The former Minister of Trade Gita Wiryawan had previously stated that Indonesia lost up to 4.5 trillion rupiah per year to pirated films and pirated music. The Government’s approach has been heavy-handed on cracking down the supply side. But it has not been effective as piracy is still a widespread problem in the country. Is there another way of solving this issue? Perhaps.
Matharion Nainggolan, a film industry player, told us on Wednesday (Sep. 24) that the government should start treating its entertainment/film industry like how it treats retail industry, by revoking the upfront tax imposed on entertainment/film industry products. The government today sees entertainment and film industry products as luxury items and thus impose on them upfront taxes.
Sales of original film DVDs, film or music VCDs, and music CDs are imposed with 10 percent Value Added Tax (PPN) and 15 percent income tax. Naturally these taxes increase the price of said products by a significant margin. People like Matharion believes that the elimination of said taxes would help combat piracy as it would bring down the retail price of entertainment/film products.
“By revoking the upfront tax, we (the film producers) could sell an original film DVD with an affordable price, probably as cheap as the pirated one for as much as 10,000 rupiah. This way, we can solve the pirated DVD problem, boost the Indonesian film industry, and reach wider consumers,” Matharion said. “The thing about the Indonesian film industry is that the distribution and ratio of screens or cinema has not reached every corner of the country. This, then, leads to pirated film DVDs simply because the lack of screen distribution across the country to meet consumer demands,” Matharion explained.
The producer of Lost in Paris (2008) from Studio Samuan also offered another solution, i.e., to implement the same strategy used for music distribution for the distribution of Indonesian films. “As you might have noticed, you can purchase an original music CD in a fast food restaurant such as Kentucky Fried Chicken (KFC) or other mini market franchise such as Indomaret and Alfamaret. (The CDs are) no longer exclusively sold in cassette or CD stores anymore so it can reach to wider consumers,” Matharion said. “So I think, with the uneven screen cinema distribution in Indonesia, Indonesian film industry should start considering to implement the same business model.”
In 2012, Swa Magazine reported that the sales of music CD in KFC restaurant could reach up to 850,000 CDs per month. It is indeed an interesting model that can be used to combat piracy. We wonder what the government and other Indonesian film industry players think about this idea. For now, it sounds like an idea worth exploring.
By Elisabeth Oktofani
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