Pinewood

GOVERNMENTS AND CREATIVE ECONOMIES: BUILDING FOR THE FUTURE

By Rezal A. Rehman, posted on 23 April 2016.

Governments often incentivize specific industries, such as agriculture, textiles, or petrochemicals, because of the jobs those industries help create and the wider impact on societal development from having created those jobs. This is particularly true for the entertainment industries, and most notably for content creation. When governments lay the groundwork for sustained economies correctly, the results are often encouraging. A long term view in this regard provides a more realistic perspective than a quarterly profit and loss report does, and governments should always keep this in mind.

Film and television productions stimulate both local economies and international reputations, and are a good business for any government to support. Aside from utilizing the full capacities of a modern, fully-equipped sound studio, such as Pinewood Iskandar Malaysia Studios – a joint collaboration between Pinewood Studios and Khazanah Nasional, the Malaysian government’s investment arm and the one I’m fortunate enough to run – and the skilled workers there that keep everything running smoothly, there are innumerable trickle-down benefits that accrue to local businesses in the surrounding area whenever Hollywood comes to town. For example, big productions such as Marco Polo – which recently completed the shooting of Season 2 at the Studios – require a variety of goods and services: accommodation of various sizes and durations, from hotel suites for main cast to serviced apartments for crew; from cars for getting around to cranes for hoisting lights on set; and raw materials from wood, plaster and nails for set construction to sufficient meat, vegetables and potatoes to feed, in this case, literally a (“Mongolian”) army and hundreds of crew.. Most of these goods and services are sourced from local vendors, catalyzing the surrounding economy.

More than twenty-five national governments around the world, including Malaysia, have recognized this phenomenon and created tax and production incentive schemes to attract film and television projects into their back yards. Depending on the jurisdiction, the scheme might take the form of a tax credit, or exemptions, grants and subsidies, fee waivers, or cash rebates. The Film In Malaysia Incentive (more colloquially known as “FIMI”) dates back to 2013 and provides a 30% cash rebate on Qualified Malaysian Production Expenditure for both domestic and foreign productions under specified conditions and guidelines. Producers take incentive schemes like these into their careful consideration when they decide where to film a scene, or a show, or a series.

FIMI has undisputedly helped attract two seasons of production of the epic Marco Polo series, which has made full use of our state-of-the-art facilities in Johor Bahru, which include the largest deep water and green screen tanks in Asia, to help bring the story alive. It’s a blockbuster show, often larger than life, enjoyed by audiences around the world that’s helped put Malaysia into the international arena. The production has generated a tremendous amount of economic stimulus for the State of Johor Bahru. Over 40,000 hotel room nights were booked for Season 1. For season 2, a nearby newly opened serviced apartment hotel, benefited from maximum occupancy within weeks of its opening. 3 car companies pooled resources and provided over 300 rentals cars. F&B outlets at the Puteri Harbour marina, a 5-minute drive from the Studios, enjoyed bustling sales in the evenings or even in the late hours as crews returned from a late shoot. Even Legoland, a few blocks away, benefited with crew popping in with their visiting children.

It’s also created a sustained, knowledge-based pool of skilled labor that is gaining international reputation and renown. Several of the local crew from Season 1 went on to work on international projects before rejoining in Season 2. These are skilled, highly valued talents that command comfortable wages and afford a higher standard of living and spending than many other professions. And these combined factors – technological investments, technical expertise, local economic benefits, and international recognition – promote both creativity and enhanced domestic output. That’s why film incentives are a sound policy for governments, and why governments need to embrace them as a sound, long-term investment that will stimulate infrastructure development for the country’s long-term benefit.

Sometimes, though, sound policy can fall victim to practical politics or short-term insecurity, leaving the best plans of mice and men to go awry. Businesses depend on certainty and predictability for their planning. Businesses don’t generally like surprises, or the unknown. Yet politics aren’t always given to permanence and this is where the conflicts can arise. We’ve seen this happen in various places around the world, such as when a new administration succeeds a prior opposition and seeks to reverse or eliminate all of their predecessors’ policies seemingly for no other reason than to discredit the opposition, often prompting uncertainty in the marketplace.

In the U.S., for example, the State of Illinois announced last November that it was reinstituting its lucrative Film Tax Credit scheme following its deferral by the state senate several months earlier. And while this is good news, the devil in the detail was a corresponding announcement by the state that tax credits for new projects would not be certified or able to be claimed unless and until the state enacted its FY2016 budget. Political uncertainty last year in Colorado also prompted similar concern amongst producers looking to film there. Such on-again/off-again pronouncements leave producers scratching their heads. A crisis in confidence amongst the producing community can spread like wildfire, and can be enough to get them looking elsewhere.   Conversely, decisions by states like Georgia and California in 2014 and 2015, respectively, to enhance their schemes stand out at the other end of the political spectrum.

