The Valley of Death of Innovation
It is still imprinted in my memory when a few years ago I visited Shanghai, China. The tour guide talked about the greatness of China, which has since become a global economic power.
It is still imprinted in my memory when a few years ago I visited Shanghai, China. The tour guide talked about the greatness of China, which has since become a global economic power.
There everyone works hard, everything is produced, to the point that a saying like this exists: "Nature and its content and everything that breathes is created by God, other things are created by China." Trivial products, household appliances, electronics and automobiles made in China have flooded the world market, taking over the export markets of Japan, South Korea and Taiwan.
As disclosed by Andrinof Chaniago (Kompas, 16/7/2020), China\'s export share in 2010 was only 8.8 percent of total world exports. A decade later it took over the position of the United States (US) as the world number one. The success of this "bamboo curtain" country cannot be separated from the transformation of the traditional and extractive economy toward that of an industrial and service economy.
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How should Indonesia position itself after being named an upper-middle-income country by the World Bank?
Extractive economy
A rating upgrade should be accompanied by the ability to strengthen the manufacturing base of the economy and start releasing dependence on raw or intermediate products. Indeed, since President Joko “Jokowi” Widodo\'s first Cabinet, one of the ideals of his nawacita (nine priority programs) has been to increase people\'s productivity and competitiveness in the international market by increasing capacity for innovation and technology.
In his second period of leadership, this goal is reaffirmed as one of the five priority programs, namely the transformation of innovation-based economic development to strengthen and increase the nation\'s competitiveness.
However, what can be said, the program\'s achievements have not met expectations. Statistics Indonesia (BPS) 2017 data processed by Chaidir (2018) shows that 95.7 percent of Indonesia\'s export volume is still in the form of raw or semi-finished products, including coal (311 million tons), palm oil (24 million tons), petroleum (17 million tons), copper ore, rubber, spices, seaweed and fresh fish.
The sale of raw or semi-finished materials gives insufficient added value, which in turn does not contribute significantly to gross domestic product (GDP).
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Why are we still struggling in the extractive economy? The basic answer is that the capacity for innovation is still weak. The global innovation index (GII) data shows that Indonesia is in 87th position out of 130 countries because the institutional and infrastructure pillars of innovation are in the lowest rank. Furthermore, the GII data also illustrates that countries with high innovation ratings, such as South Korea, Japan, China, Singapore and the United States, also rank highly in terms of their per capita income.
In terms of competitiveness, according to Agus Sugiarto (Kompas, 16/7/2020), citing the 2020 Global Competitiveness Report, Indonesia is ranked the 50th in the world under Singapore (1), Malaysia (27), Thailand (40), China (28), Japan (8), South Korea (26) and Taiwan (14). Of the 12 competitiveness indicators, Indonesia only excels in the market component (the 10th rank).
To produce downstream products in order to create added value and competitiveness, the powerful way is to master science and technology and apply it in the industrial world. The mastery of science and technology is carried out through research and development (R & D) institutions of higher education, both government and private, which produce findings (inventions). The research quantity has been immense, but unfortunately most of the research results are stuck at the stages of publication, prototype and patent.
On one occasion in 2019, President Jokowi once asked a question in a demanding tone, "Then what is the result of the research fund of Rp 26.5 trillion?" The fund of this size are spread across various research institutions of the higher education, ministries and non-ministerial government agencies. The percentage of research fund that comes from the government reaches 80 percent, in contrast to developed countries where most of their research fund comes from the private sector.
It becomes a problem in our country because research results from various research and development institutions do not connect with the needs of users or industry.
Death Valley
In the last three years, the number of publications indexed by Scopus has already jumped surpassing Malaysia and Thailand. However, based on data from the Business Innovation Center from 700 research results, only 18 percent are successfully utilized by the business world. Research results that stop at publications, patents, and prototypes are still at the stage of invention. If the three products are downstreamed by testing and then commercialized, then they are categorized as innovations.
Edward Roberts, professor of MIT, United States, believes that innovation is an invention multiplied by commercialization. This means that if there is no commercialization (utilization that provides added value), it is not yet called innovation. Innovation, therefore, is an invention in the form of science and technology that is commercialized in a business process or disseminated as a public service.
Several factors cause the research results to stop at the invention stage, among others, because the research results do not match the industry needs, the industry\'s trust in the research results of R & D institutions is low, the budget is limited, and the bureaucracy that complicates the research ecosystem that is not conducive . Because of the many obstacles in producing research results, this stage is known as the valley of death.
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The government, through the Education Fund Management Institute, is trying to overcome the valley of death by financing productive innovative research (rispro), a research whose results are directly produced by partners to be commercialized. The weakness of rispro proposals in general is in their ability to map research problems, which are triggered by the lack of dialogue between researchers and potential users. If only such a proposal is successfully funded, it would be difficult to implement because it does not suit the users\' needs.
Meanwhile, the national private companies that have concessions are engaged in the upstream and sell their mining products to smelters owned by foreign companies.
Downstream efforts in the mining sector by implementing smelters and banning raw mineral exports are still not as well as expected. According to Ferdy Hasiman\'s observation (Kompas, 18/7/2020), this is due to the absence of any restrictions on foreign ownership in the downstream sector. Players in the downstream sector are dominated by foreign companies. Meanwhile, the national private companies that have concessions are engaged in the upstream and sell their mining products to smelters owned by foreign companies.
In the midst of the Covid-19 endemic, we are witnessing the emergence of innovations in the health sector. Several universities collaborating with industry and fully supported by the government have succeeded in producing ventilators, PCR test kits, rapid tests, and other medical devices. This innovation is like an oasis in the middle of a desert, considering that so far more than 90 percent of the ingredients for medicines and medical equipment still depend on imports.
Sudharto P Hadi, Deputy Chairman of the National Research Council; Environmental Management Lecturer of Diponegoro University