Intellectual Property as a Source of Competitive Advantage

INTELLECTUAL PROPERTY

AS A SOURCE OF COMPETITIVE ADVANTAGE

Andi P Rahim

April 2010

Lately, as the hustle and bustle of the Century gate and Gayus gate investigation, came the polemics surrounding the inclusion of Indonesia in ASEAN-China Free Trade Area (ACFTA). Actually, the concept in terms of the agreement, there is nothing strange of this ACFTA, roughly equal to other free trade area agreements. This article will discuss the implications of ACFTA on the intellectual property system, but as the beginning, firstly I would like to describe the implications for the industry players in Indonesia.

Indonesia as part of ASEAN by itself will participate in the deal. It is important to indicate the position of Indonesia in the regional and global arena. However, the truth as seen by many people that Indonesia is not ready yet to participate in this agreement.  Since this agreement is more likely an unbalanced competition which is framed in a concept of togetherness.  This opinion was mainly raised by the industry players who are particularly vulnerable to the impact of the agreement.  An example is the textile industry; a decade ago we barely knew the Chinese batik. Now China begin to dominate batik industry and in a few years ahead it is possible to find the original local batik only in memories. The original batik can only be found in history book in libraries and museums.  Our Children and grandchildren may never again know the original batik made in their own nation.

In terms of competition, it must be recognized that no single country in this world can win the competition in all industry sectors.  Even the United States with such a powerful economic force, in some industry sectors could also become powerless.  A classic example of this process is the story of fax machine.  The first fax machine was invented in Europe and then developed and produced in America, but then over time the history noted that Japan was the real winner.  As a matter of fact, since the 80s there was hardly any fax machine produced in the United States, all imported from Japan, because this country has the ability to produce more effectively and efficiently than if produced in the country of its origin.  Hopefully, batik will be having a different story with fax machine.  I wish so.

The concept of this competition is not really new; even David Ricardo was brought it to public discussion since 1817 in his book On the Principles of Political Economy and Taxation, to which we are familiar with The Theory of Comparative Advantage.  Simply put this theory to remind us that in the context of competition, only those that can produce more efficiently and effectively will be the winner on the global stage. 

Indonesia between China and ASEAN

Indonesia's position to the ASEAN region is unique, not to mention that it is exposed in such as difficult circumstances. As we struggle to catch up Thailand and Malaysia and Singapore that are increasingly far off, now comes Vietnam into the playground and become the new idol of global investors with its successful land reform and pro-business economic policies. Thailand is very successful in agriculture and the automotive industry, Malaysia's even got her own brand of automotive Proton, besides the high quality of its high-tech industries.  Singapore with a world-class financial services industry and Vietnam has now becoming the new belle of ASEAN that make a loss to the neighboring countries due to many manufacturing industries migrate there.

What about Indonesia? By taking a milestone of Indonesia’s entry into OPEC, since 1962 until now, image of Indonesia has not shifted from mere raw material supplier (exporter of raw material). China for a long time known for the words like; fake, plagiarist and pirate is now evolved into a super nation full of creativity and innovation. With the combination of human resource abundance, passion and high creativity and appropriate government policy, China is no longer the old China.  Even America, Europe and Japan admitting that China is now becoming a new global economic giant.

From the standpoint of economic policy, we must recognize that Indonesia is far left behind China.  At least there are three factors why Chinese products can be very competitive:

1.   Labor policy in China is more conducive to economic actors and to the workers. While in Indonesia, otherwise, the condition could be said that so far the issue of labor remains one of the most prominent one for economic actors in various industrial sectors.  Outsourcing employee, contract employee, minimum wage, and retirement, just to mention a few, are those of the issues that catch most attention. These has brought a bad image throughout the world and of course at the same time become a blessing to the neighboring countries.

2.  Financial sector policies, especially interest rates can be as low as 5% and even lower. Compare with Indonesia's average rate is twice the rate of interest in China. From this point, it obviously that Indonesia is not competitive to deal with products from China. With the simple logic, a product manufactured in China can be sold with a margin of 10%, where 5% for bank interest and 5% for profit. As for the same product manufactured in Indonesia could only generate profit if it is sold by a margin of 15%, in which for 10% to pay the bank interest and 5% profit. It was really out of proportion since the amount of payments to the bank is higher than the profit. No wonder, many businessmen, especially SMEs actors who say that doing business in Indonesia as if only become a cash cow of the banks. And this fact can be even more devastated when business results just enough to pay interest to the banks.

3.     Well formulated policies on infrastructure facilities.  Real-life example of this well formulated policy is in the textile industry in China, where the machines used are made in their own country so they can be very cheap.  Beside, a vigorous support of the government to build facilities such as electricity supply and transportation facilities. While the textile industry in Indonesia, in order to rejuvenate and upgrade all machinery, must be imported from outside and even from China, the country we intended to compete with. This was compounded by the limited supporting infrastructure such as unstable electricity supply.

