VZCZCXRO7726
PP RUEHCHI RUEHDT RUEHHM
DE RUEHJA #0011/01 0030831
ZNR UUUUU ZZH
P 030831Z JAN 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC PRIORITY 2650
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS

UNCLAS SECTION 01 OF 03 JAKARTA 000011 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
FOR EAP/MTS; EB/TPP/IPE JBOGER 
COMMERCE FOR 4430/BERLINGUETTE AND PETERS 
COMMERCE PASS USPTO FOR URBAN AND FOWLER 
DEPT PASS USTR FOR DKATZ, JGROVES, RBAE, CCOLLEY 
 
E.O. 12598: N/A 
TAGS: ECON ETRD KIPR ID
SUBJECT: INDONESIA - JANUARY 2007 IPR UPDATE 
 
¶1.  (SBU) Summary: Unannounced "training visits" by the Ministry of 
Industry's (MOI) Optical Disc Factory Monitoring Team (MT) in late 
November to 25 of 27 registered optical disc factories show that the 
enforcement of Indonesia's Optical Disc Regulations (ODR) is still 
in its infancy.  Evidence that some factories had been tipped off 
prior to the visits points to the possibility of collusion between 
team members and factory owners, and there are also reports of 
attempts by some team members to extort money from factory owners. 
Despite these issues, the MTs collected important data and evidence 
during their visits, including forensic samples from 100 of 127 
lines at the 25 registered factories visited.  The MOI agreed to 
allow an International Recording Industry Association (IFPI) 
forensic lab in England to analyze the samples, and already IFPI has 
determined that at least six factories, with 27 lines and capacity 
of up to 700,000 discs per day, are involved in piracy.  Ironically, 
the owner of one of six factories producing bootleg DVDs serves as 
the Chairman of the Video Industry Association (ASIREVI), 
Indonesia's industry group for legally registered optical disc (OD) 
factories.  The Embassy's two IPR technical advisors are working 
closely with IFPI to pull together a comprehensive report on the 
visits that we can share with key GOI officials.  In order to make a 
significant dent in pirate OD production in Indonesia, the USG will 
need to continue to support the MT and find ways to generate greater 
political will and interagency cooperation to address the OD 
factories, particularly with regards to the police. End Summary. 
 
¶2. (SBU) The Embassy's two State Department-funded IPR technical 
advisors, on board with the Department of Justice's International 
Criminal Investigative Training Assistance Program (DOJ-ICITAP) 
since September 2006, are off to an active start.  In mid-November, 
the two held four days of digital photography and refresher training 
for members of the MOI's OD Factory Monitoring Team.  Subsequently, 
with approval from MOI Director Tony Tanduk, the MT worked with the 
Embassy advisors and IFPI representatives to plan unannounced 
"training visits" to 27 of Indonesia's 28 registered OD factories, 
the remaining one being in Surabaya.  Tanduk agreed that five 
experienced IFPI investigators, four of whom flew in to Indonesia 
for the training visits, could help supervise and guide each of four 
teams during their factory visits.  Tanduk also agreed that the 
visits should be unannounced. 
 
Factories Likely Tipped-Off Prior to Visits 
------------------------------------------- 
 
¶3. (SBU) During a final briefing for MT members the Friday before 
the training visits, MT Deputy Head Azwar Ratu Pengadilan handed out 
a schedule for the MT to follow.  The Embassy and IFPI advisors, 
however, explained to Azwar that, to preclude the possibility of 
tipping off factory owners, they would prefer to provide a separate 
schedule the following Monday while the MT investigation groups were 
en route to the factories.  Azwar initially resisted but eventually 
acquiesced to the approach.  Following the Friday meeting, Azwar was 
seen busily making and receiving telephone calls, presumably from 
factory owners anxious about the inspections. 
 
