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This report should be referenced as follows: CIPG and Nesta (2019) Understanding Indonesia's innovation system.
Content and research: Mona Luthfina Usmani, Fajri Siregar, Rinta Meilani (contributors), Irsan Pawennei, Dinita Andriani Putri (reviewers) (CIPG)
Design: Priscila Vanneuville
Disclaimer: Information and data collected in August 2018.
1. COUNTRY PROFILE
1.1 INTRODUCTION
Indonesia has seen a steady economic growth in the past 20 years after going through multiple crises in 1997-1998. Home to nearly 252 million people and 360 ethnic groups, Indonesia is divided into 34 provinces, 415 regencies and 93 cities. This extreme diversity is also reflected in many sectors, including the innovation system itself.
Currently, Indonesia is also considered as the 10th biggest market in the world. A large proportion of the Indonesian population, nearly 50%, is young and productive. Private consumption has been a key factor in driving the country's economic growth in recent years. At the same time, Indonesia's economy is still heavily dependent on natural resources.
The Government of Indonesia (GoI) has shown its commitment to developing innovation and technology capabilities. The GoI mainly focuses on improving research and development (R&D) and support for science and technology (S&T), by providing human resources, facilities, institutional and network support, as well as building new Science and Techno Parks (STP).[^1] However, there are still gaps in Information and Communication Technology (ICT) infrastructure and education quality between regions, hindering the full implementation of a national innovation policy.
Key statistical findings:
- In Global Competitiveness Index 2017-2018, Indonesia ranked 36th, 87th in innovation and 80th in technology readiness pillar.
- The government total expenditure in education is relatively stable from 2010 to 2015.[^2]
- In 2013, the Indonesian government's expenditure in R&D was only 0.0846% of total GDP. However, in 2016, LIPI stated that Indonesia's GERD has reached 0.25% of total GDP.[^3]
- Indonesia ranked 107th in Knowledge Economy Index 2012. This index captures the ability of countries to generate and diffuse knowledge.
- The number of patent applications consistently increased from 2010 to 2015.
- Indonesia has a low level of exports of high technology goods.
- The percentage has consistently decreased from 2009 to 2015.
| INDICATOR |
INDONESIA |
| Global Innovation Index Rank (2018) |
85 |
| Global Competitiveness Index (2017-2018) |
36 |
| R&D gross domestic expenditure as % of GDP (2016) |
0.2% |
| High tech exports, in % of manufactures exports (2015) |
6.625% |
| Patent applications, residents (2015) |
1,058 |
| Percent growth in total patent applications (2010-2015) |
51.98% |
| Time to start a business, days (GCI 2017-2018) |
105 |
1.2 HIGHLIGHTS OF KEY INNOVATION PROGRAMME
- President SBY formed Komite Inovasi Nasional (KIN/National Committee of Innovation) in 2010. However the agency was dissolved in 2014.[^4]
- President Jokowi merged the higher education unit from Ministry of Education and Culture with Ministry of Research and Technology in 2014 into Ristekdikti.[^5]
- Establishment of the DG Strengthening Innovation under the Ministry of Research Technology and Higher Education in 2015.[^5]
- President Jokowi's administration has targeted the development and use of 100 Science and Techno Parks. This ambitious programme failed to achieve its target and has already been reduced to 66 Techno Parks.[^6]
- Centers of Excellence (PUI) is a Ristekdikti-driven initiative. It aims to increase the capacity of research centers. As of 2017, 78 institutions benefit from strategic support in order to increase three different capacities, namely sourcing, R&D, and dissemination capacity.
1.3.1 INSTITUTIONAL MAP OF THE INNOVATION SYSTEM
This graph shows there are many agencies dealing with innovation in the system, but the persistent problem is the lack of coordination among them.
Diagram: National System of Innovation
This diagram illustrates the hierarchical and functional relationships among various entities within Indonesia's innovation system, categorized into Coordinating Councils, Ministries, Institutes and Under Ministries, and Relevant Institutions.
