New Product Innovation Strategy 2019

National Taiwan Unuversity of Science & Technology

Indonesia Innovation News Release

Rizqi Akbar Romdloni - M10720803 - Graduate Institute of Technology Management

INTRODUCTION
Indonesia is ranked 85th in the Global Innovation Index (GII) 2018. Though Indonesia global innovation
index  is still very low compared to other Southeast Asian and Oceanian countries (rank 14 of 15 countries).
The government continues to make efforts to develop innovation. Following are some programs carried out
by the Indonesian government regarding to innovation.
I. MINISTRY OF COMMUNICATION AND INFORMATION TECHNOLOGY STEPS TO ACCELERATE
DIGITAL INNOVATION [1]
The government, especially the Ministry of Communication and Information Technology
(Kemenkominfo) is changing in terms of community service. They simplify almost all regulations even the
certification process is also simplified. There are several numbers of steps taken by them in accelerating
digital innovation. (1) Encouraging startup growth; Since 2016, there were around a thousand startups that
were guided and nurtured by the Ministry of Communication and Information. As a result, four of the
thousand startups which were GoJek, Tokopedia, Traveloka, and Bukalapak has successfully transformed
into unicorns’ company. (2) Encouraging the Growth of the Creative Industries; The Ministry of
Communication and Information encourages the growth of creative industry as well as SMEs through
entering to the marketplace. Because in Indonesia, SMEs are one of the driving forces for the economy.
Until 2019, the target is to bring in eight million SMEs to enter the marketplace. (3) efficient regulation; now
regulation has been simplified by the Ministry of Communication and Information. They are now
implementing light touch regulation. For example, there were 45 regulations involving various matters, such
as broadcasting and BTS. Now they are squeezing that into only one permit (4) Improving the quality of
human resource. Indonesia needs at least 600 thousand skilled workers in the digital field. To prepare for
this, the Ministry of Communication and Information carried out a scholarship in 2018. This year 2019, the
event will be held again where they open opportunities for 20.000 young people who want to become skilled
workers in the digital field. And this event will also in collaboration with Sisco, Microsoft and Google.
II. MOVING TOWARDS THE INDONESIA REVOLUTION 4.0 TROUGH THE IOT INNOVATION CENTER
[2][3]
The world is now experiencing Industry 4.0 and therefore Indonesia needs to be well prepared to join the
new trend. Industry 4.0 is expected to result in very rapid and wide transformations. As such, countries,
including Indonesia need to be ready. The Indonesian government officially launched the roadmap called
"Making Indonesia 4.0" in April 2018. Industry Minister Hartarto Airlangga said in order to turn Indonesia
into a competitive nation, it will require the development and integration of connectivity, technology,
information, and communication. This should lead to a more efficient economy as well as higher quality
output in the industry sector.
In the "Making Indonesia 4.0" roadmap there are five priority sectors: food and drinks, automotive, textile,
electronics, and chemicals. These five sectors are all key sectors in the world. Therefore, continued
Airlangga, the government invites all relevant stakeholders to participate in encouraging the development
and ecosystem of the Internet of Things (IoT) in Indonesia as a pillar of industry 4.0. One of them is through
the Telkomsel Innovation Center (TINC). TINC is a series of programs that will bring together startups,
developers, and investors in the IoT industry. This program summarizes various activities to shape the IoT
ecosystem in Indonesia. Some of them are IoT laboratory facilities, mentoring and boot camp activities, to
access networking for startups, developers, and system integrators with related business people. Not only
that, but they also introduced the first Narrowband Internet of Things (NB-IoT) Lab in Indonesia that TINC
innovators could use to test IoT products which they developed. This lab is located in Bandung, West Java.
In addition to embracing its own IoT ecosystem, Telkomsel will also build a 5G network in the future to
strengthen more massive IoT adoption. Currently, the 5G technology is not yet commercial in the world but
it will be tested in a number of countries, including Indonesia. Besides, Telkomsel will also increase LTE
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National Taiwan Unuversity of Science & Technology

