Malaysia is fast gaining recognition as a pirates' haven. The country is home to one of the world's biggest bootleg video producers, where about 35 plants churn out an estimated 360 million pieces of VCDs a year. They carry everything from classic Akira Kurasawa films to pornography and the latest Hollywood blockbusters.

Made-in-Malaysia pirated VCDs are found all over Asia, and as far away as South America. Things would have been worse if Malaysia was put on the Special 301 watch list by the Office of the US Trade Representative (USTR) last year.

Unlike Malaysia's enthusiasm to appear on world records, being put on the USTR would brand this proud nation as a problem country in terms of the protection of intellectual property rights. More importantly, Prime Minister Mahathir Mohamad's Multimedia Super Corridor (MSC) would fall through as one of its Bill of Guarantees vouches for the protection of intellectual property.

Development of the MSC could be jeopardised if Malaysia is unable to show potential investors their intellectual property will be adequately protected here.

"Indeed, we are strenuously protecting intellectual property because of the MSC and the government has the willpower to overcome this menace," Pahamin A Rajab, secretary-general of the Ministry of Domestic Trade and Consumer Affairs said.

Things, however, appear to be easier said than done. While government enforcement officers know exactly where the factories that manufacture the pirated items are, the pirates mange to stay one step ahead of them.

"If we are sophisticated, the pirates are even more sophisticated. They have their own network of spies and informants," Pahamin said.

Although crackdowns will force pirates off the streets, it does not seem to offer long-term solutions. The inability to address piracy the right way could be disastrous for foreign investment, Roland Chan of Business Software Alliance warns.

"Piracy is definitely killing off potential investment by overseas investors and is a threat to the industry. It threatens jobs, investments into research and development and tax revenues to the government," he said.

Pirates in Malaysia sell four times as many movies as legitimate film distributors and 99 times more entertainment software. They are able to do so because pirated VCDs are sold dirt cheap in different parts of the country. In Kuala Lumpur, pirated VCDs are sold as cheap as RM5.

Furthermore, an average Malaysian would willingly part with his RM15 for pirated software instead of paying several hundred ringgit for an original version. "The sheer gap in price between pirated and legal material will help preserve the market for fake CDs and VCDs," investment analyst Benjamin Paul wrote in The Edge this week.

Local education software developer Christopher Chan agrees that Malaysians are forced to pay too much for original software compared with countries like the US. "Relative to peoples' income, software here is very expensive," Chan said.

The Americans themselves were concerned with the extent of the piracy problem in Malaysia. Hollywood's studios such as Fox and Warner Bros are desperately trying to foil Malaysia's pirate video industry in a bid to stem the slide in their box office takings in the country and elsewhere.

Their concern does hold water as the International Intellectual Property Association (IIPA) estimates that, in 1998 the American motion picture industry lost US$40 million to pirates here. The American recording industry lost US$13 million to music pirates and the entertainment software industry US$135.2 million.

Quick checks with those who fervently buy pirated VCDs in night markets revealed that pricing is not the only factor driving them towards the fake item. Malaysia's censorship laws coupled with delayed release dates of movies in cinemas are also contributing factors.

Every Malaysian can now own a copy of "Austin Powers 2: The Spy Who Shagged Me", a movie banned in Malaysia, thanks to pirates and their fake goods.

"Although crackdowns by government enforcement officers would force the pirates to stop selling their fake stuff, it is only for the time being. The real solution will depend on making original items more affordable," Chan said.

Chan also says piracy has made software accessible to the middle class and accelerated knowledge of computer technology. Games software developer Brett Bibby feels piracy has helped create a generation of "games players" who otherwise would not be able to do so.

Pahamin, however, is determined to completely wipe out piracy in the country. He says his officers are on the ground raiding pirates everyday and have been at it for the last one year.

It cannot be denied that Petaling Street, for the last one week, has lost its colour without the pirates waving their VCDs and shouting: "This one is banned in Malaysia!" and "This not show in theatre yet!". But whether Pahamin's officers will be able to maintain the momentum is yet to be seen.

R. MAGESWARI is a member of the malaysiakini team.