Coordinating Councils:
- Kemenko PMK
- Kemenko Ekuin
- KSP
Ministries:
- Ristekdikti
- Kemenperin
- Kemenkeu
- Bappenas
- Kementan
- Kemendagri
- Other ministries
Institutes and Under Ministries:
- BPPT
- LIPI
- LAPAN
- BATAN
- Lembaga Eijkman
Relevant Institutions:
- Higher education institutions
- DRN
- AIPI
- Private sectors
- State-owned companies
- International NGO
- Regional government
Legend:
- Attached to (solid arrow)
- Provides funds (dashed arrow)
- Political influence (dotted arrow)
1.3.2 ROLE AND INFLUENCE DIAGRAM OF KEY MINISTRIES AND AGENCIES
In terms of innovation policy in Indonesia, the main actor is still the government. There are four main agencies that are very relevant for the innovation ecosystem in Indonesia. They are:
- Bappenas
- Ristekdikti
- Kemenperin
- Kemenkeu
Budget spending is by far the only relevant indicator for government agencies' key performance. Kemenkeu has the power to determine whether a programme will be continued the next year based on this year's spending. Therefore, Kemenkeu arguably has become the most influential agency. Kementan is a relevant actor for agriculture-related innovation policies. Balitbangtan, a public research institution under Kementan, is the most established public research institution (PRI) in Indonesia and receives the largest government budget allocation for R&D.
Diagram: Role and Influence of Key Ministries and Agencies
This diagram shows the relative influence and functional areas (DESIGN, INNOVATION, SCIENCE AND TECHNOLOGY, OPERATION) of key government bodies in Indonesia's innovation policy. Bubbles represent agencies, and their size indicates level of influence.
- DESIGN: Bappenas
- INNOVATION: Kemenperin
- SCIENCE AND TECHNOLOGY: Ristekdikti
- OPERATION: Kemenkeu, Kementan (connected to Ristekdikti and Kemenperin)
Level of influence: the bigger the size of the bubble, the more influence in the innovation system.
This influence map is indicative and reflects the insights of the project team rather than a formal statement of roles and structures.
1.4 GLOSSARY OF INSTITUTIONAL ABBREVIATIONS AND ACRONYMS
- AIPI: Akademi Ilmu Pengetahuan Indonesia/Indonesian Academy of Sciences
- BAPPENAS: Kementerian Perencanaan Pembangunan Nasional/Badan Perencanaan Pembangunan Nasional/Ministry of National Development Planning
- BATAN: Badan Tenaga Nuklir Nasional/National Nuclear Energy Agency
- BPPT: Badan Pengkajian dan Penerapan Teknologi/Agency for The Assessment and Application of Technology
- DRN: Dewan Riset Nasional/National Research Council
- GOI: Government of Indonesia
- JOKOWI: Joko Widodo, President of Indonesia 2014-2019
- KEMENDAGRI: Kementerian Dalam Negeri/Ministry of Home Affairs
- KEMENDIKBUD: Kementerian Pendidikan dan Kebudayaan/Ministry of Education and Culture
- KEMENKEU: Kementerian Keuangan/Ministry of Finance
- KEMENKO EKUIN: Kementerian Koordinator Bidang Perekonomian/Coordinating Ministry of Economic Affairs
- KEMENKO PMK: Kementerian Koordinator Bidang Pembangunan Manusia dan Kebudayaan/Coordinating Ministry of Human Development and Culture
- KEMENPERIN: Kementerian Perindustrian/Ministry of Industry
- KEMENTAN: Kementerian Pertanian/Ministry of Agriculture
- KOMINFO: Kementerian Komunikasi dan Informatika/Ministry of Communication and Informatics
- KPI: Key Performance Indicators
- KSP: Kantor Staf Presiden/Presidential Staff Office
- LAPAN: Lembaga Penerbangan dan Antariksa Nasional/National Institute of Aeronautics and Space
- LEMBAGA EIJKMAN: Eijkman Institute for Molecular Biology
- LIPI: Lembaga Ilmu Pengetahuan Indonesia/Indonesian Institutes of Sciences
- LPDP: Lembaga Pengelola Dana Pendidikan/Indonesia Endowment Fund for Education
- PUI: Pusat Unggulan Iptek/Centers of Excellence
- RISTEK: Kementerian Riset dan Teknologi/Ministry of Research and Technology. Merged with Higher Education Unit from Kemendikbud in 2015 into Ristekdikti.
- RISTEKDIKTI: Kementerian Riset Teknologi dan Pendidikan Tinggi/Ministry of Research Technology and Higher Education. Established in 2015.
- SBY: Susilo Bambang Yudhoyono, President of Indonesia 2004-2014
- STI: Science, Technology, and Innovation
1.5 STRENGTHS AND WEAKNESSES ANALYSIS
| Category | STRENGTHS | WEAKNESSES
