In the battle against software pirates, the bad guys are winning. And much more needs to be done by the region's governments if Asian countries are to realise their dreams of becoming hotbeds of innovation and high-tech consumption.
Revenue losses from software piracy in Asia amounted to US$2.8 billion last year. Japan accounted for US$974.4 million in losses, China US$645.5 million and India US$214.6 million.
You don't have to be a mathematician to understand that the battle is being lost. About 59% of all software in corporate use in Hong Kong is unauthorised. The Business Software Alliance, an industry lobby group, resolved software infringement claims against 35 Hong Kong companies in 1999. It's a case of 35 down and thousands to go.
Similarly in Singapore, revenue losses from piracy rose 6% last year to US$61.8 million, according to research firm International Planning and Research. The company says 51% of software in corporate use is pirated. Last year saw more than 390 raids against software, music and film pirates in Singapore, better than one a day. These raids led to the arrest of 127 people. Sim Lim Square, a shopping centre notorious for pirates, is constantly raided. The shady shops of Sim Lim were last week still openly selling software for S$6 (US$3.50) a piece. The crackdown is clearly not working.
You'd think with better than one in two businesses using pirated software that the authorities could simply go door-knocking. In reality, the number of pirate operators will always outnumber those trying to catch them.
While the revenue losses in developed Asian nations are staggering, the likely future losses in developing Asia are more sobering. Almost 98% of business software in Vietnam, 91% in China and 81% in Thailand are unauthorised copies (compared with 25% in the US and 26% in the UK). These markets account for a small slice of lost revenue because of the low penetration rates of corporate software use. But, as those markets mature, lost revenue will skyrocket.
The problem, many argue, is the high price of commercial software. It's true that software makers could cut prices, but they could not come close to matching the price of black-market software. If pirated goods were even 10% cheaper than the real deal those price cuts would barely dent demand.
With demand impossible to stifle, the only option is to go after the suppliers. Recent successes against pirates in Hong Kong and China have forced many software suppliers into safer territory. Malaysia has now become a net exporter of pirated software products, with CD-ROMs from Malaysia now turning up as far away as Latin America.
The Domestic Trade and Consumer Affairs Ministry of Malaysia recently launched Crackdown 2000, which will see more end-user checks and more raids on companies believed to be using pirated software. From this month, Malaysian companies face civil and criminal proceedings if they are found using unlicensed software.
Such initiatives will nibble away at the piracy problem, but it will take a concerted and co-operative effort on behalf of Asian governments to truly dent the profits of pirate operators. Continually busting the end users of pirated software is akin to locking up heroin addicts in a bid to wipe out drug use. The problem must be attacked at its source.