Wednesday, November 16, 2011

Indonesia and US IP relations

As Air Force One brings US President Obama to the Bali ASEAN and East Asia summits, IP Komodo is also sitting in Bali airport, musing about US Indonesia IP relations.
At the APEC forum in Hawaii last week the US and Indonesia agreed a trade deal which highlighted difficulties of doing business in Indonesia. The US has long been keen to expand trade with the world’s 4th largest country; but trade between them is half of that between the US and either Singapore or Malaysia. Michael Camuez, a U.S. assistant secretary of commerce mentioned several Indonesian trade barriers including import licensing and poor protection of IPRs. "Frankly, (American companies) are looking for a less complicated environment in which to do business," was his telling comment.

Meanwhile, Sugihono Kadarisman, the Vice Chairman of the International Chamber of Commerce (ICC) Indonesia, announced similar concerns this week too, saying that Indonesia suffered from poor business competitiveness and weak IPR protection, compared to other states. He cited World Economic Forum (WEF) survey of Global Competitiveness which showed Indonesia slipping lower. Transparency International ranks Indonesia as one of the more corrupt countries in Asia. The US Foreign Corrupt Practices Act frequently focuses on Indonesia.

Indonesia’s massive democracy with its parliament of local provincial representatives tends to focus on internal national issues, and less on improving systems relative to global benchmarks. The IP registration system is just about acceptable. R&D is in a poor state and local innovation is weak. Some areas of IP protection like Customs don’t function at all or like police enforcement are simply getting worse, in contrast to global improvements. All of this will feature in the USTR special 301 review which starts in the New Year.

IP Komodo worries that Indonesia is not making the advances being made in other ASEAN countries. Business here thrives in spite of government. So investment may continue and the domestic economy may thrive. But this tends to hide institutional IPR weaknesses, until the day when business complains.

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