The accumulation of all factors mentioned above will lead Indonesia into a difficult position to fight for the existing market pie. It is clear that Indonesia will experience difficulty in penetrating products into Chinese market, at the same level that the Chinese products will be easily penetrated into Indonesian market. This will be a serious blow to our industries; especially manufacturing sectors.  And a wave of layoffs seems inevitable as a result of downsizing or even closure of factories whose products are not able to compete in the free market. 

Intellectual Property System in ACFTA Era, Learning from Japanese Experiences

One factor that gets less serious attention in Indonesia is a policy issue of how to promote creativity as a driver of the economy. This can be seen from how small the numbers of intellectual property registrations. Also at the same time indicates that the invention or new creations are very few in number both qualitatively and quantitatively. However, if we examine furthermore, new inventions and creations can be a major motor of economic growth of a nation. Experience of Japan can be compared to our country.  In the year of 1945 Japan was extremely devastated by nuclear war and the defeat in the World War II, while Indonesia at same time gained independence.  The fact is precisely the opposite.  But what happens after half a centuries later? Japan was capable of turning things around and put its position as the country with the second largest economic power in the world behind the United States. While Indonesia, to only catch up with Malaysia alone is quite far from equality, not to compare with Japan which is even farther from reality.

Certainly, interesting to analyze what are the keys to the Japan economic miracle, so that we can learn while continuing to strive to become one of the world biggest economic power.  The key factor is none other than the advance of research and development that continually encouraged to produce inventions and new innovations. But it must be remembered that the true research and development will not be able to continue to be creative without the other key factors, namely intellectual property system. From this intellectual property system policy is where everything begins.

Description	Japan	Indonesia
Year 1945	Destroyed by a nuclear bomb and defeated in the world war II	Declare independence
Year 1945 - 1960's	Economic Stability	Political Stabilization
Focus of the 1960 policy	Intellectual property system to encourage invention / innovation through R & D	Political system and defence
Results from the focus of the 1960’s policy	Birth to many entrepreneurs	Produced many activists
Entity formed	Business entities	NGOs / CBOs / Parties
Brands then arises	SONY, TOYOTA, HONDA, PANASONIC, FUJITSU, etc.	Angkatan 66, Petisi 50, Malari, GOLKAR, Orba, etc.
Resource policy focus	Human Resources	Natural Resources
Results from the focus of resource policies	Human-productive and environmentally-friendly processing resources	Humans are less productive and less environmentally friendly in tapping resources
Become giant	Current economic giant	What giant? When?

Sony, Panasonic, Toyota, Honda, Toshiba, Fujitsu, Hitachi and Casio, just to mention a few, are those of example of the fruits of pro-business intellectual property system policy. The products of these brands are placed in the front guard of the Japanese economy squad. I can hardly imagine how we, particularly urban people, live normally without having one or two of these brands. Its products have become an integral part of modern human life such as the tag line of Panasonic; “Ideas for Life".

Natural wealth has lulled us all, make us forget that the natural resources will be exhausted soon and it could not be updated. It's time, although a little late, to improve seriously our intellectual property system to be more commercially oriented so that it can bring financial benefits to the right’s owner and to the industry practitioners’. Not rarely the subject researched by university students only seen as a mandatory to the terms of graduation for a particular academic degree. This is the problems we face today that make research and development in Indonesia very poor in invention. Universities and research institutions such as LIPI have no enough incentive to encourage research and development into a more commercial direction. It is the crucial role of the government to design a policy of commercial-oriented intellectual property system.

Intellectual Property as a Source of Competitive Advantage

To survive in the era of ACFTA we can no longer rely on a strict way of protection, because this is precisely contrary to the spirit of the FTA itself.  The only way that could be put forward is to establish intellectual property system for new talents to emerge to create innovation and new creations more effectively and efficiently and commercially valuable.  The focus of resource policy can no longer emphasis on the exploitation of natural resources, but should be directed to intellectual resources.  Intellectual is clearly a resource that can be updated and continue and can even be improved constantly.

Competing with China and ASEAN countries rely solely on the potential of natural resources will soon be entering the last period along with the depletion of deposits of natural wealth we have. Thus, this ACFTA momentum should be interpreted as an opportunity to be able to produce better work instead of seeing it as an economic disaster to be avoided.  Alienate our self from the FTA is likely to alienate our self from global community. Instead of constantly looking for ways to avoid the FTA, it would be much better if we learn to deal with it. If China could rise from the slump, why Indonesia cannot stand up and look at the future where Indonesia will be in line with China, Japan and The United States.

