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."