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.
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.
