Indonesia: Research & Development Financing · Published in January 2013 Indonesia: Research &...

Indonesia:Research & DevelopmentFinancing

Human DevelopmentEast Asia and Pacific Region

THE WORLD BANK

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74619

THE WORLD BANK OFFICE JAKARTA

Indonesia Stock Exchange Building, Tower II/12-13th Fl.

Jl. Jend. Sudirman Kav. 52-53

Jakarta 12910

Tel: (6221) 5299-3000

Fax: (6221) 5299-3111

Published in January 2013

Indonesia: Research & Development Financing is a product of staff of the World Bank. The fi ndings, interpretation and conclusion expressed

herein do not necessarily refl ect the views of the Board of Executive Directors of the World Bank or the government they represent.

The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denomination and other

information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any

territory or the endorsement of acceptance of such boundaries

Cover Photo by: World Bank

Indonesia:Research & DevelopmentFinancing

Human DevelopmentEast Asia and Pacific Region

Report No. 74619-ID

Indonesia: Research & Development Financingii

Acknowledgments

The team is grateful to offi cials and staff in the Ministry of Research and Technology, the National Innovation

Commission, and the Indonesia Academy of Sciences for discussions that initiated this report; and for various

inputs throughout the production of the report. We are particularly grateful to the Center for Science and

Technology Studies (PAPPIPTEK) at the Indonesian Institute of Sciences (LIPI), who provided key survey data, and

RISTEK colleagues who verifi ed key information. We thank all the participants at discussion workshops for sharing

with us their experiences and concerns about public support for R&D in Indonesia.

We thank colleagues at AusAid - Maesy Angelina, Benjamin Davis, Diastika Rahwidiati, Rivandra Yoyono, Scott

Guggenheim, and Hannah Birdsey - for their support throughout the production of the report.

The report is managed by a team comprising of Dandan Chen (Task Team Leader, Senior Economist); Jean-Louis

Racine (Senior Private Sector Development Specialist), Lawrence Kay (Consultant, main author of fi rst draft), and

Siwage Negara (Operations Offi cer). Dyah Kelasworo Nugraheni provided the most effi cient team support. The

preparation of the report was under the overall guidance and support of Luis Benveniste (Sector Manager, EASHE).

The production of this report was made possible through the generous fi nancial support of AusAid Indonesia.

Public Expenditure Review iii

Abbreviations, Acronyms, and Terms

ADB Asian Development Bank

AIPI Indonesian Academy of Sciences

ASEAN Association of South East Asian Nations

AusAID Australian Agency for International Development

BALITBANG Badan Penelitian dan Pengembangan (Ministry research centers)

BALITBANGDA Badan Penelitian dan Pengembangan Daerah (Ministry research centers in the regions)

BAPETEN Badan Pengawas Tenaga Nuklir (Nuclear Energy Regulatory Agency)

BAPPENAS Badan Perencanaan Pembangunan Nasional (National Development Planning Agency)

BATAN Badan Tenaga Nuklir Nasional (National Nuclear Energy Agency)

BIG Badan Informasi Geospasial (Geospatial Information Agency)

BMKG Badan Meteorologi, Klimatologi, dan Geofi sika (Center of Meteorology, Climatology and

Geophysics)

BPPT Badan Pengkajian dan Penerapan Teknologi (Agency for Assessment and Application of

Technology)

BSN Badan Standardisasi Nasional (National Standardization Agency)

DRN Dewan Riset Nasional (National Research Council)

EITI Extractive Industries Transparency Initiative

EU European Union

EITI Extractive Industries Transparency Initiative

GDP Gross Domestic Product

GERD Gross Domestic Expenditure on R&D

GNI Gross National Income

ICT Information and Communications Technology

IDR Indonesian Rupiah

Indonesia: Research & Development Financingiv

KEI Knowledge Economy Index

KEMENRISTEK Kementerian Riset dan Teknologi (Ministry of Science and Technology)

KI Knowledge Index

KIN National Innovation Committee

LAPAN Lembaga Penerbangan dan Antariksa Nasional (National Institute of Aeronautics and Space)

