By Wan Saiful Wan Jan. Published in Sin Chew Daily (English) 3 December 2016

If you go to a local pasar malam, it is likely that you will find the latest albums or the latest movies being sold cheaply. The prices of these pirated items are much lower than the price of the legitimate ones sold in “proper” shops.

At some places, you can get certain medicines at very cheap prices. The drug may be labelled as if it was one of the better-known brands, but they are not the same. You know that at that price; something must be not right.

An even more widespread phenomenon is the selling of branded items at prices you know is simply too cheap for the brand. Fake branded shirts, jerseys, handbags, shoes, watches and many more are widely available for purchase in Malaysia.

Most people would not complain that much about the availability of these fake products. Many are happily selling them and making money from these fake items, and an equal number of people are happily buying them.

But their widespread presence in our economy is actually hurting Malaysia’s global reputation (as if our politicians haven’t done enough damage!).

Brands and trademarks are components of intellectual property, together with other elements such as patent and copyright. Unfortunately Malaysia still falls short in several areas when it comes to protecting intellectual property rights.

The International Property Rights Index is a worldwide study produced by Washington-based Property Rights Alliance. This year, the Index ranked Malaysia at 26th out of 128 countries globally, and 7th out of 20 countries in our region, Asia and Oceania.

Under the Intellectual Property Rights category, Malaysia performed poorly in the sub-component of copyright protection, scoring a mere 4.6 out of a possible 10. In fact, this is our worst score among all the indicators measured by the study.

The fact that we scored badly in the Intellectual Property component is disappointing especially given that the government is trying hard to eradicate piracy. The high level of product counterfeiting and piracy are bringing our whole country down in this Index. And it is bad for our economic development too.

Economists generally agree that a country’s economic growth depends on higher value activities and less on commodities and natural resources. Malaysia’s domestic manufacturing sector may be increasingly diversified but is still focused on the assembly of products that are designed and manufactured elsewhere. This is not good enough to propel us into a developed economy status.

For Malaysia to join the ranks of high-income countries, we need to get serious in building a knowledge economy. And for knowledge to be successfully monetized, we must have better protection of intellectual property.

Research and knowledge-driven industries underpin the growth of most high-income countries. Consider the example of the United States. Back in 1975, 83 percent of its 500 biggest companies were focused on “tangible assets” in the areas of manufacturing, agriculture and commodities. That was very much like Malaysia today. But today, the reverse is true.

In 2015, 85 percent of the value of US’ 500 biggest companies came from “intangible assets”. This means the most successful US companies make almost all their money through ideas, concepts, brands and innovative products and processes.

Advanced Asian economies — Japan, South Korea, Singapore and Taiwan — have already taken that same path. Over the recent decades they have been transforming the structure of their economies from agriculture to manufacturing and now to knowledge-based industries. In order to follow suit, we need to take the important step of strengthening the protection of intellectual property so that we can attract innovative multinational companies to our shores, bringing with them the capital, skills and technological know-how that Malaysia may still be missing.

To be fair, Malaysia already has the basics in place, in line with our World Trade Organization commitments. And during the TPP negotiations, Malaysia had also shown a willingness to upgrade our domestic IP legislation beyond the minimum standards required by WTO membership. This commitment must continue, irrespective of the recent political developments in the United States and despite the death of the TPP.

In the same spirit, businesses big and small must show respect towards intellectual property rights. There are far too many fake items being sold out there. The selling of these fake items by shops and pasar malam stalls must stop. Our small business operators must realize that every time they sell a fake product, they are contributing towards damaging our country’s reputation among global investors.

Consumers like you and me must change our attitude too. Yes of course we are all looking for bargain items, especially at a time when the prices of almost everything is going up. But we need to stop buying all the fake merchandises or downloading movies and softwares illegally. We must realize that buying fake items or downloading pirate copies of movies, songs and softwares are modern version of theft. We have a moral obligation to stop these daylight robberies.

(Wan Saiful Wan Jan is the chief executive of the Institute for Democracy and Economic Affairs, IDEAS)


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