VZCZCXRO7861
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #0372/01 0621137
ZNR UUUUU ZZH
R 031137Z MAR 09
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 1696
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS COLL
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHKL/AMEMBASSY KUALA LUMPUR 2557
RUEHBK/AMEMBASSY BANGKOK 8660
RUEHGP/AMEMBASSY SINGAPORE 6466
RUEHDT/AMEMBASSY DILI 1019

UNCLAS SECTION 01 OF 02 JAKARTA 000372 
 
SINGAPORE FOR SUSAN BAKER 
 
SIPDIS 
SENSITIVE 
 
DEPT PASS TO USTR 
DEPT FOR EAP/MTS, EAP/IPE, EB/TPP, EB/IPE 
USTR FOR BWEISEL 
USTR FOR KELHERS AND RBAE 
 
E.O. 12598: N/A 
TAGS: KIPR EINV ETRD ECON ID
SUBJECT: INDONESIA SHOULD DOWNGRADE TO PRIORITY WATCH 
 
JAKARTA 00000372  001.2 OF 002 
 
 
¶1.  (SBU) Summary:  Post recommends that Indonesia be downgraded on 
the Special 301 intellectual property rights (IPR) Watch List to 
Priority Watch List status for 2009.  Indonesia has made only 
limited improvements overall in the enforcement and protection of 
IPR since its upgrade to the Watch List in November 2006.  In 
addition, several economic policies initiated by Indonesia in 2008 
undermine the country's IPR regime and increase harm to U.S. 
intellectual property rights holders.  These include actions by the 
Government of Indonesia (GOI) to limit the ability of pharmaceutical 
companies to import medicines as well as a ministerial decree 
requiring films exhibited in Indonesia  be processed domestically. 
End Summary. 
 
Some Progress, But Not Enough 
----------------------------- 
 
¶2.  (SBU) Post acknowledges that the GOI has made advances to 
address IPR infringement.  IPR enforcement has continued, although 
often sporadic and poorly reported.  During 2008, the GOI continued 
to interdict counterfeit pharmaceutical products and launched a 
successful operation against nine different criminal groups involved 
in the manufacture and distribution of counterfeit industrial 
lubricants.  Among those arrested was the country's single largest 
lubricant counterfeiter. 
 
¶3.  (SBU) Optical disk (OD) enforcement also continued throughout 
¶2008.  The GOI seized approximately 6 million contraband or pirate 
disks and several hundred optical disk burners.  (Optical discs are 
used to pirate music, movies and software.)  The Ministry of 
Industry increased inspections of OD factories and factory owners 
have responded with better compliance.  Indonesia has also 
implemented a system to monitor imports of the raw material used to 
manufacture optical disks.  Unfortunately, Indonesia's judiciary 
continues to resist employing provisions of the copyright law that 
require the seizure and destruction of equipment identified as 
having been used for the production of counterfeit products. 
 
¶4.  (SBU) Indonesian law enforcement authorities have successfully 
utilized U.S. assistance, especially support provided by the 
Department of State-funded, Department of Justice (DOJ)-implemented 
ICITAP program.  ICITAP advisors continue to mentor and guide GOI 
officials in advancing IPR objectives.  Many of Indonesia's 
IPR-related accomplishments trace back to capacity building efforts 
delivered under this program, including improved compliance by OD 
factories and increased interdictions of counterfeit goods. 
However, overall lack of coordination at the national level 
continues to undermine Indonesia's efforts to substantially and 
measurably improve its IPR regime. 
 
Unintended Consequences 
----------------------- 
 
¶5.  (SBU) Indonesia has instituted several policies in 2008 that 
pose an adverse risk to Indonesia's IPR regime.  In November the 
Ministry of Health issued Decree 1010/MENKES/PER/XI/2008, which 
requires pharmaceutical companies to manufacture drugs domestically 
as a prerequisite for the licensing and sale of their products. 
Decree 1010 effectively prevents the sale of legitimate, foreign 
manufactured drugs in Indonesia.  Several licenses for medicines 
have subsequently been rejected by the GOI's food and drug agency 
(BPOM).  As a result, Decree 1010 forces the transfer of 
intellectual property to local manufacturers and risks increasing 
the demand for counterfeit alternatives.  Counterfeits are already 
estimated to comprise 40 percent of the pharmaceutical market in 
Indonesia. 
 
¶6.  (SBU) In November the Ministry of Tourism issued Decree 
PM.55/PW.204/MKP/2008 which requires that all theatrical movie 
prints exhibited in Indonesia be processed locally.  This decree 
forces the transfer of intellectual property to local film 
processors (of which there are only two in Indonesia.)  And by 
preventing importation and exhibition of foreign produced movie 
prints, the decree risks diverting consumer demand toward pirated 
substitutes in a market already beset by counterfeit DVDs.   Health 
issues SDecree 
 
 
Priority Watch List 
 
JAKARTA 00000372  002.2 OF 002 
 
 
------------------- 
 
¶7.  (SBU) Post feels that IPR policy interests are best served if 
Indonesia remains on the Priority Watch List for the full year. 
However, Indonesia should be offered a realistic opportunity to 
return to Watch List status (or better) in 2010.  That opportunity 
should include concrete efforts to roll back policies that enable 
IPR violations as well as enhanced enforcement against IPR 
violators.  The integrity of Indonesia's judicial system also 
remains a persistent concern.  We should insist on measurable 
improvement in the successful prosecution of IPR violators and the 
full application of sanctions as provided for under Indonesia's IPR 
laws.  We should also encourage the Indonesian National Police to 
include IPR enforcement as a specific priority.   Lastly, Indonesia 
should empower its Directorate General of IPR to more effectively 
coordinate IPR efforts at the national level. 
 
HUME