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.

Natural vs Intellectual

Natural Resources vs Intellectual Resources

A basic understanding on shaping Indonesia for better future

Andi P Rahim

January, 2010

The declining quality of the earth

Speaking at a side event of international climate talks in Copenhagen on December 16, 2009 on the theme “International Cooperation on Technology Transfer: Time for Action,” WIPO (World Intellectual Property Organization) Director General Mr. Francis Gurry said Intellectual property (IP), has an important role to play in technology policy - encouraging investment in the creation of environment - friendly technologies and their rapid dissemination are major policy objectives to which priority must be given. In both cases, the IP system, and in particular patents, are fundamentally important in that they provide a stimulus for investment in green innovation and contribute to a rapid – and global – diffusion of new technologies and knowledge.

I would like to highlight the key words of the speech; intellectual, technology, policy, innovation, investment and green. This was a clear warning that to be prospering in the future we must propose a policy which is count on intellectual resources as the core capital for investment to drive innovative technology for green world. We are now living in the age of global warming and if we continue to dig our natural resources, one thing is certain in the upcoming century that the next generation will be living in the age of global heating. Provided that we couldn’t find another planet to live on, then human being is now in the right direction to extinction due to planet earth is no longer habitable.

Indonesia has one out of only two tropical rain forests on earth (another one is Amazon) that significantly reduce the evil effect of global warming. Unfortunately, the quality of this rain forest is currently in serious declining. James Gustave Speth, dean of the School of Forestry and Environment Studies at Yale writes “half of the world’s tropical and temperate forest are now gone. The rate of deforestation in the tropics continues at about an acre a second. About half of the wetlands and a third of the mangroves are gone. An estimated 90 percent of the large predator fish are gone…Twenty percent of the corals are gone, and another 20 percent severely threatened. Species are disappearing at rates about a thousand times faster than normal.”

In Indonesia alone, the constant effort of irresponsible hunting to certain animals has been leading to the damage of ecosystem. Elephant, lion, orangutan, anaconda, just to mention a few, is now become those of rare animals. What should be done? How it should be done?

Natural resources and the economic growth

With its large economic potentials, Indonesia has adopted investment-friendly policies to continually promote the country’s economic growth. The availability of vast competitively and rich reserves of natural resources has made Indonesia an attractive choice for domestic and foreign investors, as well as venture capitalists to invest. However, today’s global business environments can no longer count on natural resources as a source of comparative and competitive advantage. Not only due to the constant pressure of green activist but its own nature as non renewable materials that bring itself to an end. It is intellectual resources that should be promoted as the next sources of competitiveness.

“For all the material blessing economic progress has provided, for all the diseases and destitution avoided, for all the glories that shine in the best of our civilization, the cost to the natural world, the cost to the glories of nature, have been huge and must be counted in balance as tragic loss,” writes James Gustave Speth the author of The Bridge at the Edge of the World.

Against this backdrop, this article is intended to provide timely insights for policy makers from both businesses and government officials to converge as well as to share invaluable thoughts and facts. Beside, to address and assess the critical issues and strategic challenges that lie ahead for making the earth a better world. It is the main purpose of this article to promote intellectual property as a true capital to build the nation for the benefit of all stake holders.

Many of us do not realize that our economic development too much rely on extracting the earth. Imagine when you do land clearing for mining site, you at the same time do a process of degradation, it is deforestation. Then the result of your mining goes into machines or turbines as fuel to be burnt and another degradation is about to begin, it is air pollution (Carbon Dioxide). In short, you ruin the ground when you dig into it, you damage the sky when you burn what you have dug, and you speed up the extinction of every single living species between ground and sky. Someday in the next century, a three years old girl would ask her mother; mommy…it’s too terrible here can we just move to another earth.......?

(to be continued...)

*Andi P Rahim is formerly an Associate Partner at Search and Solve Consulting, an intellectual property consulting firm based in Jakarta - Indonesia.

