Software Legalization in Ukraine
Date: October 15, 2003Source: Computer Crime Research Center
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... in East Europe countries, especially in Russia and Ukraine, thereby creating a modern technological economy there.
Today the use of unlicensed software in Ukraine makes up 87%.
It was said by Vladimir Dmitrishin, a vice-chairman of Intellectual Property State Department at the “round table” session on “Lawful protection of intellectual property”.
According to V.Dmitrishin when compared with 2000, the index of unlicensed software has been reduced only by 2%. In 2000, gross profits made up 265 million US dollars whereas the shortage of tax incomes was $93 million. He also noted that if the use of counterfeit program products is not lowered, losses of gross profits in 2004 are expected to be $47 million and shortage of tax payments will make up $165 million.
He says that the sum of Ukraine’s annuals sales of SW is $120-140 million, legal products making $25-35 million. Budget losses caused by tax shortages are about $30 million a year.
Software legalization by its size and consequences can be considered as the whole economy sector. It should be not forgotten that SW market can hardly exist independently and the growth of adjacent markets consuming software products depend on it.
The reduction of piracy favors the increase of wages, tax assessments and decrease of so-called “brain drain”. Every year 2,5-6 thousand experts in computer technology leave Ukraine. State losses inflicted by that are UAH 37,5-90 million a year. The budget allocates every year UAH 3 000 to train an expert.
However, the state receives main tax assessments not from physical persons but companies. Here tax payments directly depend on piracy level. According to Data-Monitor SW, market sales in Russia are $191 million. They are lower than in many East Europe countries for example Poland ($387 million), Czechia and Hungary ($279 and $232 million respectively). Quite radical backlog is explained as follows: Russia and Ukraine have younger software markets and high piracy (88%). High level of piracy resulted in that the state has lost $1,44 million in retail trade and $731 million in tax assessments. It is expected that market sales will be increased up to $395 million and tax assessments will make $201 million in 2004. According to IDC and BSA, losses of total profits will be $7,8 million in 2004 if the piracy remains on the level of 2000. If the piracy is decreased by 10% until 2004, losses will make up about $7 million. If the piracy is lowered to average level of West Europe countries (34%), losses of total profits will be $4,8 million.
According to experts from Communication and Information State Committee (CISC) press-service, one of the main reasons of widely using unlicensed software is a low consuming capacity and the lack of active mechanism of protecting intellectual property rights.
CISC informs that organs of Ukraine’s government operate now over 40 thousand Microsoft program products whereas uncovered demand in such products exceeds 50 thousand units for the next three years.
It is obvious that the government should pay more attention to problems of fighting against piracy and copyright infringement. They must not be among key difficulties for the association of information technology market to be created.
In May 2002 Ukraine’s Cabinet of ministers ratified the conception of legalization software and fighting against its illegal usage. In accordance with it, the main organizational measures of legalization software include, in particular, an obligatory purchase of licensed SW together with computing technique and prohibition of illegal installation of new SW. Such a decision can be negatively reflected on small firms. If large firms have no special problems with assigning means on transition to licensed software, small and middle ones can experience difficulties connected with substantial expenses on complete re-equipment of their technique with licensed software.
In conclusion, it should be emphasized that Microsoft products are the most popular but not one and only. Now there are many budget-friendly operating systems and office applications, which considerably surpass Microsoft products. For example, Linux and Lindows operational systems, as well as Open Office designed by Sun Microsystems. Open Office has been put on the market recently but it was widely spread and became much admired. The program package is intended for the broad circle of users ranged from home computer owners to corporate clients and officials of state establishments and allows resolving most problems of legalization software.
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