VZCZCXRO7584
PP RUEHCHI RUEHDT RUEHHM
DE RUEHJA #2531/01 0551044
ZNR UUUUU ZZH
P 241044Z FEB 06
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC PRIORITY 0139
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 03 JAKARTA 002531 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
FOR EAP/MTS AND EB/IPE/EAP 
COMMERCE PLEASE PASS USPTO FOR JOELLEN URBAN 
DEPT PASS TO USTR FOR KATZ AND GROVES 
 
E.O. 12598: N/A 
TAGS: ETRD KIPR PGOV ID
SUBJECT: INDONESIA: 2006 SPECIAL 301 SUBMISSION 
 
REF: A) State 14937;  B) 05 Jakarta 16289 
 
¶1.  (SBU) Summary:  Local IPR industry representatives now 
tell us that the IPR enforcement landscape has changed 
considerably since they made their Special 310 out-of-cycle 
review (OCR) submissions in December 2005.  They now see a 
more credible and sustained enforcement effort backed up by 
signals of high-level political will, including President 
Yudhoyono's personal involvement in a MOU with Microsoft to 
legalize government software and Police Chief Sutanto's 
strong directive against piracy.  There is clear evidence 
the U.S. decision to maintain Indonesia on the priority 
watch list (PWL) during the recent out of cycle review has 
demoralized key IPR officials at the Ministries of Trade and 
Justice.  We urge Washington agencies to upgrade Indonesia 
to Watch List status during the 2006 regular Special 301 
review.  End Summary. 
 
Enforcement Actions 
------------------- 
 
¶2. (SBU) In early January, Indonesia's new and no-nonsense 
National Police Chief General Sutanto issued a directive to 
all of Indonesia's 33 regional police chiefs instructing 
them to step-up enforcement activities in all areas 
pertaining to optical disc piracy, including retail sales 
and factory production. The result has been a dramatic 
increase in police raids across the country, and 
particularly in major urban centers.  In Jakarta, the 
metropolitan police, working closely with the local Motion 
Pictures Association (MPA) representative, made good on 
their promise to conduct regular monthly raids following the 
successful November 2005 raids against some of Jakarta's 
most notorious malls (Ratu Plaza, Mangga Dua and Harko 
Glodok).  Since November, they have conducted repeat raids 
at those same centers as well as new raids in other areas. 
In February 2006, they raided 65 shops and, with 
contributions from earlier raids, have collected over 6 tons 
of pirated optical discs that now await destruction at an 
appropriate high-level event.  A local Business Software 
Alliance (BSA) representative claims that overall piracy is 
down by as much as 10 percent in Jakarta and 50 percent in 
Surabaya. 
 
¶3. (SBU) The police have also conducted recent factory 
raids.  On February 9 and 10, with MPA support, police 
raided 2 factories in Tanggerang where they seized three CD 
and four DVD production lines and roughly 18,000 pirated 
optical discs.  The local MPA representative says his 
organization and the police plan to raid an additional 8 
malls and a major factory by the end of March.  According to 
the MPA representative, the police said that following 
General Sutanto's directive, they no longer require MPA 
support (usually for transportation and meals) to organize 
and conduct raids.  Sutanto has now turned his attention 
towards creating an anti-piracy film in collaboration with a 
local recording industry association and Indonesia Customs. 
 
¶4. (SBU) On a February 22 visit to Jakarta, a Singapore MPA 
representative told us the recent GOI actions on IPR are 
"the most remarkable developments in the past six years." 
He also expressed concern that the recent decision to keep 
Indonesia on the PWL had been based on dated information 
that does not accurately reflect what he described as a new, 
credible and sustained enforcement campaign, supported by 
political will from the very top.  He also expressed fear 
that the OCR decision would dampen current momentum, and 
said he would recommend to MPA and the IIPA that they revise 
earlier recommendations and support upgrading Indonesia to 
Watch List during the upcoming regular Special 301 review. 
Local BSA and IFPI reps say they support this view and will 
also press for an upgrade to the Watch List. 
 
Optical Disc Regulations (ODR) 
------------------------------ 
 
¶5. (SBU) Local IPR industry reps tell us they now believe 
that the list of roughly 22 optical disc factories in the 
GOI's database accounts for most of the factories known to 
exist.  They note that earlier estimates of as many as 50-60 
factories were based largely on rough estimates, and some 
suspected factories may have closed or moved.  The 
interagency ODR monitoring team continues to build capacity 
through its participation in USAID funded trainings and 
awareness campaigns.  It is also making steady progress 
towards registering factories (17 of 22 are now registered), 
supplying SID codes (the 17 registered factories now have 
 
JAKARTA 00002531  002 OF 003 
 
 
SID codes), and conducting regular inspections.  The 
monitoring group's head, Tony Tanduk, recently told us that 
his team is having better success in entering factories with 
greater police support following General Sutanto's 
directive.  Still, the monitoring team consists of an ad hoc 
group of officials who take time-off from other 
responsibilities to work on ODR implementation and rely 
heavily on industry support.  Moving forward, it will be 
important to encourage the GOI to provide the team with a 
regular budget and staff. 
 