In order to maintain international competitiveness and continue attracting the likes of Marco Polo, Asia’s Got Talent, and other productions from the next signature TV series and blockbuster to more modest Independent or Asian productions to Malaysia and with the foregoing caveats in mind, the Government should seize the opportunity to confirm its commitment to creativity by making FIMI permanent, or at least announcing publicly its availability for a 5-year minimum guarantee, rather than leaving it open to question every year by means of speculative annual renewal funding. Film incentives are not a finite, zero-sum game measurable on a quarterly basis and governments that see it that way are myopic. Building a holistic infrastructure to support continued international investment and keep Malaysian film crews and facilities on the world’s radar screen will yield immeasurable benefits years from now.

Regional competition throughout the Asia-Pacific is fierce, with Australia, New Zealand, Singapore, and Thailand all offering comprehensive arrangements within their shores. It’s not difficult to imagine more productions migrating there, rather than to Malaysia, if the Government here gives any indication of losing resolve or reconsidering its support for the Film in Malaysia Incentive. As a proud Malaysian confident of the studio’s ability to deliver at an international standard befitting the iconic global Pinewood Studios brand, I would hate for that to happen. We’re committed to establishing Malaysia as a destination for international filming, to providing employment opportunities for artists and local crews and the rest of the production ecosystem, and enhancing the country’s reputation as an efficient and cost-effective hub for the creative industries. Let’s hope that our friends at Putrajaya take the same view.

Rezal A. Rehman is the Chief Executive Officer of Pinewood Isakandar Malaysia Studios.

internet takes the money

SCORE ONE FOR THE GOOD GUYS: PROTECTING SINGAPORE’S CREATIVITY

By Clara Cheo and Mark Shaw, posted on 23 April 2016.

The creative industries – books, magazine, theater, music, movies and TV, computer software and the like – are an essential component of Singapore’s national ambitions for future economic sustainability. Over the years, in fact going back a generation, those ambitions have sometimes fallen victim to the bad guys; people who make their living by engaging in the production and distribution of illegal, pirated content made readily available to anyone looking for it. But the recent implementation of ground-breaking legislation is an encouraging development that levels the playing field significantly for content creators and distributors, including Golden Village and the Shaw Organisation, who depend on copyright laws in order to make a living.

A new day has dawned in Singapore. The High Court’s order issued on February 11 requiring Singapore’s network service providers to block access to SolarMovie.ph evidences a mutual commitment by industry and government to work cooperatively to promote and protect creativity, and confirms the republic’s leadership role in intellectual property rights reform.

These orders resulted from the High Court’s determination, that SolarMovie fit the statutory criteria of a Flagrantly Infringing Online Location as defined under Singapore law. SolarMovie has already been the subject of similar blocking orders in a number of other jurisdictions including Denmark, Italy, Romania, and the United Kingdom. Six international producers and distributors of filmed entertainment, represented by the Motion Picture Association, petitioned the court for this relief in January, marking the first such proceedings ever brought in Singapore and the Asia-Pacific region.

Though innovative in their scope and impact, the orders are neither capricious nor arbitrary. In fact they represent the culmination of more than five years of careful policy consideration and legislative deliberation. The Copyright (Amendment) Act 2014 resulted largely from recommendations issued in 2012 by the Media Convergence Review Panel, a 12-member committee consisting of public and private sector representatives tasked, among other things, with developing policy and regulatory responses to copyright and digital piracy challenges. That panel, which included senior executives and officials from the Attorney-General’s Office, MediaCorp, Singapore Press Holdings, Samsung, and Google took note of the unacceptably high level of online piracy taking place in Singapore and also took stock of deterrent measures utilized in other jurisdictions before finally recommending site blocking as the most feasible and cost-effective regulatory means to combat digital piracy.

The Government, for its part, has consistently emphasized the value of strong intellectual property rights protection as an essential component of its ambition to make Singapore the Asian IP Hub, and has repeatedly acknowledged the need for more effective solutions to address copyright piracy. Minister for Law, K. Shanmugam, for example, cited evidence in parliament following research by Mark Monitor, a division of Thomson-Reuters, that the consumption of online pirated material here is not insignificant, and that in fact Singapore ranked the worst out of fifteen Asia-Pacific countries in per capita infringement. Senior Minister of State for Law, Indranee Rajah SC, noted two years ago that the prevalence of online piracy in Singapore turns customers away from legitimate content and adversely affects Singapore’s creative sector and can undermine our reputation as a society that respects the protection of intellectual property rights.

