Indonesia’s Research Strategy

TANGKAPAN LAYAR VIDEO REKAMAN SEKRETARIAT PRESIDEN

Minister of Education, Culture, Research and Technology, Nadiem Anwar Makarim (center), speaks to the press after being inaugurated by President Joko Widodo at the State Palace, Jakarta, Wednesday (28/04/2021).

The Ministry of Education, Culture, Research and Technology was officially established with the inauguration of Nadiem Makarim as minister on April 28.

Of course, President Joko Widodo has made careful considerations, especially for the acceleration of achieving the vision of the Onward Indonesia Cabinet. That is, breaking away from the middle income trap and leading Indonesia to become a developed country by 2045.

Keun Lee (2019) states that being a developed country requires high innovation capabilities and that it all starts with research. Currently, Indonesia is ranked 74th in the world for innovation capabilities based on the Global Competitiveness Report (GCR). This position is far lower than in 2014/2015, when Indonesia was placed at 22nd in the world. This shows that Indonesia\'s innovation capabilities need to be accelerated.

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What is Indonesia\'s research strategy to increase innovation capabilities and escape the middle income trap?

BRICS and Indonesia

BRICS is a group of emerging economies consisting of Brazil, Russia, India, China and South Africa. These countries are expected to become developed countries. With a population of around 3.21 billion (nearly 42 percent of the world\'s population) and with around 26.66 percent of the world\'s area, of course this hope will be easily achieved.

As of 2019, the countries that were close to the lower limit of a developed country (economically) were Russia (with per capita income of US$11,585) and China ($10,217). As for Brazil, which reached $11,286 in 2010, its income fell to $8,717 in 2019. Likewise with Argentina, which reached $13,789 in 2015, the income fell to $9,912 in 2019. The same trend was experienced by South Africa ($6,001). Meanwhile, India has a positive trend, but it is still in the group of lower-income countries or lower middle-income countries ($2,099).

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It can be seen that Brazil, Argentina and South Africa are having difficulty increasing their economic growth and have fallen into the trap of the middle income group. The one progressive enough to get out of the group\'s trap is China. In 2000, China\'s per capita income was $959, at the same time that of Indonesia was $780. In 2010, China reached $4,550 and Indonesia was $3,122.

In less than 10 years, China had doubled that to $10,217. This is what makes economists believe that in the next five years China will come out of the trap of the middle income group of countries.

KOMPAS/BENEDIKTUS KRISNA YOGATAMA

Technicians check rolls of special submarine cables on Thursday (18/12/2019) from the Agency for the Assessment and Application of Technology (BPPT) at the Technology Research Center (Puspitek) in Serpong. The fiber optic cables are to be installed under the sea to send marine data as part of the cable-based tsunameter (CBT) early warning system.

How about Indonesia? The COVID-19 pandemic lowered our status from an upper-middle-income country in 2019 ($4,136) to a lower-middle-income country with an annual income per capita of $3,911.7. If Indonesia\'s per capita gross domestic product (GDP) grows at an average rate like in the last 10 years, it will take 64 years (2085) to escape the trap of a middle-income country.

Economic transformation, especially structural, is needed so that Indonesia is able to accelerate its economic growth. We can learn from the success of South Korea, which officially emerged from the trap of middle-income countries in 1995, then collapsed because of the 1997/1998 Asian economic crisis and rose again in 2000 until its per capita income was $31,846 in 2019.

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According to Lee (2019), this occurs because of the high proportion of the population that is highly educated (especially doctors in the STEM field) and the ability to innovate, especially related to technology.

Research and "catch-up" technology

The intensive research conducted by Lee and colleagues related to technology yielded quite interesting findings. In the early 1980s, South Korea and Taiwan had a low level of localized knowledge, the same level as other middle income countries.

KOMPAS/PRIYOMBODO

A worker finishes the production of a gas stove at PT Selaras Citra Nusantara Perkasa in Cileungsi, Bogor regency, West Java, Thursday (10/10/2019). In the midst of the American-Chinese trade war, PT Selaras Citra Nusantara Perkasa has taken the advantage of the opportunity by sending its first export of electric air purifiers to the United States.