LBME Lembaga Biologi Molekular Eijkman (Eijkman Institute for Molecular Biology)

LIPI Lembaga Ilmu Pengetahuan Indonesia (Indonesian Institute of Sciences)

LPNK Lembaga Pemerintah Non Kementerian (Non-ministerial State Institutes)

MVA Manufacturing Value-Added

OECD Organisation for Economic Development

PER Public Expenditure Review

PhD Doctor of Philosophy

PUSPIPTEK Pusat Penelitian Ilmu Pengetahuan dan Teknologi (Science and Technology Research Center)

RAPID Riset Andalan Perguruan Tinggi dan Industri (University and Industry Research Collaboration)

R&D Research and Development

S&T Science and Technology

TFP Total Factor Productivity

UNESCO United Nations Educational, Scientifi c and Cultural Organization

UNIDO United Nations Industrial Development Organization

USD United States Dollars

USPTO United States Patent and Trademark Offi ce

Public Expenditure Review v

Contents

Acknowledgments ii

Abbreviations, acronyms, and terms iii

Contents v

Executive Summary vii

Introduction 2

R&D and Indonesia’s Economic Development 4

Indonesia’s R&D Performance 8

Government R&D Policy and R&D Financing 16

R&D Policy 16

Resource Mobilization 19

Resource Allocation and Utilization 23

Improving Indonesia’s R&D Public Financing for the Future 44

Bibliography 46

Annex 1: Organizations Involved in R&D, Divided by Type 49

TablesTable 1 Knowledge Economy Index Rankings, Select Countries, 2012 8

Table 2 Scientifi c and Technical Journal Articles, Indonesia and Select Countries,

1999–2009 9

Table 3 Scientifi c Papers and Citations of Authors from Select Countries, 1999–2009 9

Table 4 Publications by Major Scientifi c Field (percent), 2008 10

Table 5 English-Language Scientifi c Articles by Authors from Select Countries,

1998–2008. 11

Table 6 Number of Resident Patent Filings per Million Population, Select Countries,

2000–2010 11

Table 7 Indonesian Patent Applications at the European Patent Offi ce and

in the United States, 2002–2010 12

Table 8 Indonesian Patent Applications Granted at the European Patent Offi ce and

in the United States, 2003–2010 12

Table 9 High-Technology Exports as a Percentage of Total Exports, Indonesia and

Select Country Groups, 1988–2010 12

Table 10 Manufacturing Value-Added (MVA), Indonesia and Select Country Groups,

Assorted Years (percent) 13

Table 11 Indonesian Share of MVA and Manufacturing in World Output, Assorted Years 13

Table 12 Structure of Policies on Science, Technology, and Research 17

Table 13 Breakdown of the S&T Policy Approach in the Masterplan for the Acceleration

of Indonesian Economic Development (2011–2014) 18

Table 14 Indonesian GERD by Known Source of Financing (percentage), Available Years 22

Table 15 Indonesian GERD by Known Locus of Activity (percentage), Available Years 22

Table 16 R&D by Source of Financing (percentage), Selected Neighboring Countries,

1998–2008 23

Table 17 Private R&D Centers by Industry Sector 24

Indonesia: Research & Development Financingvi

Table 18 Organizations Involved in R&D, Divided by Type 25

Table 19 R&D Funding Distribution, 2006 and 2009 28

Table 20 Distribution of RAPID Grants, 2008–2012 33

Table 21 LIPI Social Science Research Projects by Type of Funding, 2010 34

Table 22 Distribution of Staff at the Seven LPNK, Most Recent Years 35

Table 23 Number of Researchers per Million Population, Select Countries, 1996–2009 37

Table 24 Public University Researchers by Field of Study, 2009 38

FiguresFigure 1 GDP Growth (annual percentage change) 2002–2010 4

Figure 2 Average Annual Growth Rate in the Number of Foreign Scholars in

the United States, 1997–2007 10

Figure 3 Resident Patent Filings per USD GDP, Select Countries, 2000_2010 11

Figure 4 GERD, Selected Regions, 1996–2009 20

Figure 5 GERD, Indonesia, Three Years of Comparable Data 21

Figure 6 GERD, Developing Countries, East Asia and Pacifi c Region, Most Recent Years 21

