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In Jakarta, piracy is
official
By Bill Guerin
JAKARTA - US software giant
Microsoft, which turned over a gross profit of more than US$30
billion for the financial year ending March 31,
2005, last week denied media reports of a deal
with Jakarta to "legalize" the software in tens of
thousands of pirated versions of Windows programs
used in government departments.
The
reports claimed the amnesty offer, which would
allow the government to pay $1 for each computer
running an illegal version of the operating
system, emerged after President Susilo Bambang
Yudhoyono met with Microsoft chairman Bill Gates
in Seattle last month. Data from the Office of the
State Minister for Communications and Information
show that currently there are approximately 70,000
computers - all of which use Microsoft software -
in government institutions. The government has
promised to crack down on software piracy and to
purchase legal versions of Microsoft software in
future.
Two days later, Microsoft
spokeswoman Alexandra Mercer denied there was any
deal. "The company does not have any amnesty-type
government licensing programs in development or
under consideration in Indonesia at this time,"
she said. The denial, which convinced very few
observers, may have been an exercise in damage
control to avoid the risk of software pirates and
even other governments getting the wrong message
that crime can pay in the end.
While
Asian pirates
fill their pockets, major software developers complain that
they are losing billions in missed
sales. A recent global software piracy study
released by Business Software Alliance (BSA),
a group formed by international software manufacturers such
as Microsoft, Intel, IBM, Apple and Symantec to
combat software piracy, shows China, Vietnam and Indonesia
are among the top five nations flouting
intellectual property.
The study, compiled
by the International Data Corporation, says that
in 2004 some 53% of the software installed on
personal computers (PCs) in the region was pirated, the
same as in 2003, costing manufacturers an
estimated $8 billion. BSA has offered rich rewards
across the region to encourage whistle blowing to
help in its drive against companies using pirated
software.
Microsoft, however, has been
blamed for helping sustain software piracy by
persisting with its policy of one worldwide price
for its products, thus making them hopelessly
expensive for individuals, companies and even
governments in developing countries.
Open source or
Microsoft?
Installing open-source software
is much cheaper than licensed software. Piracy
also acts as a disincentive for the development of
homegrown software companies and it's argued that
promoting the wider use of open-source software
throughout the region will lead to the growth of
regional software development businesses.
Faced by the need to fend off advances by
Linux-type software, Microsoft had been forced to
dangle anti-piracy incentives and sell a cut-price
Windows package in the region. It is now selling
computers, pre-installed with stripped-down
versions of Windows XP, for as little as $300 in a
bid to lock up government contracts in Thailand,
Malaysia and Indonesia before they go to Linux.
The software is only sold with Asian PCs
and pirates are not expected to bother trying to
export the crippled "poor man's Windows" to other
countries, as the software is formatted only in
the respective native languages of Thai, Bahasa
Melayu and Bahasa Indonesia. All three countries
have strengthened anti-piracy measures to a
varying degree, but the astronomical levels of
software piracy continue as copyright laws are
rarely applied and, in general, cat-and-mouse
raids are just part of the cost of doing business
for pirated software sellers.
Indonesia
Around 88% of the
software floating in the Indonesian market is
pirated. This is more than double the global
average of 35% and the Asia-Pacific regional
average. In 2001, Microsoft launched its very own
"random raids initiative" in Jakarta and
subsequently filed lawsuits against five
Indonesian companies for installing unlicensed
software in computers sold to their customers.
Microsoft won a total of $9.1 million in damages
and a year later, in July 2002, the government
enacted Law No 19/2002 on copyright. Illegal use
of software for commercial purposes is now a
criminal offense punishable with imprisonment of a
maximum of five years and/or a fine of a maximum
of Rp500 million ($52,000).
Microsoft
Indonesia president Tony Chen said the company
"would rather let the law enforcers to do the work
to clamp down on them". Chen claims that if the
government manages to reduce the country's
software piracy rate to 78%, Indonesia would gain
at least $3 billion in software sales, 4,000 jobs
in the high-tech sector would be created and the
government could increase tax revenues from
software sales from $20 million at present to $100
million.
On the reported amnesty with
Microsoft, Minister of Information and
Communication Sofyan Djalil said the
already-installed illegal software would be
certified, "but in future, all government
computers must have legal software produced by the
company". State Minister for Research and
Technology Kusmayanto Kadiman said: "From 2007,
we will promise there will be no more pirated
Microsoft software in local markets or
institutions."
Yet, what was not reported
last week was the fact that almost a year ago, the
Megawati government had launched "Indonesia Goes
Open Source", or IGOS, a project designed to
promote and implement free, open-source software.
Concerned about the low level
of PC ownership - data from
the International Telecommunications Union shows that
the computer ownership ratio is only about one person
in every 100 - or about 22 million people
nationally - Microsoft Indonesia has "given"
30,000 original software packages together
with second-hand PCs to around 15,000 schools
and universities across the country since 2003.
The ongoing project, due to end in 2008, will cost
Microsoft $1 billion. Last year Microsoft also
launched 21 community training and learning
centers in Indonesia to provide access to the
latest information and communication technology.
It is assisting the centers with both hardware and
software and training.
