The International Intellectual Property Alliance (IIPA) has recommended keeping Malaysia on the U.S. Trade Representative (USTR) piracy watch list, despite improvements in combating piracy.

The IIPA reports that music piracy in Malaysia is down to 45% in 2006, from 49% the previous year. The closure of 11 CD manufacturing plants contributed largely to the percentage drop in piracy, it says.

Malaysia remains on the watch list despite its removal from the USTR's priority watch list in 2001.

"The Malaysian government has plans to address IIPA's issues," observes Sandy Monteiro, chairman of the Recording Industry of Assn. of Malaysia. "We're making some strides in reducing piracy significantly."

Monteiro adds that the Domestic Trade and Consumer Affairs Ministry plans to establish an intellectually property court, which should clear the backlog of cases, some dating back five years.

The IIPA report encourages the government to adopt stringent measures in curbing export of pirated product. Pirated products from Malaysia have been found in markets as far flung as the Philippines, Thailand, Belgium and Germany.

The IIPA report also notes that Internet-based piracy remains a cause of concern to copyright owners. There are currently 11 million Internet users in Malaysia, despite the relatively low 13% broadband penetration.