Figure 7 GERD, Selected Neighboring Countries, Most Recent Years 21

Figure 8 Total State R&D Funding by Source, 2006 27

Figure 9 Non-Higher Education Central Government R&D Funding

by Destination, 2006 29

Figure 10 BALITBANG Funding by Source, 2006 30

Figure 11 LPNK Funding by Source, 2006 30

Figure 12 LPNK Funding by Domestic Research Contracts 31

Figure 13 BALITBANGDA Funding by Source, 2006 31

Figure 14 Public Universities’ Funding by Source, 2009 31

Figure 15 Public Universities’ Funding by Source, 2006 and 2009 32

Figure 16 Distribution of LIPI Staff by Age Group, Assorted Years 36

Figure 17 Distribution of LIPI Researchers by Education Level, Assorted Years 36

Figure 18 LIPI Staff by Level of Seniority, Assorted Years 36

Figure 19 R&D Sector Researchers by Organization Type, Assorted Years 37

Figure 20 BALITBANG Funding by Type of Research, 2006 39

Figure 21 BALITBANGDA Funding by Type of Research, 2006 40

Figure 22 LPNK Funding by Type of Research, 2006 40

Figure 23 Public Universities’ Funding by Type of Research, 2009 40

Public Expenditure Review vii

Indonesia’s economy over the past decade has been on a sustained growth path. The economy grew within

a band of 4.5 percent to just over 6 percent between 2002 and 2010. Comparative strength in several sectors has

helped Indonesia to weather recent problems in the world economy. Production of commodities was especially

useful in this respect, as in 2010 it constituted 63 percent of total exports and 26 percent of annual value added.1

Furthermore, the country enjoys a large number of micro-, small- and medium-sized enterprises. One important

factor that highlights Indonesia’s growth potential are the recent increases in total factor productivity (TFP),

which has contributed more to recent economic growth than before the 1998 fi nancial crisis.2

Indonesia has also made fast progress in reducing extreme poverty. In 1984 around 65 percent of Indonesia’s

population lived on less than USD 1.25 a day (at purchasing power parity), while the fi gure was around 50 percent

in 2000. In 2010–2011 the level was less than 19 percent, or around the same rate as in China.3 By March 2011

these percentage falls meant that the number of people living below the poverty line had fallen to 30 million,

driven by economic growth, higher household incomes, and more jobs.4 However, large parts of the population

still have levels of income that suggest signifi cant deprivation.

There are a few risks that need to be managed for sustained economic growth and social development.

First are the threats generated by large capital fl ows into the country. While this has opportunities that Indonesia

can take advantage of, such as lower borrowing costs, job creation and exposure to foreign expertise, the infl ows

are often portfolio investments rather than foreign direct investment. Hence, quick withdrawals of capital can

aff ect domestic industries through fl uctuations in the exchange rate. In addition, large pockets of poverty remain.

Currently, 51 percent of the population still lives on less than USD 2 a day, suggesting that any shocks to the

economy and thus disruption in the small incomes of so many people could aff ect large parts of the population.

There are also large economic disparities between the regions.

However, Indonesia also enjoys many opportunities for greater economic growth and poverty reduction.

For example, in January 2010 the ASEAN-China Free Trade Agreement came into eff ect which, as a part of ASEAN,

Indonesia is party to. It eliminates tariff barriers on approximately 6,600 products in a variety of industries.5

According to analysis of the likely eff ects of the trade agreement on Indonesia, the country might enjoy benefi ts

of 1.2 percent of GDP over the long term as it reallocates resources towards industries where it has a comparative

advantage.6

This public expenditure review (PER) concentrates on one of Indonesia’s key opportunities for future

growth: research and development. R&D can lead to greater innovation and growth in human capital, which a

country needs in order to be fl exible in response to market changes and to capture larger amounts of value-added

throughout the value chain in the production of goods or services. In addition, the challenge of continuing the

momentum of poverty reduction also needs strengthening through R&D in the social science fi elds, to support

eff ective and evidence-based public policy making. This PER looks at what Indonesia’s R&D sector produces

relative to how much money is spent on it, and how. It will not only focus on the levels of spending on the sector,

but also the policy, institutional, and managerial framework. However, the report does not aim to describe how

the R&D sector might be transformed, but instead to focus on current fi nancing and institutional issues and how,

if necessary, these might be addressed.