network coverage using NB-IoT in a number of areas in 2019. Until now, Telkomsel's network has been
supported by 167 thousand BTS units with 80 percent of them are on the 4G network.
III. PALAPA RING PROJECT TO BOOSTING INDONESIA DIGITAL ECONOMY [4]
One of Indonesia's priority infrastructure projects in the 2016-2019 period is the Palapa Ring project. This
project, involving an undersea fiber-optic cable network that stretches across 13,000 kilometers and an
onshore network of nearly 22,000 kilometers, aims to provide fast broadband Internet to Indonesians in both
the urban and rural areas. Construction of a national fiber-optic network, which will be screened by 440
cities ordistricts throughout Indonesia. This Palapa Ring project will integrate existing networks with new
networks in eastern Indonesia. East Palapa Ring will be built as far as 4,450 KM consisting of 3,850 km of
sea cable and 600 KM of landline cable with a landing point of around fifteen points in 21 cities or districts.
The government’s ambitious nationwide Palapa Ring project is expected to be operational by mid-2019.
The project is intended to improve internet access in rural areas throughout Indonesia and support the
country’s digital economy. The Palapa Ring project has reached 96.3 percent completion as of Januari 2019.
National Development Planning Minister Bambang Brodjonegoro said that the project’s completion would
pave the way for smarter cities, new start-ups, more household entrepreneurs and, most critically, boost the
overall digital economy to the targeted US$100 billion by 2025, as published in a landmark Google-Temasek
report.
The multibillion-rupiah project, the construction of which is divided into west, central and east regions,
remains incomplete only in the eastern region, mostly in the underdeveloped Papua province due to rough
road conditions in remote mountain areas. Meanwhile, in the western and central regions, which cover
Sumatra, Kalimantan, Java, Sulawesi, the western Moluccas and lesser Sunda islands, the project was
completed in Januari 2019. After 2019, businessmen don’t have to worry about doing business in Eastern
Indonesia, in Natuna or in Nusa Tenggara.
Digital economy players such as OVO, Grab, Tokopedia and Google, which are focusing on expanding
their ecosystems, stand to benefit most from the increased internet penetration facilitated by the project’s
completion. The project’s completion will also improve financial inclusivity by helping financial technology
(fintech) lending firms such as Kredivo and Investree access eastern Indonesia, promising more financing
opportunities for micro, small and medium enterprises.West Kalimantan Deputy Governor Ria Norsan
expects the Palapa Ring project’s completion to help boost regional financial inclusion from 65.5% last year
to 75% in 2019 through fintech.
IV. STRENGTHEN INNOVATION, INDONESIA MINISTRY OF RESEARCH, TECHNOLOGY AND HIGHER
EDUCATION (KEMENRISTEKDIKTI) PREPARES MANAGEMENT OF INNOVATION IN HIGHER EDUCATION
[5]
The national working meeting (Rakernas) of the Ministry of Research, Technology and Higher Education
(Kemenristekdikti) in Semarang on 3-4 January 2019 resulted in seven focus recommendations, including
the field of strengthening innovation. For this reason, the Directorate General of Innovation Strengthening of
the Ministry of Research, Technology and Higher Education held a workshop to ensure that
recommendations from the national working meeting, especially in the field of strengthening innovation
were implemented properly.
The Director General of Innovation Strengthening in Kemenristekdikti, Jumain Appe, said that the
workshop was aimed to equalizing the understanding and formulating important and strategic decisions to
strengthening innovation. This recommendation, requires a joint formulation that must be followed up
through activities or programs in order to reach open and adaptive higher institutions. Now we are entering
the era of the Industrial Revolution 4.0, which has very rapid change due to the development of science and
technology. This change, according to Jumain, must well and quickly responded. These changes can be well
responded by universities and institutions because they have quality resources and capabilities. However, the
developments they experienced so far are still not optimal to respond to changes that are so fast. Therefore,
Kemenristekdikti needs to develop various instruments in order for universities can respond to such rapid
developments.
Jumain revealed, based on the experience carried out so far, there were still different perceptions between
various universities, R&D institutions and the public about how the implementation of innovation to make
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National Taiwan Unuversity of Science & Technology