¶4.  (SBU) As the teams gathered the following Monday to begin 
factory visits, the four members of the MT from the police were 
conspicuously absent.  Those who could be reached by telephone 
claimed they could not join the factory visits due to other 
priorities that had unexpectedly arisen.  (Comment: The INP's 
Special Crimes Division has the lead on Intellectual Property Rights 
(IPR) enforcement, but its efforts traditionally have been weak. 
This contrasts dramatically with successful ongoing IPR enforcement 
efforts of the Jakarta Metropolitan Police Special Crimes Unit, 
stationed less than a mile away.  End Comment.)  Moreover, despite 
requests that they turn off their mobile phones throughout the 
course of the factory visits, many MT members were seen sending and 
receiving text messages soon after the announcement of each day's 
schedule of visits. 
 
Conditions at Some Factories Highly Suspect 
------------------------------------------- 
 
¶5. (SBU) MT and IFPI representatives reported that many of the 
factories visited were either not producing or appeared to have been 
sanitized prior to the MT's arrival.  Staff at some factories 
claimed that operations had ceased due to a lack of orders, 
repeating what they told MT members on previous visits months ago. 
(Comment: Given the value of the machinery and the opportunity cost 
of keeping it idle, their explanation seems suspect. End Comment.) 
 
¶6.  (SBU) Despite the security breaches, the MTs were able to 
collect 100 exemplar samples from the 25 plants visited.  Following 
the visits, Tanduk agreed to allow the exemplars to be forensically 
examined at IFPI's laboratory in the UK.  Initial IFPI forensic 
analysis suggests a high probability that six factories, with 27 
 
JAKARTA 00000011  002 OF 003 
 
 
lines and production capacity of as much as 700,000 per day, are 
involved in piracy.  PT Panca Surya Putera, an import/export trading 
company, owns five of the factories with 21 lines, as well as a 
mastering facility and broadband internet company located at the 
same address.  Preliminary forensics indicates that two of PT 
Panca's production lines have been used to produce pirate ODs.  With 
a mastering facility and broadband access, it is conceivable that PT 
Panca is producing its own pirate master moulds locally. 
 
Industry Group Leader a Bootlegger Too 
-------------------------------------- 
 
¶7. (SBU) The MT found two of six production lines unregistered at PT 
Akeda Multimedia, the sixth highly suspect factory.  One of the two 
machines, a DVC line, was warm, indicating recent operation. 
However, the plant manager refused to allow the MT to run the 
machine, open the mould, or take samples, claiming that the machine 
was broken and that their engineer in Singapore had instructed that 
it should not be operated pending his arrival as otherwise serious 
damage would occur.  Ironically, PT Akeda Chairman Nurdin Umar is 
the chairman of Indonesia's video association (ASIREVI), a group 
that publicly advocates against piracy.  Another shareholder of PT 
Akeda, Wahadi Wiyanto, serves as ASIREVI's Secretary General and 
owns a distribution company that replicates New Line Cinema and 
independent movies in DVD format for distribution. 
 
¶8.  At PT Visindotama Sakti Perkasa, a factory with five replicating 
machines, the MT arrived and observed a truck apparently about to be 
unloaded with and estimated 10 to 15, 750 kilogram bags of 
polycarbonate.  However, upon seeing the MT, factory staff quickly 
covered the truck and moved it off the factory grounds.  A factory 
caretaker later claimed the factory had not operated for three 
months.  However, the MT counted 80 empty and 12 full 750 kilogram 
unmarked (no manufacturer or batch numbers) bags of polycarbonate. 
With roughly 120 bags of polycarbonate, the factory could produce up 
to three million CDs or half that amount in DVDs. 
 
¶9.  (SBU) At several factories raided in the last year by police, MT 
and IFPI representatives observed the following: 
 
-- PT Winnerstarindo: Police raided and sealed production lines at 
PT Winnerstarindo several month agao.  During its recent visit, the 
MT found the electricity turned on and heard compressors operating. 
The door to the machinery area, however, was sealed with a padlock 
that factory staff claimed that the police installed.  Soon after 
the MT arrival at the factory, a group of threatening looking men 
arrived outside the factory and stood menacingly by its entrance 
doors.  IFPI and MT representatives said that, without police 
present, the MT felt threatened and decided to leave the factory. 
 