Executive Summary

1 World Bank, Indonesia Economic Quarterly: Continuity Amidst Volatility, World Bank, June 2010, p34

2 OECD, OECD Economic Surveys: Indonesia, OECD, November 2010, p34

3 World Economic Forum, The Indonesia Competitiveness Report 2011: Sustaining the Growth Momentum, World Economic Forum, 2011, p1

4 World Bank, Indonesia Economic Quarterly: Turbulent Times, World Bank, October 2011, p11



Indonesia: Research & Development Financingviii

Indonesia’s R&D sector has some way to go to gain global signifi cance. On the World Bank’s Knowledge

Economy Index, Indonesia ranks poorly compared to both its richer and poorer neighboring countries. The index

combines factors that concern the economic incentives available for researchers, the level of innovation and

adoption of technology, the quality of education, and the information technology infrastructure in place. In 2012

Indonesia ranked 108th in the world.

Indonesia also compares poorly in international comparisons of R&D output and quality. There are some

strong areas in Indonesian R&D, with the country’s scientists receiving 7.67 citations per paper between 1999 and

2009, which was more than their peers in countries such as Cambodia and Thailand. However, in 2009 Indonesia

published only 262 papers in scientifi c and technical journals, a level far behind places such as Malaysia (1,351) or

Singapore (4,187). This low level of activity also has eff ects on the technological advancement of the goods and

services produced by the economy. Regarding the output of the social sciences sector, a recent report found that

only 12 percent of peer-reviewed social science research publications on Indonesia are undertaken by authors

based in the country, where the average among a group of developing countries including the Philippines,

China, India, Thailand, Malaysia, and Brazil is approximately 28 percent.7

The lack of broad capacity in the R&D system is also revealed by Indonesia’s inability to innovate

signifi cantly, as shown by its low level of patenting activity. UNESCO has argued that the level of activity

since the turn of the century has shown very little growth.8 This is demonstrated by several diff erent international

comparisons. For example, between 2000 and 2006 the number of patents fi led by Indonesian residents grew

from only 0.74 per million population to 1.25 in 2006. This is a 59 percent increase, but from a very low base. By

comparison, in the same period, annual Malaysian patent fi lings rose from 8.8 to 43.41. Countries such as China

and Thailand also showed signifi cant progress in the same period.

The government has extensive plans to develop the quality and output of R&D in Indonesia. Since the

1990s there have been several government eff orts to support R&D in one way or another. After 2005 these were

mainly incentive programs for the pursuit of R&D and its use in industry. As government policy currently stands,

there is a National Long-Term Development Plan (2005–2025) that specifi es seven areas (food security; energy;

transportation technology and management; information and communication technology; defense and security

technology; health and medicine; and advanced materials) as needing greater R&D activity. This is supported by

other plans, such as the Medium-Term Development Plan (2010–2014), which are more specifi c in how greater

R&D activity will be fostered and used.

At the moment, the level of spending on R&D is too low to support the government’s plans for greater

R&D activity. According to the latest fi gures (from 2009) Indonesia only spends 0.08 percent of its GDP on

R&D, or less than one tenth of one percent. This is much less than even its regional developing peers such as

China, which spends 1.46 percent of its GDP on R&D. In one of the government’s main economic development

plans, the Masterplan for the Acceleration and Expansion of Indonesian Economic Development (2011–2025),

it is stipulated that there will be an increase in R&D funding to 1 percent of GDP by 2014 and 3 percent by 2025,

coming from a mixture of the state, state-owned fi rms, and the private sector.

Around three quarters of R&D funding in Indonesia comes from the government. The best data on the

activity in the sector suggests that the private sector conducts very little R&D. This is the opposite of normal

practice elsewhere, such as among OECD countries where fi rms account for around 70 percent of all activity. It is

likely that with such a balance there is little investigation of the most pressing commercial R&D questions.

