Malaysia is to slash prices of music and movie discs beginning Jan 1 next year as part of its fight against piracy, local media reported today.

The ceiling price for locally-produced video compact discs (VCDs) will be fixed at RM14, Domestic Trade and Consumer Affairs Minister Muhyiddin Yassin said.

Locally-manufactured music compact discs (CDs) of foreign artistes will be priced at RM29 and those of local artistes at RM21, he said.

The price controls will not affect imported CDs, VCDs or music cassettes, digital video discs (DVDs) or computer software.

"The government has given the best solution to the problem we are facing. I hope all parties will agree to this. A 30 percent decrease in prices of the CDs and VCDs I think is good," Muhyiddin was quoted as saying by the Bernama news agency.

At present, original music discs or DVDs normally cost between RM40 and RM80 apiece while illegal copies, which were readily available on the streets before a recent government crackdown, sold for around RM5 to RM15.

Stock clearance

Industry players are being given a three-month grace period to clear existing stock, estimated to be worth RM40 million, Muhyiddin said.

They were unlikely to suffer much as manufacturers and distributors would earn between 11 and 21 percent profit margins respectively, once the price reduction is in place, he said.

"A CD manufacturer personally told me that he could still make profits even if the CDs were sold at RM19.90 per copy," Muhyiddin was quoted as saying by The Star .

Those who flouted the price controls next year could be fined up to RM15,000, he said, adding that the situation will be reviewed in a year's time.

"We will review this decision in one year after implementation and if we find that the price control mechanism managed to revitalise the industry, then we will lift it," he said.

Reaction from industry

For their part, local film and music producers, distributors and artistes protested the move, saying it would hurt the industry.

Producer Mariana Hashim, who owns A and A Pictures, said the move was a "slap in the face" for local producers, who would have to cut costs by almost half and this would have a domino effect on the entire industry.

"If many small producers have to close their business, production crews will have no jobs and actors too will find it difficult to make a living," she was quoted as saying by the afternoon Malay Mail .

Danny Liew, chief executive of distributor PMP Sdn Bhd, said it would be impossible to bring in box-office hits and good foreign movies with the fixed price because they have to pay US$100,000 for the rights.

"Now we cannot afford to do so, and simply put, the pirates will have a field day," he said.

US warning

The United States has warned that Malaysia's move to cut prices of CDs and DVDs could backfire and prompt producers to shun the country even though some of its own companies have recently adopted a similar approach to cope with the problem of internet downloading of music for free.

"This (price control) will be to the detriment of the country," US Department of Commerce assistant secretary William H Lash said while in Kuala Lumpur in July.

Market forces would compel producers based in the US, which owns 70 percent of disc copyrights, to shift to more lucrative markets, Lash said.

He said the US had suffered losses of about RM919.6 million to piracy in Malaysia last year.

A nationwide blitz on piracy this year has led to the seizure of nearly four million discs estimated to be worth over RM26 million between May and August, according to Malaysian official figures. - AFP