Rampant piracy impacts Philipino software sector

Despite the concerted efforts of several government agencies to curb the use of illegal software, the Philippines remains in the list of nations with the highest software piracy rates in the Asia-Pacific region.

A study presented during the Philippine Software Industry Association (PSIA) general meeting held recently showed that the Philippines ranked eighth among the 14 countries included in the list. The study was commissioned by Microsoft Corp. Philippines and conducted by economics professor Ramon Clarete and colleague Sining Cuevas of the University of the Philippines.

Registering a high 72 per cent piracy rate in 2003, the country bested only China, Vietnam, Indonesia and Pakistan in fighting illegal software. It continues to lag behind New Zealand, Australia, Singapore, Taiwan and Malaysia in protecting software.

The study indicated an apparent negative correlation between the levels of piracy and new investments in software development in the country. As the software piracy in the country declines, the level of new investments in the software sector rises and vice-versa, stated the study.

Levels of new employment in the software sector also improve as piracy rates become more controlled.

Investments in software quadrupled in 2000 when piracy rates declined by seven per cent in 1999. Similarly, investments in 2001 rose 38.2 per cent as piracy dropped nine per cent in 2000.

However, the quantity of investments dwindled in 2002 when the Philippines posted a higher piracy rate of 63 per cent in 2001 compared to the 61 per cent rate it posted in 2000. The investment figures further declined by 28.5 per cent as the rate of piracy soared to 68 per cent in 2002. As a result, new hiring in the software industry dipped by more than 50 per cent in 2002 and further dropped to 65.2 per cent in 2003 after the piracy rate climbed to 63 per cent in 2001.

The findings in the local industry are consistent with the results of another study conducted by the software sector in Mexico which showed that every 10 per cent decline in software piracy rate increases the information technology investment share in the gross domestic product (GDP) by 13.4 per cent. Thus, even a modestly successful effort to protect intellectual property rights (IPRs) has proven to exert a sizeable — favourable — impact on IT investment and GDP.

According to the Business Software Alliance (BSA), piracy rates can decline through a more intensified enforcement of the copyright law (Intellectual Property Code of the Philippines of 1998) and a better awareness of IPR in the country, especially among members of the judiciary.

The Microsoft-commissioned study also indicated that since the creation of the Presidential Inter-Agency Committee on Intellectual Property Rights (PIAC-IPR) in 1993, the increase in the number of monitored firms by the Department of Trade and Industry (DTI), Department of Justice (DOJ), National Bureau of Investigation (NBI) and Philippine National Police (PNP) resulted in a lower software piracy rate.

Among the agencies, DTI registered the highest number of monitored firms, while the DOJ conducted the most number of raids from 1993 to 2001.

President Gloria Macapagal-Arroyo has abolished the PIAC-IPR in line with the government’s restructuring agenda.

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Jim Love, Chief Content Officer, IT World Canada

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