Intangible Assets in Focus: The Critical Role of Intellectual Property in Indonesia
Intellectual Property (IP) as an intangible asset has become increasingly important in Indonesia, reflecting global trends where knowledge-based industries and creative sectors are growing rapidly. Intellectual Property Rights (IPR) protect creations of the mind, such as inventions, literary and artistic works, symbols, names, images, and designs used in commerce. These intangible assets are critical to the economic growth and competitiveness of individuals, businesses, and the nation as a whole.
Types of Intellectual Property in Indonesia.
Indonesia recognizes various types of IP, including:
1. Patents: Protect technological inventions or innovations that offer new solutions to problems. In Indonesia, patent protection lasts 20 years for general patents and 10 years for simple patents (utility models).
2. Trademarks: Protect distinctive symbols, logos, or names used by businesses to identify their goods or services. Trademark registration is valid for 10 years and can be renewed indefinitely.
3. Copyrights: Cover literary and artistic works, including books, music, films, and software. In Indonesia, copyright lasts for the life of the creator plus 70 years.
4. Industrial Designs: Protect the aesthetic aspects of a product, such as its shape, pattern, or color. Protection is granted for 10 years and cannot be extended.
5. Geographical Indications: Protect products that have specific characteristics or a reputation attributable to their geographic origin, such as “Kopi Gayo” for coffee or “Tenun Bali” for traditional Balinese fabric.
6. Trade Secrets: Protect confidential business information, such as formulas, methods, or processes that give a company a competitive edge. Trade secrets are protected as long as they remain undisclosed.
7. Integrated Circuit Layout Designs: Protect the three-dimensional layout of circuits used in electronics, valid for 10 years.
Legal Framework for Intellectual Property in Indonesia
Indonesia’s IP laws are in line with international standards, particularly the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), a part of the World Trade Organization (WTO) agreements. The primary laws governing IP in Indonesia include:
• Law No. 13 of 2016 on Patents
• Law No. 20 of 2016 on Trademarks and Geographical Indications
• Law No. 28 of 2014 on Copyright
• Law No. 31 of 2000 on Industrial Designs
• Law No. 30 of 2000 on Trade Secrets
• Law No. 32 of 2000 on Integrated Circuit Layout Designs
Indonesia has also ratified the Paris Convention for the Protection of Industrial Property and the Berne Convention for the Protection of Literary and Artistic Works.
IP as an Intangible Asset
As an intangible asset, IP can generate significant economic value. For businesses, IP can be:
• Monetized: Companies can license or sell their IP to generate revenue. Patents, trademarks, and copyrights are often licensed to other companies, allowing them to use the IP in exchange for royalties or lump-sum payments.
• Leveraged for Investment: IP can be used as collateral to secure loans or attract investors. For example, companies with strong trademark portfolios or innovative technologies often find it easier to raise capital.
• Key to Market Competitiveness: Strong IP protection allows businesses to differentiate their products and services, protect market share, and maintain a competitive advantage.
For Indonesia, IP assets play a key role in the country’s creative economy, which includes sectors such as fashion, music, films, software, and digital content. The creative economy contributed approximately 7.5% to Indonesia’s GDP in 2020, with IP-based industries growing in importance.
Challenges in IP Protection and Enforcement
Despite a robust legal framework, Indonesia faces several challenges in IP protection and enforcement:
1. Counterfeiting and Piracy: The prevalence of counterfeit goods and copyright piracy, particularly in sectors like fashion, electronics, and media, remains a major issue. The enforcement of IP laws, especially in online spaces, is a continuous struggle.
2. Public Awareness: Many Indonesian businesses, particularly small and medium-sized enterprises (SMEs), are unaware of the value of IP and the processes for protecting their assets. This lack of awareness can result in missed opportunities to protect and capitalize on IP assets.
3. Legal and Bureaucratic Barriers: The process of registering IP, while improving, can still be complex and time-consuming. There are also concerns over the judicial system’s capacity to effectively handle IP disputes.
4. Global Competition: As businesses expand into international markets, they must ensure their IP is protected beyond Indonesia’s borders. Navigating the international IP landscape can be complex and costly.
Role of the Government and Initiatives
The Indonesian government has taken steps to improve the IP environment:
• Directorate General of Intellectual Property (DGIP) under the Ministry of Law and Human Rights is responsible for administering IP rights, including registration, maintenance, and dispute resolution.
• Socialization Programs: The government regularly runs educational campaigns to raise awareness about the importance of IP protection among SMEs and the general public.
• E-Government Services: Indonesia has introduced online platforms for IP registration and management, making the process more accessible and efficient.
• Collaboration with International Organizations: Indonesia cooperates with the World Intellectual Property Organization (WIPO) and other international bodies to strengthen its IP system and adopt best practices.
IP Valuation and Accounting in Business
Valuing IP as an intangible asset can be complex. Several methods are used, such as:
• Cost-Based Valuation: Based on the cost of developing the IP.
• Market-Based Valuation: Based on the price comparable IP has fetched in the market.
• Income-Based Valuation: Based on the future revenue the IP is expected to generate.
Accounting for IP also requires adherence to International Financial Reporting Standards (IFRS), which mandate that companies recognize IP as an intangible asset on their balance sheets if it is acquired or developed and its value can be reliably measured.
In Indonesia, IP is a vital intangible asset that drives economic growth and innovation. The country’s legal framework provides protection for a wide range of IP rights, but challenges such as enforcement and public awareness remain. As Indonesia continues to develop its creative economy and knowledge-based sectors, IP will play an increasingly central role in the country’s development strategy. Businesses and individuals must recognize the importance of protecting and managing their IP assets to fully capitalize on the opportunities presented by the global economy.
[RHP/Khurnia Hudewi]
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