The low level of state R&D spending is spread across a range of organizations. Each of the 22 government

ministries has a research arm (the BALITBANG), which is mostly used for short-term research that mainly constitutes

policy advice. There are then seven independent research institutes (the LPNK) that conduct longer-term research

7 Suryadarma D, Pomeroy J and Tanuwidjaja S, “Economic Factors Underpinning Constraints in Indonesia’s Knowledge Sector: Final Report,” AusAID, 7th June

2011, p3

8 UNESCO, UNESCO Science Report 2010, UNESCO, 2010, p451

Public Expenditure Review ix

in their given fi elds, which range from aeronautics and space to nuclear energy. The most reputable of these is

the Indonesian Institute of Sciences (LIPI). Among other assorted bodies are the public and private universities.

Only a few of these (in the public sector) have the research capacity to tackle long-term research questions.

Despite the importance of state funding of R&D, the administration of it currently has many weaknesses.

In two important ways the approach to state fi nancing has constraining eff ects on R&D because of the

investigative nature of research. Firstly, an emphasis on single-year budgeting makes it diffi cult for R&D institutes

that rely on government funding to plan. Without a multi-year view it is diffi cult to start a research project that

has unknown outcomes as the researchers do not know whether funding will be available for a second year if

the target discovery has not been made in the fi rst year. Secondly, the necessity to achieve a research outcome

within a given fi nancial year induces further caution over which research topics to pursue. Researchers may tend

to pick less signifi cant topics that are likely to produce some results in the budgeted timeframe.

State R&D funding is also characterized by its distribution by the center of government. Even if a state

provides the majority of funding for a given activity, it is not necessary that it be distributed to the fi nal recipients

by a central body. Agencies and arms-length bodies can be given the funding, which can be granted to various

researchers and contractors. In Indonesia, however, the funding is usually allocated within the government

departments and agencies where research activities are conducted. Not only does this make the public research

institutes and agencies such as the LPNK highly dependent on the state for their work, the internal allocation of

funding is also rarely competitive.

The insignifi cant role of contract funding would also suggest low usage of competitive fi nancing. Where

line-item funding is used, the demands of administering and tracking the fl ow of funds is likely to require high

levels of specifi cation as to where it is going and for what purpose – two characteristics of R&D funding in

Indonesia. By contrast, if funding is allocated to R&D and is then distributed by research contracts, it is sometimes

easier for that funding to take place through a competitive bidding process.

Compared with other R&D units and institutes, the funding for R&D at public universities appears to be

most diversifi ed. In 2009, while nearly IDR 1.2 trillion9 came from the Directorate for Higher Education, there

was also funding from other central government agencies, amounting to IDR 280 billion10. In addition, they also

received around IDR 205 billion from domestic research contracts. Approximately IDR 180 billion of this was from

government discretionary funds and only around IDR 21 billion from companies and suchlike.

The Directorate for Higher Education distributes its funding in several diff erent ways. Around 65 percent

goes to the public institutions under its remit through a mix of block grant funding and line-item budgeting. But

it also operates grant schemes. These schemes have recently been focused on university-industry collaborations,

but over the past 20 years, money has also been given for fundamental research. In 2012 the Directorate for

Higher Education made 4,297 grants worth a total of IDR 286 billion, with the vast majority going to the public

universities rather than the private ones, and the seven leading public universities in particular (Institut Pertanian

Bogor, Institut Teknologi Bandung, Universitas Airlangga, Universitas Gajah Mada, Universitas Indonesia, Universitas

Pendidikan Indonesia, Universitas Sumatera Utara). It is possible that this refl ects the balance of R&D expertise,

although this may also refl ect the preference given to the leading public universities.11

The low R&D human resource base is also a signifi cant constraint to the eff ective use of limited state R&D

funding. As of 2009 Indonesia only had around 89.6 researchers per million people, while its developed regional

peers had between 4,000 and 5,000. The LPNK receive around a quarter of the central funding that is given to

the BALITBANG but have double the amount of staff . Staffi ng at the LPNK is also infl exible, in that researchers are

obliged to join at the grade conferred on them by their level of education and receive tenure after one year in

Executive Summary

9 A trillion is 1 million million.

10 A billion is 1,000 million.

11 PT. Trans Intra Asia (TIA), Development of Strategies for University-Industry-Government Partnership, PT. Trans Intra Asia (TIA), August 2012

Indonesia: Research & Development Financingx

their post. There are also questions over the capacity of researchers in the universities, as in 2009 there were three

or four staff with a bachelor’s degree for every one with a PhD.

