Research, Strategic Industries, and Transformation of the Indonesian Economy
Badri Munir Sukoco
Professor of the Faculty of Economics and Business, Universitas Airlangga
Visiting Professor, University of Skovde, Sweden

In his inauguration speech as President, Joko Widodo outlined five strategic issues that the Advanced Indonesia Cabinet will address. One of these is economic transformation, shifting from dependence on natural resources to modern, competitive manufacturing and services with high added value. Competitiveness with high added value is key to Indonesia's success in escaping the middle-income trap, a vision outlined by the government in the 2020-2024 Medium-Term Development Plan (RPJMN).

Richard Florida (2012) stated that a nation will be competitive and achieve high added value if it can transform its dependence on natural resources, cheap labor, and capital into a creative economy. This includes not only technology but also art, culture, and new services.

Each country has its own strategy for developing its creative economy. One example is South Korea, which has developed its music and film industries since the 1980s and is currently spreading the hallyu (Korean fever) trend worldwide. Beyond culture, they also excel in high technology (digital communications and its associated technologies) and plastic surgery, with film and music stars as endorsers.

The impact was also felt in the tourism sector, with 15.35 million foreign tourists (2018) attracted by scenes from Korean dramas and concerts by popular boy/girl bands. With an average spending of US$1,268 per tourist, the tourism sector's economic value reached US$19.63 billion (equivalent to Rp. 272.49 trillion, or one-tenth of Indonesia's 2020 state budget). This situation has helped South Korea escape the middle-income trap since 2002.

Their success certainly didn't come suddenly, but rather through a long and comprehensive process. Although they initially imitated Japan (in its music, film, and technology industries), their innovations gradually became global benchmarks. Indeed, research support focused on specific topics and integrated downstreaming with industry has become one of the backbones of their creative economy's success. For example, photocatalysis, artificial intelligence, and cognitive radio have been the topics Korea has produced the most research in the past 10 years. As a result, the World Intellectual Property Organization (WIPO) recorded the highest number of patents issued by Korea in digital communications, followed by electrical machinery and energy, and then computer technology.

The question is, what should Indonesia do to ensure that the products of research institutions and universities align with and support the transformation of Indonesia's creative economy?

Research in Indonesia
One of the key performance indicators (KPI) of the Ministry of Research, Technology, and Higher Education (Kemenristekdikti) in the 2014-2019 Working Cabinet was to place five Indonesian universities (PT) in the world's Top 500. The indicator with the highest weighting for the two most popular ranking institutions, Quacquarelli Symonds (QS) and Times Higher Education (THE), is the quality of research indexed in the Scopus database. This is a primary focus of Kemenristekdikti to increase the quantity of publications from universities in Indonesia.

Through Minister of Research, Technology, and Higher Education Regulation No. 20 of 2017, all professors and associate professors are required to publish in journals indexed by Scopus. Even rectors at universities targeted to be ranked among the world's top 500 have taken the lead by requiring all their master's and doctoral graduates to publish in Scopus. This situation has sparked much controversy among the academic community, but Scopus-ization continues. With varied yet encouraging publication incentives, rectors are making it easier to direct their academics to publish.

The result? There's been a remarkable surge in publications, particularly at the Ministry of Research, Technology, and Higher Education's Cluster 1 universities. Five universities (ITS, UNAIR, UB, UNDIP, and UNS) have produced 80% of the total publications throughout their existence in the last five years. Even universities like UI, ITB, and UGM have produced more than 60% of their total publications in the last five years. While most still rely on Scopus-indexed proceedings (more than 60% for UNS, ITS, and ITB), UI accounts for more than 49% of its total publications.

Surprisingly, the existing research lacks a clear focus, and it is spread across a wide variety of topics. The top five research topics conducted by Indonesian academics (>1,000 publications) are Indonesia, Malaysia, and Thailand; followed by industry, research, and marketing; algorithms, computer vision; students, science, and learning; and corporate social responsibility and corporate governance. Other research topics are interesting and important, particularly those related to technology, but their number is relatively small. This diversity of topics is due to the government and universities' freedom of choice regarding research topics, as long as they can be indexed in Scopus.

This is certainly different from what other countries, such as China, have done. Since launching Made in China 2025, 10 strategic industries have been identified as driving economic growth to escape the middle-income trap. Scival data (a scientific publication database covering over 14,000 research institutions, over 230 countries, and over 48 million scientific papers across 1,433 topics) shows that in these 10 fields, the number of publications by Chinese scientists is overwhelming.

For Artificial Intelligence, 95,722 scientific papers were produced throughout 2009-2018 (for comparison, all scientific papers produced by Indonesian scientists in the same period amounted to 99,795). The US produced 38,117 scientific papers, while India only half of the US. The Chinese Academy of Sciences (CAS) has the largest contribution, followed by the Ministry of Education of China (MOE-C), then existing universities (Tsinghua, Beihang and others). Currently, 3% of the scientific works of Chinese scientists are used by companies. It is not surprising that the largest patents filed by China are in the fields of digital communication and computer technology, and the total patents filed are three times that filed by the USA (1,542,002 patents in 2018, WIPO).

Conclusion:
High praise is due to the previous Minister of Research, Technology, and Higher Education for successfully institutionalizing a research culture that had previously been relatively neglected. However, the above conditions also present a challenge for the new Minister of Research, Technology, and Higher Education/BRIN to provide clear and focused direction so that the research conducted and produced can support Indonesia's economic transformation.

Currently, Indonesia's research funding as a share of GDP is relatively low (0.25%). In comparison, China's R&D spending reached 1.7% of GDP in 2010, while the US had 2.7%. China will increase its research funding to 2.5% of GDP by 2020 (equivalent to US$387 billion). With research funding still relatively small and almost entirely reliant on the government, it is time for the Minister of Research and Technology/National Research and Innovation Agency (BRIN) to direct research topics that will support the growth and development of Indonesia's new strategic industries in the future.

What strategic industries will be targeted and require comprehensive research support? Should Indonesia focus on hot research topics (e.g., artificial intelligence, galaxies, MIMO systems, and others) to gain citations and elevate the nation's prestige, but with limited equipment and relevance?

Or research topics that are relevant to society but not attractive to editors of top-tier journals, so that the dream of placing UI, ITB, or UGM in the world's Top 200 is far away?

Or is it a research topic that compromises all parties, all of which can be researched as long as the accountability (especially financial) is acceptable?

While many questions need answers, the primary question is what research areas will support Indonesia's economic transformation to a competitive, high-value economy. As Michael E. Porter put it, the essence of strategy is focusing on specific activities (in this case, research topics) to help an organization (nation) avoid mediocrity and become highly competitive. 

Source: Republika (Opinion), Wednesday, November 13, 2019