Intellectual Property Rights and its Development in Indonesia
Companies spend a considerable amount of time and financial resources on international expansion. Researching a local market, designing business tactics, identifying local partners, intermediaries and distributors and understanding consumer patterns and demands in a new market involve significant investment. Each of these stages of business development can therefore be considered as IP assets.
IP includes more than technological inventions. It includes expertise, products, processes, trade marks, designs, written material, business strategies, sounds and smells – and more. IP includes anything that distinguishes a business from another, a unique selling points (USPs), so to speak.
Taking time to understand the IP landscape in the country that one intend to do business in can both save and make money, and can help enterpreneurs avoid the pitfalls associated with another country’s legal system. IP is key to the competitiveness of a business in today’s global economy.
Indonesia’s growth in recent years has been impressive. While it has experienced a slight slow-down, it remains the largest economy in the Association of Southeast Asian Nations (ASEAN). The country’s Gross Domestic Product (GDP) is the 8th largest in the world in terms of purchasing power parity (PPP) and its Gross National Income (GNP) per capita has risen by around EUR 537 over the last 8 years.
Between 2009 and 2013, the average growth rate of EU imports to Indonesia was 5.2%; by 2013, EU goods exported to Indonesia totaled EUR 9.7 billion. The EU is Indonesia’s fourth largest trading partner after Japan, China and Singapore. The EU’s exports to Indonesia are typically high tech goods, transport and aviation equipment manufacturing goods and chemicals. The Indonesian government is attempting to reduce its reliance on palm oil and fossil fuel exports and is encouraging foreign investment in the manufacturing sector
Indonesia offers attractive prospects for EU Small Medium Enterprises (SME) seeking to expand their businesses in South-East Asia. It accounts for one third of South-East Asia’s GDP. It offers a growing consumer base, comparatively cheap labour and raw materials, and a favorable environment for foreign direct investment (FDI) as a result of the Indonesian government’s “Masterplan for the Acceleration an Expansion of Indonesia’s Economic Development.”
Following the conclusion of the TRIPS Agreement, much has been written on the potential costs and benefits of stronger Intellectual Property Rights (IPRs) protection in terms of growth and technology transfer, particularly for developing countries. In a 2006 UNIDO study, new evidence was provided linking protection of IPRs to economic growth, innovation and technology diffusion. Results suggest that while stronger IPR protection can ultimately reap rewards in terms of greater domestic innovation and increased technology diffusion in developing countries with sufficient capacity to innovate, it has little impact on innovation and diffusion in those developing countries without such capacity and may impose additional costs. There is a considerable incentive, therefore, for countries at different stages of development to use the flexibilities in the TRIPS Agreement to maximize its net benefits for their development. Indonesia is one of those countries that has decided to improve it IPRs so as to bolster its trade performance.
Indonesia is a member of WTO and WIPO, and it is party to the main WIPO treaties, including the Berne (re-entering in 1997) and Paris Convention, the PCT, the Hague Agreement, the WIPO Performances and Phonograms Treaty (WPPT), the WIPO Copyright Treaty (WCT) and the Trademark Law Treaty. Indonesian legislation was substantially revised in recent years to bring it in line with regional and international IPR standards. In 2000, laws concerning the protection of new plant varieties (law no. 29), trade secrets (law no. 30), industrial designs (law no. 31), and layout designs of integrated circuits (law no. 32) were enacted and promulgated. In 2001, new laws on trademarks (law no. 15) and patents (law no. 14) were enacted. In 2002, the new copyright law (law no. 19) was issued. With support from a development project called ECAP II, in 2005-2007, Indonesia’s legal IP framework was further enhanced with a new customs act and a regulation for a patent attorney profession.
An implementing regulation of the law on trademark introducing a sui generis Geographical Indications protection and registration was also passed. In addition, Indonesia started to work on a legislation to protect genetic resources, traditional knowledge and expression of folklore. The Indonesian Government is currently reviewing all its IP laws, in consultation with all stakeholders. “Explanatory memoranda” specify provisions in the legislation and play an important role in Indonesia, as they may be used by the court to clarify issues related to the legal language and to integrate details which are in missing in the legislation.