ChapterOne-IP

The Indonesian Intellectual Property Service

Indonesia’s Economic and Business Insights – An IP Strategy

By Dipl.-Ing. Rohaldy Muluk

The following information will give you an insight that will support your decision whether you should register or file your Intellectual Properties (IPs), such as patent, trademark, industrial design or copyright, in Indonesia.

Registering or filing an IP is a strategic decision. Therefore, we use some strategic approaches to help us to take a decision about where and why we should register an IP in which country. Economic & Business Prospects and Market Potential are main approaches that will help us to decide. Other approaches are Potential of IP Infringements in a country, and Cost – Benefit analysis of “no-register” or “no-file” in a specific country like Indonesia.

Indonesia with 240 million populations, 50% of them under 29 years of age, is the 4th biggest populous country in the world with three time zones and therefore one of the world biggest potential markets. Let’s see Indonesia’s economic and business indicators.

Indonesia’s Economic and Business Prospects

According to Mc Kinsey Global Survey 2009, there are “Five Forces” that will reshape the global economy. If we match it to Indonesia’s economic and business indicators, we will see that Indonesia’s economic and business is prospective.

  1. Indonesia’s Growth
    Standard Chartered Global Research: Growth 7.1 – 7.6% during 2011-2014 periods, currently one of the highest in the world; GDP nominal per capita will be quadruple by 2020; it reaches Korea level by 2016, Japan level by 2024.
  2. Indonesia’s Productivity and Talent Management
    Position 44 on Global Competitiveness Index 2010 (Brazil 58, Russia 63, India 51, China 27). Indonesia’s government expenses 20% of its total expenses for education.
  3. Indonesia’s Global Flow of Goods, Information & Capital
    Geographically, Indonesia is very strategic since Indonesia lies between Indian and Pacific Ocean, and along Malacca Straits. Over half of all international shipping goes through Indonesian waters. According to Boston Consulting Group, Indonesia will double their internet users by 2015. Indonesia’s mobile-phone users are 66% of its 240 million populations, and Indonesia has the best prospects (of the three markets, China, India and Indonesia) for organic growth in telecommunications revenue. According to IMF ranking, Indonesia’s GDP was on position 18 (2010), projected to be on pos. 11 in 2014 , while Indonesia’s external debt to GDP ratio was 28.1% by the end of 2010, and is the lowest in ASEAN countries and much lower than most developed countries in the world.
  4. Indonesia’s Natural Resources
    Indonesia has abundance of natural resources, e.g. 40% of world geothermal resources, the world’s 3rd largest exporter of natural gas, the world’s 2nd largest exporter of thermal coal, cocoa, tin, and the world’s largest palm oil exporter etc. Lying on the equator, Indonesia is a home of biodiversity.
  5. Indonesia’s Role of Government:
    Indonesia is one of ASEAN founders, and the only member from ASEAN countries in G-20.

Indonesia is member in Free Trade Areas, such as ASEAN Free Trade Area (AFTA), ASEAN-China FTA (2010) and ASEAN Economic Community (2015). Other ASEAN Free Trade Areas where Indonesia involved are with Australia-New Zealand, with India, with South Korea, and with Japan. As the biggest country in ASEAN, Indonesia has the role as an entry market country to those FTAs.

ASEAN – China Free Trade Area (ACFTA)

ACFTA is so far the biggest Free Trade Area in the world. It has a combined nominal GDP approximately USD 6 trillion (2008) and has the 3rd biggest trade volume after EU and NAFTA. China had overtaken the position of USA as the 3rd biggest trade partner after Japan and EU since joining ACFTA.

ASEAN Economic Community (AEC)

AEC is more than just a Free Trade Area. It will be one of the world biggest single markets and production bases. Indonesia is the biggest country market in AEC that will launch in 2015.

Population: 600 million
GDP (PPP) 2010: USD 3.084 trillion
GDP (PPP) per capita 2010: USD 5,131

Market Potential

According to Market Potential Index (MPI) 2010 of University of Michigan, Indonesia is

  • One of the highest Potential Market in the world emerging market (overall Rank 12, ASEAN countries Rank 2)
  • The biggest Market Size in ASEAN (the 5th world emerging market)
  • The highest Market Growth Rate in ASEAN (the 4th world emerging market)
  • The 2nd highest Market Consumption Capacity in the world emerging market and ASEAN countries, better than Brazil, Russia, India & China
  • Commercial Infrastructure on rank 20 in the world emerging market, better than China and India

Cost-Benefits analysis of No-Register and No-File of IPs

Indonesia’s counterfeiting index (GTRIX-e) is the lowest in East Asia (except Singapore and Japan). It means Indonesia is surrounded by exporting countries of counterfeit products, and more being a market of counterfeit products. A study by the University of Indonesia and the Indonesian Anti-Counterfeiting Society (2010) reported that Indonesia is awash with counterfeit products, mostly from China. Therefore, IP protection in Indonesia, as the next biggest potential market to China, is as important as IP protection in China. Furthermore, no-registration/no-filing of IPs in Indonesia risks that those IPs are going to be used, or even registered/filed, by others. Since IP registration/filing in Indonesia is relatively much cheaper than losses in turn over/market share, or losses due to blocked access to the market, it’s advisable to register/file IPs in Indonesia, even though still no business has done yet.

(Dipl.-Ing. Rohaldy Muluk is IP Attorney at ChapterOne-IP, Jakarta, Indonesia)