-- PT Medialine: Police raided and sealed production lines at PT 
Medialine around April 2006.  During its visit, the MT found a 
broken police seal on the main entrance gate and photographed it. 
As no police were present, the MT did not enter the premises. Police 
had reportedly arrested one of the factory's managers, who was 
reportedly sentenced to 18 months in prison for piracy. However, in 
spite of the conviction, the MOI has yet to suspend or revoke the 
factory's registration. 
 
-- PT Visora Catur Disindo: On August 1, 2006 police raided and 
removed one of four production lines.  The MT found the factory's 
three remaining lines remained in operation.  There is no further 
information available on police investigations into the factory, and 
MOI has yet to revoke or suspend its production license. 
 
-- PT Takdir Jaya Abadi: Police raided the plant in February 2006. 
The MT found the plants four lines still operational. 
 
Governance Issues Swirl Around MT 
--------------------------------- 
 
¶10. (SBU) In the months prior to the recent trainings and factory 
visits, two factories lodged complaints that Wihadi and another 
ASIREVI executive (who served as a member or the MT) had attempted 
to extort money from them to ensure that their plants passed the MT 
inspections.  Soon after one of the factories refused to pay, the 
police raided the factory and detained its director for a month on a 
minor charge of failing to have proper censor documentation for one 
of the film's it was replicating.  The Embassy's IPR advisors 
subsequently raised this matter with Tanduk, and he agreed that it 
was best to remove all industry representatives from the MT. 
 
IPR Map Out More Capacity Building 
---------------------------------- 
 
¶11. (SBU) Following the factory visits, the Embassy IPR advisors 
 
JAKARTA 00000011  003 OF 003 
 
 
arranged a well-attended one day workshop for representatives of OD 
factories and importers of polycarbonate to provide them with 
further guidance on their obligations under Indonesia's OD 
regulations and international best practices.  Based on lessons 
learned during factory visits, the IPR advisors have formulated the 
following list of recommendations and activities for the GOI to 
undertake during the coming year.  They will pass the list to Tanduk 
in the coming days. 
 
-- Assign staff full-time to serve on the MT, instead of seconding 
staff on a part-time basis; 
 
-- Provide the MT's new office with full time secretarial support 
which can assist in improving the OD factory database and keeping it 
up to date; 
 
-- Issue official warning letters to non-complaint factories; 
 
-- Facilitate better cooperation and information sharing between key 
agencies involved in OD regulations implementation, including case 
development and prosecution; 
 
-- Revoke licenses of factories producing pirated goods, especially 
in cased where there is a successful prosecution. 
 
-- Require prosecutors to demand the sealing and seizing of 
equipment and machinery used to pirate goods. 
 
-- Develop and implement MT security best practices to avoid 
factories being tipped-off in advance of monitoring visits; 
 
-- Encourage inspection outside regular business hours; and 
 
-- Explore ways to better monitor production of blank CD-R and 
DVD-Rs. 
 
Comment: Where the Rubber Hits the Road 
--------------------------------------- 
 
¶12. (SBU) The unannounced factory visits represent the first serious 
and systematic GOI attempt to implement the ODRs, and will hopefully 
be the start of a long process to build GOI enforcement capacity and 
raise the costs of producing pirated ODs in Indonesia.  Given 
Indonesia's high rates of piracy, production over-capacity, and poor 
enforcement, it is not surprising that MT visits uncovered evidence 
of piracy -- in fact, any other outcome from the inspections would 
not have been credible.  Nor is it surprising that leaders of the 
legitimate industry are dabbling in piracy and likely involved in 
buying-off members of the MT.  As a result of the inspections and 
IFPI forensic analysis, we should soon have a compelling case of 
widespread registered factory involvement in piracy.  We will 
present this evidence to senior GOI officials concerned with IPR, 
all of whom are keen to maintain Indonesia's Special 310 Watch List 
status.  With so many kinks in the system yet to be worked out, our 
DOJ-ICITAP advisors will continue to be critical to effectively 
implementing the ODRs, providing desperately needed capacity 
building and guidance, and encouraging interagency cooperation. 
ANDERSON