With 240 million Indonesian population residing in a better system of intellectual property right, it is not impossible to find a thousand smart people to become tough researchers to produce inventions, innovations and creations for the stake in the FTA. Just like a race, then this is the way and perhaps the only way to win the ACFTA game or at least not being a loser. It is now the time to make intellectual property as a source of competitive advantage to compete regionally as well as globally.

Long time no post

Its very long time since the last post to this blog. I just miss blogging. And I just wanna come back

Tukang Becak Paling Mulia

Kisah Bai Fang Li ini saya harap menjadi pelajaran hidup bagi kita semua untuk saling membantu sesama kita yang kesusahan, walaupun hidup serba pas-pasan tetapi tetap membantu orang tanpa pamrih

Tak perlu menggembar-gemborkan sudah berapa banyak kita menyumbang orang karena mungkin belum sepadan dengan apa yang sudah dilakukan oleh Bai Fang Li. Kebanyakan dari kita menyumbang kalau sudah kelebihan uang. Jika hidup pas-pasan keinginan menyumbang hampir tak ada.

Bai Fang Li berbeda. Ia menjalani hidup sebagai tukang becak. Hidupnya sederhana karena memang hanya tukang becak. Namun semangatnya tinggi. Pergi pagi pulang malam mengayuh becak mencari penumpang yang bersedia menggunakan jasanya. Ia tinggal di gubuk sederhana di Tianjin, China.

Ia hampir tak pernah beli makanan karena makanan ia dapatkan dengan cara memulung. Begitupun pakaiannya. Apakah hasil membecaknya tak cukup untuk membeli makanan dan pakaian? Pendapatannya cukup memadai dan sebenarnya bisa membuatnya hidup lebih layak. Namun ia lebih memilih menggunakan uang hasil jerih payahnya untuk menyumbang yayasan yatim piatu yang mengasuh 300-an anak tak mampu.

Tersentuh...Bai Fang Li mulai tersentuh untuk menyumbang yayasan itu ketika usianya menginjak 74 tahun. Saat itu ia tak sengaja melihat seorang anak usia 6 tahunan yang sedang menawarkan jasa untuk membantu ibu-ibu mengangkat belanjaannya di pasar. Usai mengangkat barang belanjaan, ia mendapat upah dari para ibu yang tertolong jasanya.

Namun yang membuat Bai Fang Li heran, si anak memungut makanan di tempat sampah untuk makannya. Padahal ia bisa membeli makanan layak untuk mengisi perutnya. Ketika ia tanya, ternyata si anak tak mau mengganggu uang hasil jerih payahnya itu untuk membeli makan. Ia gunakan uang itu untuk makan kedua adiknya yang berusia 3 dan 4 tahun di gubuk di mana mereka tinggal. Mereka hidup bertiga sebagai pemulung dan orangtuanya entah di mana.

Bai Fang Li yang berkesempatan mengantar anak itu ke tempat tinggalnya. Setelah itu ia membawa ketiga anak itu ke yayasan yatim piatu di mana di sana ada ratusan anak yang diasuh. Sejak itu Bai Fang Li mengikuti cara si anak, tak menggunakan uang hasil mengayuh becaknya untuk kehidupan sehari-hari melainkan disumbangkan untuk yayasan yatim piatu tersebut.

Tak Menuntut Apapun...
Bai Fang Li memulai menyumbang yayasan itu pada tahun 1986. Ia tak pernah menuntut apa-apa dari yayasan tersebut. Ia tak tahu pula siapa saja anak yang mendapatkan manfaat dari uang sumbangannya. Pada tahun 2001 usianya mencapai 91 tahun. Ia datang ke yayasan itu dengan ringkih. Ia bilang pada pengurus yayasan kalau ia sudah tak sanggup lagi mengayuh becak karena kesehatannya memburuk. Saat itu ia membawa sumbangan terakhir sebanyak 500 yuan atau setara dengan Rp 675.000.

Dengan uang sumbangan terakhir itu, total ia sudah menyumbang 350.000 yuan atau setara dengan Rp 472,5 juta. Anaknya, Bai Jin Feng, baru tahu kalau selama ini ayahnya menyumbang ke yayasan tersebut. Tahun 2005, Bai Fang Li meninggal setelah terserang sakit kanker paru-paru.

Melihat semangatnya untuk menyumbang, Bai Fang Li memang orang yang luar biasa. Ia hidup tanpa pamrih dengan menolong anak-anak yang tak beruntung. Meski hidup dari mengayuh becak (jika diukur jarak mengayuh becaknya sama dengan 18 kali keliling bumi), ia punya kepedulian yang tinggi yang tak terperikan.