Jakarta. Indonesia has increased its ranking on the United States Chamber of Commerce's 2018 International Intellectual Property Index this year, which shows that the government's efforts to protect copyrights are starting to bear fruit.
The sixth edition of the annual report titled "Create," published last month, shows the state of intellectual property rights in the world's 50 biggest economies.
The index uses 40 indicators in eight categories to evaluate which policies and efforts have been effective in protecting intellectual property rights.
Indonesia scored 12.14 compared with last year's 9.64, putting it in 43th place – just above India (44), but below Thailand (41), Vietnam (40), Brunei (35) and Singapore (9).
Topping the list are the United States, Britain, Sweden, France and Germany.
Patrick Kilbride, vice president of international intellectual property for the Global Innovation Policy Center at the US Chamber of Commerce, said music and film are two of the sectors that have improved the most in Indonesia.
"Indonesia does well [in the creative industry]. I think copyright helps to preserve [intellectual property]. It's a vehicle for cultural experience," he said.
The report also notes that Indonesia has improved measures to control copyright infringements through an online system. The government and the creative and advertising industry established the Infringing Website List to address such cases in the creative industry.
The report lauds the government's framework for intellectual property rights, which was established across ministries. It notes that over the past decade, the country has had an inter-ministerial group tasked with the enforcement of these rights.
Through a 2006 presidential decree, the government also created a national intellectual property task force, which is responsible for designing policies and measures to enforce intellectual property rights.
The task force, which consists of cabinet-level officials from the ministries of industry, trade, finance, foreign affairs, justice and home affairs, reports directly to the president.
However, Kilbride said the biotechnology and software sectors are still vulnerable in the country.
"Foreign companies operating in that space [biotech and software] may be less inclined to bring their products to Indonesia and must be less inclined to invest in domestic innovation," Kilbride said.
The report further highlights certain weaknesses Indonesia still has to address, such as limited participation in international intellectual property treaties, copyright piracy and a 2016 law that has proven to be a barrier to foreign companies entering the country, as it requires them to transfer all patented technologies and processes.
Kilbride said 80 percent of research and development in Indonesia is currently state-funded, but that it should be the exact opposite. Private companies are deterred from investing or expanding in the country if there are no clear regulations on intellectual property rights.
"The private sector doesn't have enough confidence in the domestic system to take risks. Intellectual property is to enable risk-taking. If you are in a sector with a high cost of entry, maybe it takes a long time to take a product to market, from research to development and testing. It costs a lot of money. You won't want to spend a lot of money without rock-solid rights," Kilbride said.
He said Indonesia will do well in the coming years as it has a large population, dynamic economy, young workforce and abundant natural resources. However, innovation is key.
"With strong intellectual property protections, the industry would be willing to invest in Indonesia; to invest in R&D. [This will] put Indonesia on the cutting edge of global technology and help it to overcome the middle-income trap," Kilbride said.