WEB 2.0

PROFITING FROM THE DARK SIDE OF WEB 2.0

By Andi P Rahim

http://andirahim.blogspot.com

Artikel Mas Siwo di (http://yuswohady.com) berjudul The Dark Side of WEB 2.0 yang disarikan dari buku Mas Tapscott Grown Up Digital adalah inspirasi dari tulisan ini. Salah satu peluang bisnis yg besar menurut saya adalah bisnis yang sifatnya bisa menarik perhatian para peselancar dunia maya untuk kembali ke dunia nyata. Sedikit flashback ke belakang yaitu pada saat syndrome coke and cake menggejala, maka kemudian binis kebugaran tumbuh kembang dengan subur. Daya tarik dari bisnis ini adalah mencegah orang jadi gemuk, jelek dan penyakitan. Intinya adalah mengkaunter semua efek negative yang ditimbulkan oleh Coke+Cake tadi.

Menurut pengamatan saya bisnis yang akan booming kedepan salah satunya adalah bisnis outbond. Mengapa bisnis outbond? Mengacu pada bekembangnya bisnis kebugaran yang sedikit banyaknya dipicu oleh Coke+Cake Syndrome, maka bisnis outbond pun akan berkembang serupa. Alasannya adalah Outbond itu adalah upper level dari kebugaran karena di outbond selain bugar juga ada intensive interaction. Kalau kebugaran itu padanannya adalah WEB 1.0 maka Outbond itu levelnya adalah WEB 2.0. Berikut adalah table komparasinya:



Saya tidak akan membahas masing-masing parameter tersebut di atas secara panjang lebar. Instead, saya akan membahas keterkaitan satu sama lain yang mendasari mengapa bisnis Outbond akan booming.

WEB 2.0 dengan karakter teknologinya yang lebih advance memungkinkan terjadinya pola komunikasi yang tidak hanya one way atau two way communication, tetapi bisa multi way atau bahkan all way communication (atau entah apalah istilahnya). Dengan demikian jejaring komunitas itu pola pertumbahannya sangat cepat. Ditambah lagi saat ini hampir semua tools jejaring yang ada bisa diakses secara mobile. Dan lebih anehnya lagi orang dengan sukarela memaparkan apa saja aktivitasnya setiap saat( sedang apa, dimana, sama siapa) bahkan status dirinya lagi bertengkar dengan pasangan pun dipublikasikan (narsis yang aneh).

Berawal dari sinilah kemudian mengundang banyak komentar dan diskusi antara sesama netter. Bayangkan saja ada seorang cewek cantik disuggest secara otomatis ke anda di facebook, bisa dipastikan anda tidak akan nunggu sampai lebih dari 3,5 detik untuk langsung meng-add dia. Tentunya dengan harap-harap cemas semoga saja cewek tersebut di profilnya khusus bagian “relationship status” tertulis “single” atau “It’s complicated” karena itu berarti ada peluang bagi anda menjadikannya “in a relationship with anda”.

Harap punya harap, begitu “friend request” anda di “confirm” oleh dia ternyata di profilenya tertulis in a relationship with someone. Serta-merta sama gesitnya ketika anda meng-add cewek tersebut hanya dalam waktu 3,5 detik dari MP3 player anda mengalunlah lagu Dewa 19 “Ingin kubunuh pacarmu saat…..”. Masalah pun berlanjut. Sejurus kemudian dengan perasaan ancur lebur anda posting di “wall”: Ingin kuraih bulan apa daya tangan tak sampai, adakah seseorang yang sudi membawakanku tangga untuk dapat meraihnya, atau adakah bulan yang lain…? Sontak, dalam hitungan 3,5 menit “comment” pun datang bertubi-tubi, maka terjadilah diskusi/conversation yang benar-benar crowded. Beberapa contoh comment sebagai berikut:

- Kawan, percayalah jika dia memang milikmu, maka jodoh tak akan kemana
- Bro, hidup itu adalah perjuangan untuk meraih apa yang kita impikan. Jika dia impianmu Teruslah berjuang…berjuang….MERDEKA…!

- Cengeng amat sih loe, kayak ga ada yang laen aja, nyari yang laen dong
- Kasian amat sih abang yang satu ini, makanya jadi orang itu jangan belagu
- Mas dari dulu aku tidak pernah berubah, aku selalu ingin jadi bulan untukmu, tapi kenapa mas…….....