In order for Indonesia to achieve its high ambitions for R&D over the next decade or so, an increase in

public funding is needed. The Indonesian government has outlined a strategy for the country’s economic

growth and has identifi ed R&D and science and technology as important sources of future growth. Given

Indonesia’s current development this is the right approach. However, currently Indonesia spends very little on

R&D either in the public or private sectors, and is likely falling behind its peers in several ways as a result. The

commitment in the government’s Masterplan to increase GERD to 3 percent by 2025 goes some way to meeting

that gap. However, there are also issues in the public R&D sector that need addressing before an increase in

funding can be spent effi ciently.

There is a need to improve the state administration of budgeting and spending, which is aff ecting the

effi cient pursuit of R&D projects. There is a need to give special consideration to R&D projects where fl exibility

and predictability of funding are especially needed. There are signs that some of the main issues are being

addressed, but the emphasis on a single-year budget cycle is unlikely to be conducive to giving researchers the

time and stability they often need to pursue complex questions with unknown outcomes. This issue is further

exacerbated by the state-wide problem of delayed disbursing of public funds.

Second, there is a need to rethink fund allocation mechanisms in order to improve R&D output and

outcomes, and leverage private funding. Currently, Indonesia’s R&D funding is largely characterized as

“institutional funding”, through the public budget allocation system. Competitive R&D funding, a mechanism

that has been adopted in many countries to incentivize those R&D activities of the highest quality, is close to

non-existent in Indonesia. Greater use of peer reviews could also help with increasing the quality of research

outputs. In addition, the wide range of organizations that receive a public R&D budget suggests that resources

are distributed thinly. More importantly, the budget allocation lacks innate incentives for better R&D results. A

competitive funding pool for R&D can introduce a new approach to public fi nancing, stimulating and benefi ting

Indonesia’s scientifi c communities at large. In addition, innovative mechanisms can be put in place, such as

matching funds to leverage private fi nancing for R&D.

In order to eff ectively use public R&D funding, a range of institutional reforms at public research entities

should be considered. Institutional autonomy and accountability should be at the center of these reforms.

Most of the R&D agencies and units in Indonesia function as part of government offi ces and bureaucracies.

For example, the BALITBANG, which receive over three quarters of all government line-item funding, are under

the direct control of their respective ministries. The LPNK are relatively independent but cannot retain revenues

from private sector research contracts. While most of the accountability and autonomy reforms have started in

the leading public universities, regulations and operational guidelines for the new autonomy law need to be

prepared to guide the institutional reforms.

Strengthening the capacity and elevating the expertise of research staff is simply the foremost necessary

condition for Indonesia’s R&D sector to take off . The data on staffi ng levels and educational background

across the public R&D sector, and especially at the LPNK, showed that a given research body is likely to be bottom-

heavy, that is, to have a large number of staff with bachelor’s degrees and junior positions, and often likely to be

young. The corollary of this is that often only a minority of staff holds doctorates, meaning that research institutes

may only have a small pool of research expertise to draw on. Given the relatively weak postgraduate programs,

particularly at doctorate level, Indonesia still needs to rely on broadening international collaborations in order

to train fi rst-rate researchers and to gain critical mass in R&D fi elds, including building stronger postgraduate

programs in the long term. Strengthening human capacity has to go hand in hand with institution reforms

in order to adequately incentivize researchers to generate fi rst-rate outcomes and contribute to Indonesia’s

development eff ectively.

IntroductionI.