However, in the 1990s, this level was equal to developed countries, with domestic technology creation quite high. This shows that the ability of South Korea and Taiwan to overcome backwardness in terms of technology (technological catch-up) is high and it supports their escape from the middle income trap.

The second finding is their choice of research orientation. Kim and Lee\'s (2015) study shows different orientations in national research, whether developing science (science-oriented) or technology (technological-oriented) in growing the economy.

As a result, scientists in tertiary institutions are isolated from the private sector and the technology used.

Latin American countries focus on the development of science as measured by the number of scientific publications produced compared to technology, as measured by the number of patents produced by the company. This policy is based on the belief that the knowledge produced by scientists will be an input for technological development. As a result, scientists in tertiary institutions are isolated from the private sector and the technology used.

This is what makes the two parties, both universities and the private sector, start to lag behind because of the limited interaction between the two. In contrast, South Korea and Taiwan prioritize technology over knowledge. The interaction between scientists and industry takes place so intensely that technology development with the resulting patents is high. This is what has helped South Korea and Taiwan quickly break free from the trap of the middle income group of countries. What about research in Indonesia?

THE WORLD ECONOMIC FORUM

Infographics on the components that make up the 2019 Global Competitiveness Index (GCI) of Indonesia.

Regarding localization of technological knowledge, data from the World Intellectual Property Organization (WIPO) in 2019 shows that 73.10 percent of patents submitted by Indonesia (11,481) were non-resident. The percentage of non-resident patents filed by China was only 11.20, with the number of patents the largest in the world (122 times more than Indonesia’s).

As for the patents granted, China has a non-resident proportion of 20.30 percent, while Indonesia’s is 93.40 percent. This shows that the patents submitted and granted to Indonesia have low knowledge localization.

Regarding research orientation on knowledge or technology, the Scival database shows that Indonesia has had a conversion rate of 0.86 percent in the last 10 years. Conversion rate compares the number of patents that have cited scientific publications produced by a country. In ASEAN, Singapore has the highest conversion rate (14.15 percent), followed by Thailand (4.83 percent), Vietnam (2.93 percent) and Malaysia (2.83 percent).

This data shows that Indonesia, which has experienced the highest publication growth in ASEAN in the last five years, has a knowledge orientation rather than a technological orientation.

In Asia, the highest was South Korea (9.10 percent), followed by Japan (7.64 percent), China (3.06 percent) and India (2.83 percent). This data shows that Indonesia, which has experienced the highest publication growth in ASEAN in the last five years, has a knowledge orientation rather than a technological orientation.

Recommendation

Research is a nation\'s first step in catching up on technology and building innovation capabilities. A study by Arora et al (2019) in the Harvard Business Review shows that productivity growth in the United States (US) has decreased since the 1970s. This is quite surprising, especially since National Science Foundation (NSF) data shows that investment in knowledge has increased five times, the number of doctors has doubled and seven times more scientific publications are in circulation.

This slowdown occurred because the minimal involvement of industry in research resulted in the low application of existing findings (a conversion rate of 5.60 percent). This could explain the US\'s lack of competitiveness in innovation or its dominance in the current and future world economy.

For Indonesia, the domestication of research and an increase in the conversion rate are absolutely necessary. These two things are a tough task for the education, culture and research and technology minister and the head of the National Agency for Research and Innovation, which emphasizes technological-oriented research and increased industry participation in research. For universities, it is imperative to allocate research topics that are highly relevant to industry needs in order to optimize their utilization.

In addition, facilitating and appreciating researchers in active collaborations with industry in downstreaming their research results are crucial steps. For industry, attractive incentives need to be provided for the allocation of R&D costs. Accelerating the implementation of Government Regulation (PP) No. 45/2019 as the basis for super-deduction tax incentives for industries conducting research needs to be done.

Badri Munir Sukoco, Professor at the Faculty of Economics and Business, Director of the Postgraduate School, Airlangga University

(This article was translated by Kurniawan Siswoko).