- Boss, gue ga punya tangga untuk ke bulan. Klu tangga untuk perbaiki genteng gue ada, anytime gue bisa meluncur

- Boro-boro bantuin sampeyan nyari bulan, saya a ja sekarang jadi bulan-bulanan isteri saya gara2 fecebook ini

Cerita ini akan berlanjut terus tanpa ada habisnya. Setiap hari anda akan tongkrongi profil cewek tadi sambil terus berharap kapan statusnya jadi single. Mungkin suatu saat anda sudah mendapatkan bulan yang dimaksud atau telah menemukan bulan lain, tapi percayalah bahwa diujung dunia sana-sini setiap saat akan ada yang melalui jalan cerita anda, bisa persis bisa lebih complicated. Hari ini anda dapat bulan, boleh jadi pada hari yang bersamaan ada dua orang teman anda justeru kehilangan bulan, dan belum terhitung barapa banyak yang lain lagi yang sementara berusaha keras mendapatkan bulan. Ini hanyalah contoh kasus dalam satu konteks masalah yang sangat kecil.

Masalah yang saya ilustrasikan di atas ternyata tidak hanya dialami oleh anak muda. Semua kalangan mengalaminya dari anak-anak sampai kakek-kakek, pria dan wanita, bahkan yang sudah bersuami dan beristeri sekalipun. Pendeknya dalam satu rumah semua anggota keluarga keranjingan teknologi WEB 2.0 ini. Jadi, perhatian keras buat yang tidak kuat mental agar menjauh dari WEB 2.0. Bayangkan saja perubahan psikologis dapat berubah-ubah hanya dalam hitungan menit bahkan detik. Baru saja anda membaca comment yang mensupport, eh satu dua menit kemudian sudah muncul lagi comment yang menjengkelkan, demikian seterusnya. Pada gilirannya terjadilah ketidakstabilan kondisi psikologis dan emosi yang sifatnya mengarah pada Behavioural Disorder.

Apa yang terjadi kemudian adalah munculnya masalah baru yaitu apa yang saya sebut SIDS (Social Interaction Deficiency Syndrome). Dari segi tingkat keparahannya SIDS ini hampir sama dengan AIDS. Bedanya hanya pola ”keterasingan-nya” saja dimana SIDS orangnya sendiri yang mengisolasikan/mengasingkan diri dari lingkungan karena behavioural disorder tadi sementara AIDS kecenderungannya adalah diasingkan oleh lingkungannya karena sifatnya adalah Physical Disorder yang bisa menular. Oleh karena itu penanganannya pun harus beda, kalau AIDS dikirim ke rehabilitasi yang tertutup sedangkan SIDS dipandu ke lingkungan/alam terbuka.

Bagi para pengidap SIDS berita baiknya adalah bahwa dalam konteks probabilitas kesembuhan tidaklah separah AIDS dimana ajal sepertinya sudah diujung jalan sana. SIDS punya harapan sembuh yang sangat tinggi. Salah satu caranya adalah dengan outing yang diisi dengan acara yang bernuansa social interaction. Dasar pemikirannya adalah kalau di dunia maya hampir semuanya bisa di dapat, kecuali satu yaitu ”Real Experience”. Dan juga perlu diingat bahwa mengapa berinternet itu diistilahkan berselancar (surfing)? Itu tak lain karena sifatnya yang adventurous. Oleh karena itu solusi untuk mencegah dan mengobati SIDS ini salah satunya adalah Outing. Di outing bisa disajikan real experience yang adventurous, hitung-hitung juga bisa sebagai ajang copy darat.

Sebagai penutup saya ingin sampaikan bahwa tulisan ini dibuat untuk sedapat mungkin bisa memberikan solusi penyeimbang antara dunia maya vs dunia nyata. Dengan outing diharapkan dapat mengkaunter dampak buruk dari WEB 2.0 bahkan kalau bisa kenapa tidak Profiting From The Dark Side of WEB 2.0 (baca: mencegah sambil berbisnis).