Arrests, Prosecutions and Convictions 
------------------------------------- 
 
¶6. (SBU) In early February, Jakarta courts convicted six 
pirate software vendors to jail terms of roughly 1 year 
each.  Police raids on vendors in February alone resulted in 
some 50 arrests, and police netted another 17 during the 
recent factory raids, including one major distributor.  MPA 
estimates that the Attorney General's Office now has some 
220 IPR cases pending.  In general, prosecutions and 
convictions still remain weak, a reflection of the very low 
capacity of Indonesia's judicial system.  MPA tells us that, 
with the police now making more concerted efforts, the next 
focus of effort should be on the Attorney General's Office, 
which is responsible for prosecuting IPR cases. 
 
Other Developments 
------------------ 
 
¶7. (SBU) On January 13, the Ministry of Information and 
Communications Technology and Microsoft signed an MOU on 
legalizing all GOI Microsoft software.  President Yudhoyono, 
on his own initiative, personally led the effort to sign the 
MOU, following his 2005 meeting with Microsoft Chairman Bill 
Gates.  It is estimated that 90 percent of GOI computers use 
pirated versions of Microsoft operating systems and 
software. 
 
¶8. (SBU) A Presidential Decree to establish a National Task 
Force is finalized and still awaits President Yudhoyono's 
signature.  Bureaucracy, higher priorities, and a logjam of 
pending Presidential decisions seem to be the main 
impediments to its passage.  While the Task Force should 
facilitate greater interagency cooperation, strong signals 
from the top, such as the Microsoft MOU and Sutanto's 
directive, are equally important.  The regional MPA 
representative recently told us that the Task Force was not 
the highest priority, and credible enforcement and 
reductions in the availability of pirated products was more 
important. 
 
¶9. (SBU) Finally, as reported in ref b, we continue to hear 
reports from a number of IPR attorneys that Indonesia's 
Commercial Court continues to perform well on a healthy 
volume of civil IPR cases (mostly related to trademark 
disputes).  Again, we should consider this a significant 
achievement given the overall weak state of Indonesia's 
judiciary. 
 
Comment and Recommendation 
-------------------------- 
 
¶10. (SBU) The IPR enforcement landscape has changed since we 
transmitted Ref B and engaged the GOI in a digital video 
conference on January 17.  Industry representatives, who a 
few months back doubted the motives behind raids, now see a 
more credible and sustained effort and positive momentum. 
Enforcement has been the weak link in Indonesia's IPR 
efforts for years, and coupled with other positive 
developments, we continue to believe there is ample progress 
to warrant an upgrade to Watch List status. 
 
¶11. (SBU) From a longer-term perspective, the last two 
Indonesian administrations have made unmistakable progress 
on OD piracy issues since USTR placed it the PWL in May 
2001: 
 
--Parliament passed a strengthened Copyright Law in July 
2002 that went into force in July 2003. 
 
--Former President Megawati Sukarnoputri signed a Government 
Regulation on Optical Discs in October 2004.  In terms of 
legal hierarchy, Government Regulations are the highest form 
of GOI regulation commonly used. 
 
--The former Minister of Trade and Industry issued 
 
JAKARTA 00002531  003 OF 003 
 
 
complementing Ministerial Regulations on optical discs, also 
in October 2004. 
 
--With assistance from the U.S., the Ministry of Industry 
formed and trained OD monitoring teams in 2005.  Although 
there is room for more progress, these teams have registered 
more than three quarters of the OD factories known to exist 
in Indonesia, and are actively enforcing the ODRs. 
 
--As noted above, the National Police Chief issued a 
directive in January 2006 to Indonesia's 33 regional police 
chiefs instructing them to step-up enforcement activities in 
all areas pertaining to optical disc piracy. 
 
--Also as noted above, police in Jakarta and other major 
Indonesian cities have dramatically increased the number of 
raids against OD vendors and factories since November 2005. 
 
¶12.  (SBU) Although they would admit that Indonesia still 
has a way to go, Indonesian IPR officials believe adamantly 
that they have made impressive progress over the last few 
years towards improving Indonesia's IPR climate, and we 
agree.  In particular, the IPR enforcement progress over the 
past four months has come in the face of competing law 
enforcement priorities and financial and political 
opposition from illegal OD producers and vendors.  For these 
reasons, the recent USG decision to retain Indonesia on the 
PWL stunned and demoralized our GOI IPR contacts.  Several 
of our close GOI interlocutors have told us flatly that 
"they feel like giving up" following the OCR decision.  The 
Ministry of Justice Director General for IPR, upon hearing 
of our decision, cancelled his planned February 16 meeting 
with USTR Director for Southeast Asia David Katz.  We are 
frankly concerned that the downturn in our IPR relationship 
could reduce the effectiveness of the USG-funded senior IPR 
technical advisors we are placing with the ODR monitoring 
team and police. 
 
¶13. (SBU) The bottom line is that the proponents of IPR 
protection within the GOI and Indonesian society are a small 
and embattled group, and they face off daily against many 
strong enemies and competing law enforcement priorities.  As 
we argued in Ref B, one of the most effective ways we can 
support this group is by upgrading Indonesia to Watch List 
status, and we believe this remains our most effective 
policy choice moving forward. 
 
PASCOE