Intellectual property rights paving the way for innovation in Indonesia

Strengthening the intellectual property regime will bring innovation and foreign investment.

A new report from the Organisation for Economic Co-operations and Development (OECD), ‘National Intellectual Property Systems, Innovation and Economic Development; With Perspectives on Colombia and Indonesia’, looks at the current state and possible areas for development of Indonesia’s intellectual property (IP) system. Indonesia needs to develop its innovation capacities if it is to sustain growth and address the key social challenges it faces. This report addresses the role of Indonesia’s IP system in the country’s socio-economic development and looks at how that system can contribute more to national innovation performance. The report is based on expert analyses of the national intellectual property system, drawing on detailed information and feedback from key stakeholders on IP-related priorities and bottlenecks.

The report is a good source of information on Indonesia’s recent IP-related efforts and strategies. For example, the ongoing licensing of agricultural research results produced by The Agricultural Research and Development Institute for Agricultural Technology Transfer, to both domestic and foreign users.

The main findings can be found via the link below, though here we outline a few of the OECD recommendations that were of particular interest:

  • Indonesia has a relatively high ratio of resident patent applications to R&D expenditures; above the expected level, based on the trends of other countries at varying stages of economic development. The IP system should play a role in increasing innovation but is far from being the overarching driver of innovation. The high ratio of applications also contributes to the notion that there is a ‘low-quality’ level of many proposed innovations.
  • Although there have been significant steps towards strengthening Indonesia’s IP system recently, there remains weak coordination amongst agencies. A co-ordination body to effectively monitor and disseminate the innovation-related activities of various agencies would complement the already active Task Force for IP Enforcement.
  • The majority of IP services are available in Jakarta, while users outside of this urban area may not have full access due to infrastructure limitations. The expansion of online IP services would greatly reduce the costs for those wishing to use the IP system, and promotion of local services would enhance recognition of the range and benefits of services available.
  • While the majority of R&D still takes place in public institutions, incentive systems and market links among these are underexploited. Greater incentives for individual public sector researchers, i.e. awarding shares in the royalties from innovations, could help to increase the returns on R&D investment. Also, finding suitable partners to commercialise research outcomes is crucial and the process would benefit from expanded technology transfer offices.

Indonesia has already demonstrated recognition of international IP best practice, (for example, see Indonesia: registration for .id domain names NOW Open!). Though what the next stage in strengthening its IP system will be may heavily depend on which industries it sees as being the key drivers of growth. However, if it wishes to strengthen its position in global trade it will have to rely on an increasingly effective domestic IP system, and this is unlikely be achieved without also offering further protection to foreign businesses entering the country.

For the Main Findings from the report click here.

To learn more about how to navigate Indonesia’s IP system and make sure your business stays competitive check out our ASEAN IPR SME Helpdesk Indonesia country fact sheet here.

Photo: Sanko/Wikimedia Commons

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