional 23,377 jobs by 2001 in the
local software and supporting industries regionwide," Holleyman
said.

These figures do not include the equally tremendous number of
jobs related to software installation and maintenance that have
been generated in every large company, government departments and
agencies and other major technology user sites.

The Indonesian government earned some US$26.1 million in taxes
from the software industry in 1996. This figure includes taxation
on corporate earnings, payroll taxes, import duties and value-
added tax on sales. The contribution could increase to US$70.4
million annually by 2001.

The study emphasized that the main constraint to growth in the
illegal copying of packaged software. The BSA estimates that
eight out of 10 applications were illegal in the markets covered
by the comprehensive study.

"This rate of software piracy is far too high," Holleyman
said.

"The market value of pirated software in all product
categories was estimated at $598.4 million regionwide. However, I
suspect that the real numbers are much higher, because this
figure applies to only 12 percent of the software market."

Holleyman said that BSA experience has shown that if the
software piracy rate was reduced to the current levels in the
United States (27 percent), the industry would have created
14,000 more jobs and generated an additional $246.3 million in
government revenues, in 1996 alone.

"If everyone joined in a concerted effort to reduce software
piracy, there would be a quantum leap in employment to 46,076
people and in taxes to US$1.3 billion in these six countries in
2001," he said.

He welcome the efforts of the government to combat piracy.

"I am confident that with the set-up of the Indonesia
Intellectual Property Society, protection of intellectual
property will receive a further boost in terms of education and
understanding."