Photo by: Nugroho Nurdikiawan Sunjoyo

Indonesia: Research & Development Financing2

Introduction

How much Indonesia spends on R&D, where it spends it, and how it spends it, will aff ect the level of the

country’s growth for many years to come. Indonesia currently has the opportunity to consider the nature

of its economic growth and where state resources might be concentrated in order to foster expansion in new

areas. For the country to achieve growth that allows it to capture more value-added on the goods and services it

produces, it is likely that it will need to be more innovative. Equally important, to ensure the benefi t of the growth

is shared by the Indonesian people and contributes to poverty reduction, there is a need for eff ective public

policies. To become more innovative and eff ective in economic and social development, Indonesia will need to

make sure that its R&D eff orts, both public and private, are well-managed and suffi ciently funded.

This public expenditure review (PER) starts with examining Indonesia’s current R&D performance,

and then looks into the recurrent levels of spending on R&D, and how the spending is administered,

identifying key constraining factors that aff ect Indonesia’s R&D performance.12 With the available data

and knowledge of the institutional framework, an understanding of the R&D system is developed. With this

understanding it was possible to identify the constraining factors in Indonesia’s use of resources to produce R&D

outputs, development of innovative goods and products to capture higher levels of value added, and support for

social public policy formulation and implementation. This analysis will take place primarily against the background

of international comparisons and the government’s policy aims. For the most part this PER will concentrate on

the public R&D system, that is, the institutions and research funded with public money and operating under the

aims defi ned by the government. Finally, this PER is not an attempt to describe how the R&D system in Indonesia

might be overhauled or transformed. Instead, it deals with the current fi nancing and institutional issues and how,

if necessary, these might be addressed.

12 A PER is often be a large report that considers many aspects of state spending in a country. In this, much shorter, report, the principles are the same. The

purpose of a PER is to look at the purpose of government spendingon a policy, given the country’s economy; to fi nd out how much is being spent; to fi nd

out how the money is being spent; and then to assess the level of spending relative to targeted, reasonable and actual outcomes. In short, a PER looks at the

effi ciency of public spending.

R&D in the Context ofIndonesia’s EconomicDevelopment

II.

Photo by: Jerry Kurniawan


R&D in the Context of Indonesia’s Economic Development

Indonesia’s economic growth over the past decade has been satisfactory, even though it has not reached

the highs of the pre-1997 period. As shown in Figure 1, the economy grew within a band of 4.5 percent to

just over 6 percent between 2002 and 2010. The fi nancial crisis of 2008–2009 aff ected Indonesia somewhat,

although it carried on growing at a similar pace to previous years. This growth was in stark contrast to the 13.1

percent contraction that the economy underwent in 1998 during the Asian fi nancial crisis. It also compares well

to the performance of some of its regional peers.13 However, in the fi ve years prior to 1998, Indonesia recorded an

average growth rate of 7.1 percent, a level several percentage points higher than it has achieved in recent years.

Comparative strength in several sectors has helped Indonesia to weather recent problems in the world

economy. Production of commodities was especially useful in this respect, as in 2010 it constituted 63 percent of

total exports and 26 percent of annual value added.14 Indonesia is the world’s largest producer of palm oil while

also producing large amounts of oil and gas, for which it has enjoyed greater demand and higher prices over the

recent past.15 Furthermore, the country enjoys a large number of micro-, small- and medium-sized enterprises.

While suggesting the potential for future growth as fi rms expand, consolidate and pursue effi ciency gains, these

fi rms also tend to use internal or informal fi nancing methods, thus meaning that they are somewhat sheltered

from economic problems elsewhere.16

Source: World Bank data (http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG)

Figure 1 GDP Growth (Annual Percentage Change) 2002–2010

0

1

2

3

4

5

6

7

2002 2003 2004 2005 2006 2007Year

2008 2009 2010 2011

Pe

rce

nta

ge

ch

an

ge


14 World Bank, Indonesia Economic Quarterly: Continuity Amidst Volatility, World Bank, June 2010, p34

15 OECD, OECD Economic Surveys: Indonesia, OECD, November 2010, p25; World Bank, Indonesia Economic Quarterly: Continuity Amidst Volatility, World Bank, June

2010, p37


Public Expenditure Review 5

R&D in the Context of Indonesia’s Economic Development

There are thus several reasons to be positive about Indonesia’s growth potential. One important reason

among several is that total factor productivity (TFP) has contributed more to recent economic growth than

before the 1998 fi nancial crisis.17 TFP helps to determine economic expansion because a country that is more

effi cient in the use of resources is a country that can produce more with the same level of inputs. Technological

advancement and richer human capital are often important in achieving higher levels of TFP. Prior to 1998, capital

accumulation and greater labor inputs were behind increases in potential output, with TFP contributing less than

20 percent before 1998. Between 2006 and 2009 the level was closer to 40 percent.

