Sri Lanka’s software piracy rates second highest in Asia

A global study reveals that Sri Lanka has the sixth highest software piracy rate in the world and second in the Asian region. The study was conducted independently by IDC, the information technology industry’s leading global market research and forecasting firm, which for the first time, covered Sri Lanka as well. Sri Lanka was found to have a software piracy rate of 90% in a study conducted as an extension of the IDC’s Global Software Piracy Study 2006. This means that 9 out of 10 software programmes installed on personal computers in 2006 in Sri Lanka were unlicensed or obtained illegally through software theft.

This high software piracy rate has resulted in US$ 86 million in retail revenue losses to the local Sri Lankan software economy according to the IDC. The findings of the study highlighted the need for action against software piracy in Sri Lanka, where it has taken a heavy toll on personal and business users as well as the overall economy. This was revealed at a seminar on business optimization with good governance and staying compliant with Software Asset Management (SAM) held at the Galadari Hotel in association with the Business Software Alliance (BSA). The seminar, the first of its kind in Sri Lanka, was jointly conducted by National Intellectual Property Office, the Ceylon Chambers of Commerce, the ICT Agency of Sri Lanka (ICTA) and the European Chamber of Commerce of Sri Lanka.

The broader economic impact of software piracy is significantly greater than the retail value of pirated software. Among the many negative consequences of software piracy is the crippling of local software industries because of competition with pirated software, lost tax revenue and jobs from the lack of a legitimate market and decreased business productivity from using unsupported and unwarranted software.

Stemming the tide of piracy in Sri Lanka can only be achieved though industry education and awareness and proactive government-led enforcement efforts. Roland Chan, BSA’s Director of Marketing for Asia said, “Software piracy is tantamount to software theft and therefore forbidden by the law of Sri Lanka,” Chan added, “BSA is making a concerted effort through Software Asset Management (SAM) to raise awareness about software piracy.” The costs of piracy affect both up and down the supply and distribution chains. According to the IDC, for every $1 in software sold, there is at least another $1.25 in services sold to design, install, customize, and support that software. That software and those additional services then drive approximately another $1 of channel revenue. Most of this additional service or channel revenue goes to local firms.

The significant losses due to high piracy translate into negative impacts on IT industry employment, revenues, and financial resources available for future innovation and the development of new, home grown technologies.

Commenting on the implications of this findings for Sri Lanka, Jayantha Fernando, Programme Director & Legal Advisor of ICTA said; “The ICT Agency of Sri Lanka welcomes BSA’s presence and involvement in capacity building and awareness campaigns of this nature, which will result in greater level of understanding and appreciation of Intellectual Property issues, essential for the growth of intellectual creations in this country and help reduce piracy. Sri Lanka has demonstrated commitment to greater protection of IP rights in software.

This is manifested through enhanced protection measures introduced through the Intellectual Property Act No. 36 of 2003 as well as the recently enacted Computer Crimes Act No. 24 of 2007. Enforcement measures have been further strengthened through the establishment of the Commercial High Court of Colombo, with jurisdiction to hear and determine PR infringement cases. This has proven to be a very effective and efficient process with several cases of Software infringement being brought before the Commercial High Court.”