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Paper 25: Connecting All The Dots: Challenges in Establishing Effective Innovation System in Indonesia


SONY DSCResearch and development (R&D) activities in Indonesia are mainly funded by government and conducted at universities and few public research institutions. Unfortunately, these R&D activities are mostly too academic and rarely focused on solving actual problems or providing relevant technologies for economic development and social welfare improvement. Public R&D institutions responsible for developing technologies for supporting national development also have drifted into academic mainstream. Meanwhile, in-house R&D at local industries is relatively inadequate and technology spillover from foreign industries is considerably low.

Indonesia had relied heavily on universities in technology development for more than half century. Meanwhile, the ‘ivory tower’ syndrome at Indonesian universities is still existent. These lead to two major problems: [1] mismatch between technology developed by universities and those needed for economic development and [2] wide gap between absorptive capacity of prospective users and investment required for adoption of the technologies. As obvious consequences, adoption of indigenous technologies by domestic industries or other users is low. Therefore, their contribution to economic growth and social welfare improvement has been insignificant.

Very low domestic technology adoption becomes a major obstacle in establishing national innovation system. Current R&D policy and its supporting sectors’ policies are clearly needed to be reexamined. During last few years, demand-driven approach in developing technologies has been encouraged in order to create more relevant and affordable technologies. It is recognized, however, that changing mindset of the academicians and researchers will not be an easy task, i.e. pulling them out of their comfort zone. Industries and other technology users have been urged to directly involve in identifying or pinpointing relevant technologies for economic and social development.

Technology policy will not be successful if not be upheld by favorable policies in other supporting sectors. Trade and industry strategies should be aligned with technology policy. Higher education and technology policies should also be synchronized in human development scenarios. In Indonesia, education and technology are administered by two different ministries.
At present, there are also regulations on catering incentives for business enterprises that financially support R&D activities; however, schemes of these incentives do not seem to be alluring from business’ perspective.

Formulating technology policy for establishing effective innovation system is not as simple and straight forward as some might imagine. Synchronized all supporting policies are absolutely needed in order to create conducive atmosphere for innovation system to flourish. So, it is not only about debottlenecking. It is more about connecting all the dots. This paper will explore strategies in formulating workable technology policy within intricacy of innovation ecosystem in Indonesia.

Full paper can be downloaded here

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