VZCZCXRO6211
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #0371/01 0560935
ZNR UUUUU ZZH
R 250935Z FEB 08
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 8092
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHKL/AMEMBASSY KUALA LUMPUR 2456
RUEHBK/AMEMBASSY BANGKOK 8342
RUEHGP/AMEMBASSY SINGAPORE 6273
RUEHDT/AMEMBASSY DILI 0932

UNCLAS SECTION 01 OF 02 JAKARTA 000371 
 
SIPDIS 
 
SINGAPORE FOR SUSAN BAKER 
 
SIPDIS 
SENSITIVE 
 
DEPT PASS TO USTR SCHWAB 
DEPT FOR EAP/MTS, EAP/IPE, EB/TPP, EB/IPE 
COMMERCE FOR JKELLY 
USTR FOR BWEISEL 
USTR FOR KELHERS AND RBAE 
TREASURY FOR IA-BAUKOL 
 
E.O. 12598: N/A 
TAGS: KIPR BEXP EINV ECON ID
SUBJECT: INDONESIA SHOULD REMAIN ON WATCH LIST 
 
REF: A: Jakarta 07 2091; B: Jakarta 07 2301; C: Jakarta 07 1813; D: 
Jakarta 07 2797 
 
JAKARTA 00000371  001.2 OF 002 
 
 
¶1.  (SBU) Summary:  Post recommends that Indonesia remain on the 
Special 301 intellectual property rights (IPR) Watch List for 2008. 
Although problems persist, Indonesia has continued to make limited 
improvements in the enforcement and protection of IPR since its 
upgrade to the Special 301 Watch List in November 2006. These 
include actions by the Government of Indonesia (GOI) to prioritize 
IPR prosecutions and improve the monitoring of optical disk 
factories, in addition to carrying out a successful string of 
IPR-related enforcement activities.  End Summary. 
 
Largest Counterfeit Drug Seizure Ever 
------------------------------------- 
 
¶2.  (SBU) Indonesia made progress with IPR enforcement on several 
fronts in 2007.  Notably, Indonesian authorities carried out the 
single largest operation ever worldwide against distributors of 
counterfeit pharmaceuticals (reftel A).  This seizure took place 
less than a month after Indonesian police closed down two optical 
disk factories suspected of illegal production (reftel B).  The past 
year also saw increased cooperation between the GOI and the 
pharmaceutical industry.  The GOI worked successfully with a 
consortium of pharmaceutical manufacturers to fund sample testing of 
seized medicines and finance construction of a storage facility for 
seized goods. The GOI and the International Pharmaceutical 
Manufacturers Group (IPMG) also collaborated on a ceremony to 
publicly destroy seized drugs. 
 
Attorney General Prioritizes IPR 
-------------------------------- 
 
¶3.  (SBU) In 2007, Attorney General Hendarman Supandji expanded the 
mandate of Indonesia's elite prosecutorial task force to include IPR 
violations (reftel D).  IPR prosecutions are now prioritized with 
other serious transnational crimes including terrorism, money 
laundering and human trafficking.  The addition of IPR represents a 
significant institutional commitment by the Attorney General's 
Office to successfully prosecute IPR violators. 
 
Progress in Optical Disk Monitoring 
----------------------------------- 
 
¶4.  (SBU)  During 2007, the Indonesian Ministry of Industry (MOI) 
Optical Disk Factory Monitoring Team (ODFMT) conducted fifty 
inspections of registered factories (including limited after hours 
inspections) resulting in issuance of thirteen warning letters to 
non-compliant factories.  Fourteen production lines were sealed due 
to non-compliance and three remain sealed to date. A warehouse 
adjoining a factory suspected to have unregistered replicating 
equipment was also sealed. Exemplars have been collected from 65% of 
registered lines (the remainder were not operational at the time of 
inspection) and 122 have been submitted to the International 
Federation of the Phonographic Industry (IFPI) laboratory for 
forensic comparisons. 
 
¶5.  (SBU) The MOI has also assigned three full-time members to the 
ODFMT team to strengthen its efforts.  Following raids on three 
optical disk factories which were sealed by law enforcement 
authorities (reftel C), the ODFMT suspended the production licenses 
of all three factories pending court decisions.  In 2008, the owners 
of eleven factories that had non-compliance issues were summoned and 
warned to comply.  Some institutional reluctance remains however to 
applying required sanctions against non-compliant factory owners. 
Some MOI officials complain that MOI's enforcement function 
conflicts with its role to foster and develop local industry. 
Meanwhile, the Secretary General of the Ministry of Industry has 
expressed interest to work with software distributors to legalize 
the Ministry's own use of software. (The Ministry of Trade is 
engaged in similar negotiations with Microsoft, but an agreement has 
not yet been reached.) 
 
¶6.  (SBU) The GOI still has much work to do, and private sector 
Special 301 submissions highlight legitimate criticisms of 
Indonesia's IPR regime.  We agree that Indonesia still needs to 
 
JAKARTA 00000371  002.2 OF 002 
 
 
enhance its enforcement efforts, including the successful 
prosecution of IPR violators.  The GOI needs to improve Indonesia's 
IPR regulatory structure, particularly in the area of judicial 
reform (as underscored by the long-running dispute over the Intel 
Corporation trademark, for example.)  And while we were pleased to 
see the GOI establish a National IPR Task Force, it's performance to 
date has been disappointing.  In consideration of the demonstrated 
progress Indonesia has made and its continued political commitment 
and cooperation to improve its IPR regime, we recommend that 
Indonesia remain on the Special 301 Watch List for 2008. 
 
HUME