For the software industry, for example, this means that all product must pass through a costly and uncompetitive distribution system that raises the ultimate price to Indonesian consumers. These artificially high prices, in turn, provide a fertile breeding ground for more software piracy. After many years of attempting to establish a market presence in Indonesia despite the country's restrictive investment regime, at least one RIAA member company has been able to establish a joint venture to produce sound recordings, although the venture is barred from participating in the distribution of those recordings. The blanket ban on foreign participation in product distribution hampers the development of the legitimate recorded music market. This antiquated and protectionist measure needs to be dismantled before U.S. record companies can enjoy meaningful market access.
Counterproductive regulations are a massive complication for market entry by audio-visual companies.
Foreign investment in the construction of cinemas, or in the development of video retail outlets, is forbidden. This extraordinary array of market access barriers makes Indonesia one of the least open markets in Asia, or indeed the world, for U.S. copyrighted products. In no other major market are foreign companies so thoroughly excluded from any role in bringing their product into the country and distributing it to consumers. Liberalizing these restrictions in order to develop more competitive and efficient distribution channels is essential if Indonesians are to achieve the full benefits of access to the world's bounty of copyrighted products. Late in 1994, IIPA submitted detailed suggestions for Indonesia to consider as it seeks to make its law as responsive as possible to the realities of the 21st century economy.