changes and keep up with developments. One important thing is how universities can communicate with the
outside world. Therefore, Kemenristekdikti encourages the existence of institutions or functions, which is
innovation management in higher education to bridge the relationship between the world of higher education
and industry. Another function is to transfer technology from universities or R&D institutions to the
industrial world so what they done will linear with the needs of the community and the government
expectations.
This institution or function, according to Jumain, has already existed in some universities but it needs
strengthening. Because innovation is not a thing that runs on its own. Universities must prepare for the
implementation of innovation management in higher education as part of the Ministerial Regulation by
including it in the university's strategic plan, identifying and building potential partner networks to
collaborate from government, business, community and academics.
V. 100 SMART CITIES BY 2019 [6] [7]
Smart cities are an asset for the government and citizens alike. This new wave of technology makes it
easier for city management to identify and resolve issues, as well as to better plan improvements and
additions. Citizens also reap benefits from more transparent and responsive government, lower taxes, and
better services. To achieve these ideals, several Indonesia's Ministries, Development Planning Agency, and
Presidential Office initiated 100 Smart City project, starting with 25 cities and regencies selected to be in this
program. To be part of this project, Ministry of Communication and Information will conduct assessment on
city's readiness on regulations, human resources, and potentials, as well as assistance to plan the roadmap
and implement smart city initiative. The country targets to develop 100 smart cities by 2019.
In this third year, 100 Smart City project has selected 25 cities or districts to participate in the mentoring
program that will be conducted during 2019. This selected city or district complements 75 cities or districts
that have been selected in 2017 and 2018, therefore there are a total of 100 cities or regencies that have
participated in the Movement towards 100 Smart City. The Movement towards 100 Smart City is an
initiative of Communication and Information Technology as a facilitator of local government in utilizing
technology to answer challenges in their respective regions. The program received full support from the
Ministry of Home Affairs, Bappenas, the Ministry of Administrative Reform, the Ministry of Public Works
and the Presidential Staff Office.
The regional heads of the 25 cities including kediri city, madiun, magelang, ambon, depok, and others
cities or districts signed a memorandum of understanding to join the Movement towards 100 Smart City.
This memorandum of understanding marks the readiness of selected local governments to develop a smart
city master plan. The smart city's main goal is to improve community service in an innovative way.
According to Rikard Bagun (Vice CEO of KG Media), the Movement Towards Smart City program is very
important for Indonesia because it forms an intelligent civilization. Several companies have signed to
sponsor this project, such as Siemens, Indosat Ooredoo Business, Lintasarta, and Kompas Gramedia.
Indonesia is just getting started with its smart city programs and has much more room to grow and improve
over time. There are six goals and components of smart city in Indonesia. (1) Creating smart governance:
development of e-governance (2) Providing smart infrastructure: development of information and
technology networks, development of IT-based transportation systems, to the development of information
systems, and IT-based management. (3) Creating a smart environment: IT-based environmental
management, IT-based natural resource management, and the development of renewable energy sources. (4)
Creating smart living: ease of access to education services, ease of access to health services, development of
media role, and ease of access to security guarantees. (5) Developing smart people: education and
development of technology-literate human resources, research support, and development of the socio-
cultural character of the community. (6) Creating smart economy: development of city branding,
entrepreneurship development, and e-Commerce development
VI. INDONESIA TO IMPROVE ITS SHIPPING INDUSTRY WITH NEW MULTI-MILLION BLOCKCHAIN
PROJECT [8] [9]
Singapore-based blockchain firm PLMP Fintech will participate in a multi-million logistics project in
partnership with the government of Indonesia, according to a press release on May 29. The new initiative is
made in partnership with the Ministry of Trade of Indonesia and intends to reshaping the whole country's
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National Taiwan Unuversity of Science & Technology

logistics sector starting from the Riau Province, which is located on one of the world’s busiest shipping
lanes. The project is a result of a new memorandum of understanding (MoU) signed between PLMP Fintech
and major industry-related entities in the Indonesian city of Batam, the largest city in the Riau Islands. The
MoU
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National Taiwan Unuversity of Science & Technology

