Extra billions for APAC with piracy reduction

Region can expect an increase of US$41 billion in gross domestic product if software piracy is decreased by 10 percentage points in four years, new report states.
Written by Liau Yun Qing, Contributor

SINGAPORE--A reduction of 10 percentage points in software piracy in four years' time will yield an extra US$41 billion in gross domestic product (GDP) for the Asia-Pacific region, according to a study which noted that the benefits will increase if piracy is decreased sooner.

Commissioned by the Business Software Alliance (BSA) and conducted by IDC, the latest "Piracy Impact Study: The Economic Benefits of Reducing PC Software Piracy" also revealed that with the same 10-point reduction, the region can expect the creation of 350,000 new jobs in 2014, or over two-thirds of the forecasted 500,000 jobs worldwide. In addition, US$9 billion in tax revenues will be added to the region.

The piracy rate in the region, as of 2009, stood at 59 percent.

The new study covered 42 countries, including 13 economies in the Asia-Pacific region--Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam. Together, they represent 93 percent of the total PC software market which BSA believes is "sufficient to represent the entire world of software".

Sharing the regional findings in a media briefing on Wednesday, Victor Lim, vice president of consulting operations at IDC Asia-Pacific, said Singapore would benefit from 1,978 new jobs, US$520 million in added GDP and US$128 million in added tax revenues. The country has the third-lowest rate of software piracy in the region after Japan and Australia in 2009, according to IDC figures.

Lim noted that if the reduction in software piracy is achieved earlier, its benefits are increased due to the compounding effect. The study found that GDP and tax revenues would increase by more than 30 percent of the original forecast if the 10-point decrease is achieved within the first two years.

By lowering piracy rates two years sooner, the region's GDP will clock in an extra US$14 billion on top of the estimated amount to reach US$55 billion while tax revenues will increase by US$3 billion to clock US$12 billion, he explained.

Decreasing software piracy does not only benefit the software industry, said Roland Chan, senior director of marketing for BSA Asia-Pacific. It also creates a "ripple effect" by stimulating other parts of the IT sector and economy as the selling, servicing and supporting of software creates downstream value, he pointed out.

A previous IDC study found that for every US$1 Microsoft churns in the region, companies in the ecosystem will generate US$10.97.

However, Lim noted that most of the benefits from reducing software piracy will remain in the local market. Citing global figures, he said on average more than 80 percent of the benefits will flow back into the local market.

Antivirus, productivity tools most pirated
According to Lim, most of the pirated software are not operating systems as these usually come pre-loaded in computer systems.

Tarun Sawney, BSA's senior director of antipiracy, said illegal versions of antivirus software, Microsoft Office and Adobe productivity tools are commonly found during raids.

While there is a perception that it is mostly more expensive software that are pirated, Sawney believes that there is no link between price and piracy. "Even cheap cannot compete with free," he said.

To illustrate his point, he said a Thai-to-English dictionary which sells for about US$5 in Thailand is one of the most heavily pirated software in the country.

Sawney also noted that software piracy affects small developers more than large software companies. Unlike larger players, local developers mostly target only their home market and are not able to gain revenues from other markets, he explained.

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