Malaysia
Although software piracy is a serious offense under
Malaysian law, an estimated 61% of all software used
there in 2004 was pirated, according to the
BSA survey, causing losses of around RM490
million ($129 million). Though this was a dip of
2% on last year, officials warn that the rate is
still alarming. Stronger copyright laws tied to
the anti-piracy operation "Ops Tulen 2005
Korporat" provide for fines of up to RM20,000 for
each unlicensed software copy, or up to five years
in prison, or both. "Company directors and senior
management found guilty will not be spared from
heavy penalties," Zainal Abidin Noordin, deputy
director general of the Ministry of Domestic Trade
and Consumer Affairs, announced recently.
Thailand
According to
Microsoft, Thailand's Prime Minister Thaksin Shinawatra
told listeners to a radio program that the
localized version of Windows XP for Thailand is
"very user-friendly and easy to understand".
Microsoft also reported Information and
Communication Technology Minister Surapong Suebwonglee saying
he believed it would be very good for the
Thai people. Yet Thailand still has the fifth
highest software piracy rate in the Asia-Pacific.
As much as 79% of all programs installed
on personal computers in 2004 were obtained
illegally, down marginally by 1% on 2003. As a
result, software piracy hurt the Thai economy and
cost the government around $183 million in lost
tax revenue, up from $158 million in 2003. The BSA
has launched a new certification campaign to help
companies audit their software and comply with
licensing conditions. To build up more awareness
among corporate users, it will hold more seminars
about Software Asset Management (SAM). The
certification campaign, called "Get SAM, Get
Compliant", is aimed at encouraging companies to
respect software property rights.
Singapore
Even in this advanced
island republic, with its reputation for strict
law-and-order, more than four out of every 10
pieces of software installed in computers are
illegal copies, according to the BSA survey. At
42%, the country's piracy rate is little removed
from that in other developed economies like France
(45%) and Italy (49%) and cost the industry about
$90 million last year. The figure includes
software installed by consumers as well as
corporate users. The losses suffered by software
companies increased by $6 million, to $96 million.
Following the US-Singapore Free Trade
Agreement, which makes organized piracy a crime,
the government has joined hands with the industry
in "an intensive educational campaign to encourage
the public and businesses to respect intellectual
property", notes Jeffrey Hardee, BSA vice
president and regional director of Asia. Offenders
stand the risk of hefty fines up to S$200,000
(US$129,930) and jail terms.
BSA estimates
that slashing the piracy rate in Singapore by 10%
within four years could add $1.3 billion to the
island's economy. It has offered a maximum reward
of S$20,000 ($121,192) for information on
copyright infringements by local companies.
The future
A new threat has
emerged. In 2004, another 44 million people began
using the Internet in the region, spawning online
piracy, as consumers have easy access to pirated
software via "warez" groups, spam, auction sites
and P2P (peer-to-peer) systems. Not only do
governments lose sales and corporate taxes, but
piracy also costs jobs - those of software company
workers and the jobs created when those workers
spend money.
Lowering the piracy rate
would stimulate economic activity, increase tax
revenues and spur more software production,
marketing, research and development. "Every copy
of software used without proper licensing cost tax
revenue, jobs and growth opportunities for
burgeoning software markets," BSA president and
chief executive officer Robert Holleyman points
out.
Curbing software piracy needs a
combination of raids, litigation and campaigns to
educate users about the advantages of using legal
software, the problems associated with copied
software and the legal penalties. Promoting
open-source software does not necessarily address
or bring down piracy levels, says Seow Hiong Goh,
Director, Software Policy (Asia), BSA. "Both
open-source and commercial software products are
predicated on strong copyright protection, and the
use of certain open-source products does not mean
that consumers or businesses will use these
products in lieu of commercial options."
Good
argument, but Microsoft also wants a slice of the
burgeoning market for PCs in the region. Though the
usability of cheaper Linux desktops will continue
to improve and these countries will reduce
the levels of software piracy over time,
the Redmond giant, whose bottom line is greater
than the gross domestic product (GDP) of several countries,
will likely end up as the eventual victor in the
region in the long term.
Asian governments using Linux "would
be sued for Intellectual Property Rights violations",
was the incredible claim (read threat)
made by Microsoft chief executive officer Steve Ballmer
when speaking at the Asia Government Leaders Forum
in Singapore in November. "Someday, for all
countries that are entering the WTO [World Trade
Organization], somebody will come and look for money owing
to the rights for that intellectual property," he
claimed, though he did not say whether Microsoft
planned to sue Linux vendors or customers over the
alleged violations.
The next day a
spokesman at Microsoft headquarters said Ballmer
was "just noting a recent OSRM [Open Source Risk
Management] report in answer to a question he was
asked on Linux and licensing costs". Too little
and too late - the battle lines were drawn in the
eyes of industry analysts and for Linux and its
increasing number of users.
Bill
Guerin, a Jakarta correspondent for Asia Times
Online since 2000, has worked in Indonesia for 19
years as a journalist. He has been published by
the BBC on East Timor and specializes in
business/economic and political analysis in
Indonesia.
(Copyright 2005 Asia Times
Online Ltd. All rights reserved. Please contact us
for information on sales, syndication and republishing.) |
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