Indonesia’s thriving US$1.6 billion IT industry set to grow to US$4.2 billion with a 10-point drop in piracy
Jakarta, Indonesia (December 8, 2005) – The IT sector is an important part of Asia Pacific economies but its growth potential is compromised by software piracy. Cutting the region’s average software piracy rate by 10 percentage points to 43 percent over a four year period could add an additional US$135 billion to its economies, increase local industry revenues by more than US$106 billion and generate an additional 2 million jobs – which is more than every other region in the world combined – according to a new study released by the Business Software Alliance (BSA) today.
The independent study, conducted by International Data Corporation (IDC), also found that for governments in the Asia Pacific region, the cumulative effect of this growth could mean an additional US$14 billion in new tax revenues that can help pay for public benefits and services.
Launching the study in Singapore, Jeffrey Hardee, Vice President and Regional Director, Asia, BSA, said: “Growth in the Asia Pacific’s IT sector has already translated into significant benefits for the region’s economies. It is a US$195 billion industry that employs 4.7 million workers and contributes US$120 billion in taxes each year, but the region could do better. With a 10-point drop in the region’s average software piracy rate, the software sector could grow three times faster over the next four years than it did in the last four years and spur expansion of the IT sector.”
“Software is the driving force behind growth in the IT sector, which also includes hardware and IT services. When countries take steps to reduce software piracy, just about everyone stands to benefit,” added Hardee. “Workers have more job opportunities, consumers have more choices, innovators have more financial incentives, entrepreneurs have more software-related business opportunities, and governments benefit from increased tax revenues.”
In Indonesia, the study found that a 10-point reduction in four years from the current 87% piracy rate would yield growth in IT industry to more than US$4.2 billion by 2009. Decreasing Indonesia’s piracy rate to 77 percent would add US$3.3 billion to its economy, create 3,000 more new IT jobs, and increase local industry revenues by more than US$1.5 billion. These benefits would, in turn, generate an additional US$152 million for its tax coffers.
Ronald Chua, Chair of BSA Indonesia Committee said, “It is clear from this study that software pirates not only steal software, they steal the jobs, tax revenues and economic growth that accompany a vibrant software sector for Indonesia. To unlock the vast new jobs, business opportunities, revenues and economic growth that the IT sector can produce, the Indonesian government must take tangible steps to further protect intellectual property and reduce software piracy. Software piracy will only be driven down through a concerted effort between government and the private sector, with an integrated enforcement and education program. The BSA is committed to stand hand-in-hand with the government to work on this issue.”
The BSA-IDC study found that the global IT sector, currently projected to grow by 33 percent between 2004 and 2009, could instead grow by 45 percent over the same period with a 10-point reduction in software piracy.
The study also concluded that four out of five countries would see greater than 30 percent IT sector growth with a piracy reduction. Countries with the highest piracy rates stand to gain the most through piracy reductions. Vietnam, China and Indonesia – countries with the highest piracy rates in Asia Pacific – would be the largest beneficiaries of piracy reductions.
For example, China could potentially gain more than any other country in the world, tripling its already large IT sector. With a 10-point piracy reduction, China could create 2.6 million new IT jobs in four years – as many IT jobs as the United States has created in 30 years.
India, which is projected to see the second fastest IT growth in the global survey – could also nearly triple the size of its IT sector by 2009 and create an additional 360,000 IT jobs by reducing its piracy rate by 10-points over four years.
The BSA-commissioned study, available online at http://www.bsa.org/idcstudy, is the only study of its kind that assesses the IT sector’s economic impact in 70 countries worldwide and the benefits that accrue to countries that tighten and enforce their intellectual property (IP) laws and work to educate the public about the impact of piracy.
Using its market data on IT industry spending, employment, and IT-generated revenues, IDC conducted an analysis in each of the 70 countries to determine what the impact of lowering piracy would be on spending on packaged software and how that would impact spending on related services and distribution.
With 1.1 million businesses worldwide, the IT industry contributes nearly US$1.7 trillion a year to global economic prosperity. Globally, a 10-point reduction in software piracy could generate US$67 billion in new tax revenues worldwide, which, according to the Organization for Economic Cooperation and Development figures, could provide:
• 435 million people with job training benefits
• Health care services for 45 million people
• Computers for over 33 million school children; or
• College degrees for 6.6 million people.
In addition to outlining the economic benefits that can be realized through increased copyright protection, the study also notes five steps countries can take to reduce software piracy and thereby enjoy the economic benefits. These are:
• Updating national copyright laws to implement World Intellectual Property Organization (WIPO) obligations;
• Creating strong enforcement mechanisms, as required by WTO, including tough anti-piracy laws;
• Dedicating real government resources to the problem, including national IP enforcement units, cross-border cooperation, and more training for local officers;
• Improving public education and awareness; and
• Leading by example by requiring public sector to use only legitimate software.
“With this report, we are able to further quantify the positive benefits that countries across the world, including those in the Asia Pacific region, can experience as a result of stronger IP protection and greater education and awareness,” said Marcel Warmerdam, Research Director, IDC IT Markets.
“This report provides a comprehensive snapshot of what we have known all along: reducing software piracy delivers real results in the form of more funding for education, job training, health care, and overall economic growth,” said Warmerdam.
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About BSA
The Business Software Alliance (www.bsa.org) is the foremost organization dedicated to promoting a safe and legal digital world. BSA is the voice of the world's commercial software industry and its hardware partners before governments and in the international marketplace. Its members represent one of the fastest growing industries in the world. BSA programs foster technology innovation through education and policy initiatives that promote copyright protection, cyber security, trade and e-commerce. BSA members include Adobe, Apple, Autodesk, Avid, Bentley Systems, Borland, Cadence Design Systems, Cisco Systems, CNC Software/Mastercam, Dell, Entrust, HP, IBM, Intel, Internet Security Systems, Macromedia, McAfee, Microsoft, Minitab, PTC, RSA Security, SAP, SolidWorks, Sybase, Symantec, Synopsys, The MathWorks, Trend Micro and UGS.
About IDC
IDC is the premier global provider of market intelligence, advisory services, and events for the information technology and telecommunications industries. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. Over 775 IDC analysts in 50 countries provide global, regional, and local expertise on technology and industry opportunities and trends. For more than 40 years, IDC has provided strategic insights to help our clients achieve their key business objectives.
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