The United States has warned that Malaysia's proposal to cut prices on computer software and compact discs could backfire and prompt producers to shun the country, a report said today.

Market forces will compel producers based in the United States, which owns 70 percent of disc copyrights, to shift to more lucrative markets, US Department of Commerce assistant secretary William H Lash was quoted as saying by the Sun .

"This (controlling prices) will be to the detriment of the country and the government's Multimedia Super Corridor (MSC) project and plan to implement a knowledge-based economy," he said.

The MSC is a high-tech zone conceived in 1994 under Malaysia's strategy of shifting the country towards a knowledge-based economy. Stretching about 50 kilometres south from Kuala Lumpur to the new international airport, the MSC mainly houses international IT companies.

No turning back

Domestic Trade and Consumer Affairs Minister Muhyiddin Yassin said Malaysia will stick to its decision to control computer software prices despite US outcry.

"Maybe they (the Americans) don't really understand the piracy problem in our country, where we want the industry to be involved to solve it. The industry has the capacity to offer fair prices," he was quoted as saying by the Bernama news agency.

Muhyiddin was quoted last month as saying the cabinet had decided to place CDs, VCDs and DVDs as well as computer software under the Price Control Act so they could be sold at reasonable prices to discourage the purchase of pirated versions.

But Lash said price control measures would not have an impact on piracy.

"It will instead lessen the appetite of companies and send out the wrong message to the investment community, especially because it involves imposing price control on luxury items.

Severe punishment

"Now it is optical discs. What next? Shoes, apparel?" asked Lash, who is on a tour of countries where piracy is rampant.

Instead, he recommended stricter enforcement, increased penalties including jail terms, destruction of illegal production, and consumer education.

Last year, the United States lost about RM919.6 million to piracy in Malaysia.

Malaysia, like many parts of Asia, is awash with pirated software, CDs and VCDs. New movies are usually on the streets for less than two dollars even before they hit the big screen in most parts of the world. - AFP