Sycamore Research and Insight Asia reported in 2014 that almost 70% of 16-24 year olds in Singapore are chronic users of pirated sites. Among the 900 respondents covered by the research, the top reason for engaging in online piracy was that pirated content was available easily and for free. 41% of persistent pirates say that they pirate movies, TV shows and music because there are no enforced laws to stop them. But perhaps even more concerning was a further study that year by Ballarat University in Australia. Piracy websites that target Singaporeans rely on advertising revenues as their means of profit. The Ballarat research noted that 90% of the advertisements displayed on rogue websites in Singapore were categorized as High Risk (e.g. featuring malware, sex industry, gambling, scams, and downloading sites) prompting concerns that new subcultural norms with profoundly negative consequences – including the rise of the online pornography culture and child exploitation material – are being fostered by those sites. When asked what type of advertising they recalled seeing on piracy websites, 58% of 16-18 year olds recalled seeing sex industry advertisements.

The content industry has therefore placed great emphasis on displacing online piracy by making legitimate content available to consumers at a reasonable price, on a timely basis, and through an array of different consumer experiences including in Golden Village’s case discounted admissions to its theaters and global day-and-date releases of major blockbuster hits. Movies and TV programs are now also widely available for catch-up viewing, on-demand downloading for sale or rental, and live streaming across a variety of legal distribution platforms including iTunes, YouTube, Viddsee, Toggle, StarHub TV Anywhere, and Singtel TV Go among several others. Netflix’s recent entry into the local market provides Singapore consumers with even more choice. So balancing the stick along with the carrot is a good way to maintain this momentum and provide assurance to new market entrants about their investments.

Although Singapore’s copyright law already contained provisions allowing rights owners to request network service providers (NSPs) to disable access or remove copyright infringing material from its network by means of ‘take-down’ notices issued to the NSPs, there is no statutory requirement for compliance. Singapore’s NSPs have also contended that take-down notices are inapplicable to them because they do not host the infringing material on their networks, and instead function as a mere conduit for its transmission. Whether or not liability for the underlying infringement extends to the NSPs – particularly where the claim is disputed – has never been litigated in Singapore.

In the meantime, more than 30 jurisdictions in Europe now have legislation in place specifically geared towards copyright infringing sites that avoids the issue of liability (and thus compliance with take-down notices) altogether. These laws premise that although internet service providers (ISPs) may not themselves be responsible for operating the infringing sites or for the vast degree of infringement that those sites facilitate, ISPs are nonetheless best situated to physically prevent any further infringement by ‘pulling the plug’ on those sites to disable their continued access and use by their customers.

The Copyright (Amendment) Act 2014’s provisions in this regard – which were the first of their kind ever passed in Asia and served as precedent for the enactment of similar legislation in Australia last year – recognizes that Singapore’s network service providers (two of whom are also Pay-TV platform operators) are by no means the problem, but are instead integral components of any effective solution. Indeed, the five major NSPs operating in Singapore all participated in the Ministry of Law’s industry and public consultations during the run-up to the enactment of the Copyright (Amendment) Act 2014.

Virtually every government around the world regularly engages in some degree of site blocking as an exercise of its administrative, discretionary authority as an expression of its societal values. The Media Development Authority, for example, presently restricts access to certain mass impact sites which contain content that the community regards as offensive or harmful to Singapore’s racial and religious harmony, or is against national interest. Most recently the government has extended this authority into unauthorized remote gambling websites. None of this has ‘broken the internet’ despite an ongoing harangue of contrary hyperbole that it might.

Content owners in Singapore, including the plaintiffs who obtained the order against Solarmovie, expend considerable resources beyond the cost of simply producing and distributing their creative output in order to protect it. This typically requires extensive and costly investigations and the initiation of legal proceedings where necessary. Content owners and distributors in Singapore have always stood up for themselves, and the recent actions show they’re still willing to do just that.

The High Court’s blocking orders are therefore welcome on a number of levels. The certainty of the outcome now provides an effective basis for future proceedings and represents a welcome next step in the continued evolution of intellectual property rights reform in Singapore. It also bodes well for businesses like Shaw and Golden Village, who need a strong copyright regime within which to operate. A generation ago, Singapore was arguably the epicenter of copyright piracy in Asia until, as a matter of national policy the Government provided an infrastructure to adequately address the problem through the enactment of the Copyright Act 1987. Now, almost thirty years later, a similar framework has been established that bodes well for the next generation of Singapore’s creators.

Clara Cheo is the Chief Executive Officer of Golden Village Multiplex Pte. Ltd. Mark Shaw is the Executive Vice President of Shaw Organisation.