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Software piracy in Indonesia is an open secret. Copies of everything from Microsoft Windows 7 to the latest games line the shelves of software shops in Ratu Plaza and other malls. All are illegally duplicated, and sell starting at just Rp 25,000 ($2.75) per disc.

“Piracy is a big problem right now,” said Donnys Sheyoputra of the Business Software Alliance in Indonesia, an association of proprietary software and hardware developers. “It will reduce the opportunity for the local software industry to grow.”

That’s the argument usually put forward in support of greater enforcement of software intellectual property rights in Indonesia, and it’s true that it’s difficult to make a profit when potential customers steal your product. But the software piracy issue is as much about international politics as it is about the domestic information technology industry, and not every Indonesian software developer will benefit from increased enforcement.

“Most Indonesian software companies use pirated software because the overhead cost would be enormous with genuine software licenses,” said Fares Farhan, a programmer for Scraplr.com.

The site is a local start-up that aims to provide personal time management services, including Web and mobile interfaces and social features that let your friends encourage you to get things done.

Because his company provides a service through the Web, this means that Scraplr does not have to worry about pirated software. Developers of custom business applications and software outsourcing firms are also immune because they do not sell their products to everyday consumers.

Instead of increased enforcement, Farhan would like the government to provide marketing assistance to Indonesian developers to help them gain international market share, while at the same time, negotiate with foreign software vendors for cheaper licenses at home.

“For Microsoft, which is a big company, we have no obligation to make them rich. They’re already rich. Obviously it’s the wrong mind-set, but we feel less guilty pirating their software to support independent software developers in Indonesia,” he said.

Intellectual property piracy of all types, including music, movies and software, is an international concern when it comes to trade negotiations. The Office of the US Trade Representative put Indonesia back on its priority watch list of intellectual property violators in May.

“We hope that the downgrading will not create a non-tariff barrier on bilateral trade between Indonesia and the United States,” Foreign Ministry spokesman Teuku Faizasyah said at the time.

After years of pressure, the government recently launched a campaign to rid all its offices of unlicensed software, and there have been a few high-profile busts of illegal media duplicators. Police seized Rp 2 billion worth of pirated discs and equipment in a raid at Banten in December.

Meanwhile, most Indonesians continue to use unlicensed software, especially individuals and small businesses, said Brett McGuire of the Indonesian office of Rouse IP Consultants, a company that deals with intellectual property.

He cited price as a major reason. “I know a lot of people, a lot of my friends who are on an income of Rp 3 million to Rp 5 million per month and they want software, they need software, but one piece of software will set them back a month’s income,” he said.

But Donnys’ cautions that price does not fully explain the popularity of piracy. He points out that even those who can afford genuine software buy counterfeits, and that not all software is expensive. Indonesian software developer and BSA member Bamboomedia sells its products legally for about Rp 50,000 each, not much more than the price of an illegally copied disc.

“We cannot justify piracy because of the price issue,” Donnys said. “This goes back to the awareness of the public of how they respect copyright as a whole, including software.”

McGuire agrees that Indonesians can and should go completely legal, but does not think that simply forcing everyone to pay the manufacturers’ full price is a reasonable or effective strategy. He said he sees two good solutions: local pricing and open-source software.

“Even the student edition of Microsoft Office is Rp 800,000 plus tax, which is still a huge amount of money. If someone did the modeling on salaries or income and compared it to overseas, the cost would be much higher here that it would be in Australia or the United States,” he said.

Some foreign vendors already have local pricing programs. Microsoft offers student prices and special multiple-license deals for Internet cafes, with discounts of 50 percent to 75 percent, Donnys said.

But local pricing is not always available to the general public and not all software vendors have chosen to participate. Apple does not offer local prices anywhere in the world, McGuire said.

Open-source software is legally free. There are open-source equivalents of just about every type, from operating systems such as Linux to office software like OpenOffice.

Betti Alisjahbana, chairwoman of the Indonesian Association of Open Source, said that the migration to open-source software would save money, as compared to paying for proprietary products, such as Microsoft Windows.

“If we use proprietary software, we have to pay for it and most of the software is copyrighted by companies from developed countries. So if we do that, it will only make them more developed and leave us behind,” Betti said in September.

The Indonesian government renewed its support for free software in its sponsorship of the Global Conference on Open Source in Jakarta last October, after creating the “Indonesia, Go Open Source” program in 2004. The program is aiming to have all government institutions use open-source software by 2011.

Donnys, whose organization is funded by a consortium of proprietary software and hardware developers, doesn’t see the promotion of open-source software as uniformly positive.

“Open-source and propriety software have to co-exist. We can let people decide which kind of software they want to use,” he said. “If the government is not neutral in this, that will be a serious problem for the software industry.”

So will Indonesia be able to kick its addiction to pirated software? “If you look at what software is being used right now and say, is it realistic for everybody to pay for that software, the answer is no,” McGuire said. “Is it realistic for everybody to be legal? Then the answer is yes, but not the way they’re doing it right now.”