MAKATI CITY, Philippines -- Whitebox PC assemblers’ act of loading illegal software in unbranded computers is posing a challenge for legal software in the Philippines, Business Software Alliance (BSA) officials said in a teleconference with reporters.

"Branded PCs come with pre-loaded software that are legal. This is not the typical case for whitebox computers. Most of the time, they take a shortcut and install illegal software to bring the cost down. This is going to be a challenge for the Philippines," said Jeffrey Hardee, vice president and regional director for BSA Asia Pacific.

The software piracy rate in the Philippines fell by 2 points to 69 percent in 2007, according to the fifth annual BSA and IDC Global Software study.

Because of the growing market in the Philippines for computers and broadband Internet, the study showed that losses tied to software piracy have increased to $147 million in 2007 from $119 million in 2006.

Hardee said that the PC shipments grew by 14 percent in 2007 in the Philippines, with about 28 percent of that market going to the consumer market.

"If you have a growing market, there might be a decrease in piracy rates, but there are still tremendous losses because of the expanding market and losses tied to the currency fluctuations," Hardee added.

In the Philippines, PC software piracy rates have gone down from 72 percent in 2003 to 71 percent in 2004, but remained at the same rate until 2006, BSA said.

Hardee said that the Philippines should push pending legislations that would help decrease software piracy. He said the country should update the national copyright laws to finally implement the World Intellectual Property Organization (WIPO) obligations of the country to help boost enforcement against digital and online piracy.

"This report shows that we are making some progress in the Philippines in the battle against software piracy. But the fight continues as the rate remains high and the losses from the IT industry have risen due to the exchange rate and growth in PC sales," added Celina Conti, chair of the BSA Philippines committee, in a statement.

BSA released the results of the study which covered 108 countries. It indicated that PC software piracy dropped in 67 countries and rose in only eight. The study said that for every two dollars' worthy of software purchased legally, a dollar’s worth was obtained illegally.

The study covers piracy of all packaged software than runs on personal computers, including desktops, laptops and ultra-portables, according to Victor Lim, vice president of consulting of IDC in Asia Pacific.

Lim said that the increasing availability of broadband Internet is also driving software piracy up in many countries, including the Philippines.