Software piracy plangue Indonesia

Vishnu K. Mahmud, Contributor, Jakarta

During the Microsoft Asia Student dot-net Competition held last September in Jakarta, Andrew McBean walked around and met some of the contestants. He found an excellent banking application made by a group of university students and encouraged them to package and sell it. Their response was: "No one would buy it". They feared that once their product got out into the market, it would only be a matter of time before it fell into the clutches of software pirates.

Such disheartening thoughts trouble McBean, the new President Director for Microsoft Indonesia. It is a well-known fact that the infringement of intellectual property rights (which includes computer software, music and movies) is pretty much rampant in Asia with Indonesia and Vietnam leading the pack.

You can find the latest movies on VCD's (video compact disc) in Jakarta just days after they are released in the US for a mere US$2. Thousand-dollar enterprise level software can be found for just under $5. And those who profit from these sales are not the directors, actors, software developers or singers who toiled endlessly for the product -- but the CD copying counterfeiters.

Many people scoff at the importance of intellectual property rights (IPR). They reason that, because items such as computer software are too expensive to purchase in Indonesia, it's no wonder that people turn to pirated versions. After all, if they cannot afford the licensed version of Microsoft Office, they will never buy it anyway, so Microsoft hasn't really lost any revenue. And besides, Bill Gates is the richest man on earth!

But "saving" money by purchasing bootlegged products does in fact have serious consequences.

"Rampant copyright infringement is blunting the creativity and inventiveness of Indonesians. The nation's indifference to copyright piracy is killing indigenous talent," says a recent Business Software Alliance report on piracy in Indonesia. McBean points to the university students he met at the competition as a prime example.

Those students had created a software application they could potentially charge millions of rupiah for per license, yet they are unable to do so because their potential clients could probably pick up a copy at a sidewalk stall for only Rp 20,000.

And it does not affect the software industry alone. The local film and music industries are struggling in part because their offerings are copied and redistributed by bootleggers. Who would want to make a movie or produce a record if bootleggers undercut the return on investment?

McBean points to India as an excellent model for fighting counterfeit products. Despite its high population and low per capita GDP, their piracy levels are at 55 percent (compared to Indonesia's 89 percent). By enforcing intellectual property rights, India has managed to generate a software export business worth $8.5 billion.

The Indian software industry alone provides over 124,000 jobs. It not only makes software for the overseas market but also devises competitive solutions for the local industry. Although the sub-continent is not as 'wired' as Singapore or Malaysia, the breadth of IT knowledge is astounding.

By enforcing copyright laws, entrepreneurs could write software, support other industries (housing, food service, IT support and education), create quick, effective solutions for local problems and stimulate the regional economy. Governments would be able to collect more taxes from not only the software industry but from the other businesses that spring up in support of it as well. Ultimately, governments can explore the possibilities of a prosperous software industry (along with the movie and music business) by helping to protect intellectual property rights.

Although Microsoft Indonesia recently won a copyright court case against system builders who installed unlicensed copies of their operating system, they are looking at other methods to help lower the percentage of counterfeit products. More importantly, McBean is looking into ways to invest in the community by helping to create an effective computer industry.

"Our piece of a truly richer computer industry in Indonesia will be a far more sizable piece of revenue to us than if we are just here bashing people with a piracy hat on," he says.

Microsoft is looking at partnerships with system builders, presenting channels for independent software vendors and finding unique ways for people to buy licensed software. By helping people realize that software has value and is a necessity, they should start to buy it as if they were purchasing a hat, hand- phone or house. At the moment, many people would consider the value of computer software to be zero, or at least "not worth the published price".

It should be appreciated that software development does not come cheap. It includes programming, testing, research and development; just like making a computer processor. But people don't consider Intel chips as worthless and try to obtain a pirated chip.

In 1999, the software industry lost $42 million in Indonesia. Computer users here can perhaps translate that amount as a "saving" generated by the non-purchase of software. However, that $42 million has probably cost Indonesia at least half a billion dollars in lost business revenue, expenditure, jobs, services and taxation. Well, at least we saved $42 million.