was signed by Indonesian firm Central Distribusi Batam and the Agency for Free Trade Zone and the Free
Port of Batam.
The pilot stage will reportedly include the deployment of PLMP Fintech's own blockchain protocol
Creatanium in order to standardise the bidding exercise between buyers and sellers of agricultural
commodities. Both parties will benefit from a simplified process where offering prices and trading are
conducted openly and transparently.  The blockchain project intends to provide a higher level of time and
cost efficiencies by enabling instant updates on the exact location of moving goods, Indonesia can make best
use of a blockchain-based tracking platform to turn its time-consuming supply chain into an efficient
machine. "Our solutions will allow for round-the-clock updates on the exact location of moving goods to
prevent delays and optimise the whole process", explains PLMP Fintech's Co-Founder Kym Kee during her
presentation. Earlier in 2019, Indonesian lawmakers introduced new legislation that recognized
cryptocurrencies such as bitcoin (BTC) as a trading commodity.
CONCLUSION & OPINION
Innovation in Indonesia has experienced several improvements compared to previous years. Where in
2018 Indonesia Global Innovation Index is moving up 2 positions from the previous year. However, in my
personal opinion, the Government under President Joko Widodo leadership has not been able to touch all
aspects of innovation in all sector. Mostly, the focus of innovation carried out by the Government is in the
infrastructure sector. Although, it is undeniable that infrastructure itself is one of the medium to advance the
innovation. In my opinion, the thing that should be done by the Government in addition to improving
infrastructure is to improve the quality of human resources in Indonesia through the provision of appropriate
education and develop the mindset for innovation and research. Because of what I have experienced so far
during my education year in Indonesia was most of the educational institutions are focussing on the theories
not the practical. Students are taught concepts in books, not concepts in the real world and less practice on
skills. In addition, another reality is that universities in Indonesia have not fully encouraged the ecosystem of
research and start-up. Therefore, my advice is to include innovation courses or start-ups as a compulsory
course at the university. Besides, the role of the Government is needed to balance the steps taken by
educational institutions by providing support either in funds or making regulations that support innovation.
One of the examples of this effort is through the management of innovation in higher education conducted
by Kemenristekdikti which have mentioned above. Besides, the involvement of all relevant stakeholders
such as industries, education, the government is needed to participate in encouraging innovation. This action
can be done by adopting the triple helix model of innovation by doing joint research or technology transfer.
But to make a highlight the most important thing is to foster awareness and mindset of people for innovation
through education or government program. Lastly, as the agent of change there are several thing that I can do
to help my nation to improve and enhance innovation by doing social volunteering to educate people and
build their awareness of innovation through discussion or talk show together with society. In the future,
when I returned to Indonesia, I wanted to ask permission from my old alma mater to hold a discussion or
inspiring talk with students about how innovation is carried out in another country such as Taiwan so they
can be motivated and encouraged. In addition, my biggest plan is to create a start-up or creative hub as a
place that can accommodate people from various background to gather and exchange their creative ideas.
REFERENCES
1. https://www.wartaekonomi.co.id/read216837/4-langkah-kemenkominfo-akselerasi-inovasi-
digital.html
2. https://www.indonesia-investments.com/business/business-columns/widodo-launches-roadmap-for-
industry-4.0-making-indonesia-4.0/item8711?
3. https://dailysocial.id/post/menuju-revolusi-indonesia-4-0-lewat-pusat-inovasi-iot
4. https://www.thejakartapost.com/news/2019/01/28/nearly-complete-palapa-ring-key-boosting-digital-
economy.html
5. http://technology-indonesia.com/lain-lain/umum-lain-lain/perkuat-inovasi-kemenristekdikti-siapkan-
manajemen-inovasi-perguruan-tinggi/
6. https://pop.grid.id/read/301727214/25-kotakabupaten-dilibatkan-dalam-gerakan-menuju-100-smart-
city-2019?page=all
7. https://indonesiabaik.id/infografis/menuju-100-smart-city-1
8. https://www.btcwires.com/c-buzz/indonesia-inks-multimillion-dollar-blockchain-deal-to-transform-
shipping-industry/
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9. https://finance.yahoo.com/news/multi-million-contract-awarded-blockchain-130300745.html