Australia Awards in Indonesia

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28 Mar 2016

Utilization of Intellectual Property Rights By Indonesian Small and Medium Enterprises: A Case Study of Challenges Facing the Batik and Jamu Industries

Selvie Sinaga, 2011
University of Wollongong

Intellectual Property Rights (IPRs) are purported to have benefits for a business enterprise, such as protecting its intellectual property assets and enhancing the commercialization of its innovations, regardless of its size. Despite the contended benefits of IPRs to a business, the number of Indonesian small and medium sized enterprises (SMEs) which integrate relevant IPRs in their business activities is small.

This study seeks to understand the obstacles and challenges that discourage Indonesian SMEs from utilizing IPRs in their businesses. It examines the approaches and measures that have been taken by the government of Indonesia in the administration of its intellectual property system to encourage the integration of IPRs into SMEs business strategies.

The study takes a social legal approach, by interviewing relevant government officers and SME owners in two selected industries, batik and jamu, which are iconic traditional fabric and medicinal industries, in the Central Java and Yogyakarta provinces. The data gained from the interviews was contextualized in the legal, regulatory and historical literature.

The study shows that only a few types of IPRs, namely trademarks, copyrights, industrial designs, petty patents and trade secrets are relevant to and can provide direct benefits for SMEs engaged in the batik and jamu industries in Indonesia. It found that the administration of intellectual property in Indonesia is so cumbersome that it discourages the SMEs from incorporating the relevant IPRs into their business strategies. The cumbersome process of obtaining the IPRs is caused by complex rules of procedure, inefficient bureaucracy and a weak decentralization policy, a corruption problem and a lack of skilled human resources, of effective information technology (IT) infrastructure and of financial resources.

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