Indonesia has also made fast progress in reducing extreme poverty. In 1984 around 65 percent of Indonesia’s

population lived on less than USD 1.25 a day (at purchasing power parity), while the fi gure was around 50 percent

in 2000. In 2010–2011 the level was less than 19 percent, or around the same rate as in China.18 By March 2011 the

percentage falls meant that the number of people living below the poverty line had fallen to 30 million, driven by

economic growth, higher household incomes, and more jobs.19

Nonetheless, large pockets of hardship remain and the benefi ts of growth have been somewhat skewed

towards the already wealthy rather than the poor. 51 percent of the population still lives on less than USD

2 a day – a level above the extreme poverty of USD 1.25 a day but still refl ective of deep deprivation in many

households. This suggests that any shocks to the economy and thus disruption in the small incomes of so many

people could aff ect large parts of the population.20 Between 1996 and 2010 per capita consumption grew by

an average annual rate of 1.4 percent. However, the growth rates enjoyed by the bottom 60 percent of the

distribution were lower than the national average, and the poorest percentiles saw the smallest increases in their

consumption, while the 92nd percentile of the income distribution saw the largest.21

There are also large economic disparities between the regions. Poverty declined in all regions between

1996 and 2009, but some regions enjoyed a sharper decline than others. For example, Kalimantan saw its poverty

headcount fall from around 15 percent to around 8 percent in the same period. Areas such as Maluku, Nusa

Tenggara, and Papua suff er from rates of poverty that are approximately three times greater than in Kalimantan,

even though these areas are also home to only around 11 percent of the population.22

However, there are a few risks that need to be managed for sustained economic growth and social

development. First is the threats generated by large capital fl ows into the country. Changes in the external

economic environment are communicated to Indonesia through changes in demand for its goods and services,

the terms of trade and capital fl ows.23 With its recent strong economic growth, reasonably sound macroeconomic

environment, and prospects for more growth in the future, Indonesia, like other emerging countries, is attracting

capital from low-yielding advanced countries to its own, higher-yielding, assets. While this has benefi ts in that

it can reduce the cost of borrowing and sometimes bring with it expertise and job creation, if the infl ows are in

the form of portfolio investments rather than foreign direct investment, quick withdrawals of capital can cause

problems through, for example, quickly changing the exchange rate and aff ecting domestic industries. In the

second quarter of 2011, capital and fi nancial account infl ows reached USD 12.5 billion, a record high.24




20 World Economic Forum, The Indonesia Competitiveness Report 2011: Sustaining the Growth Momentum, World Economic Forum, 2011, p1; Asian

Development Bank, Indonesia: Critical Development Constraints, Asian Development Bank, p55

21 World Bank, Indonesia Economic Quarterly: 2008 Again?, World Bank, March 2011, p32

22 Asian Development Bank, Indonesia: Critical Development Constraints, Asian Development Bank, 2010, p14

23 World Bank, Indonesia Economic Quarterly: Current Challenges, Future Potential, World Bank, June 2011, p1



One of the most signifi cant opportunities that Indonesia has is the growth and prospects of its region,

which give Indonesia substantial scope to profi t from greater trade to accelerate economic growth

and poverty reduction. Indonesia represents 40 percent of ASEAN’s GDP and population, and is its biggest

market.25 In January 2010 the ASEAN-China Free Trade Agreement came into eff ect. It eliminates tariff barriers

on approximately 6,600 products in a variety of industries.26 According to analysis of the likely eff ects of the

trade agreement on Indonesia, the country might enjoy benefi ts of 1.2 percent of GDP over the long term as

it reallocates resources towards industries where it has a comparative advantage. In particular, labor-intensive

industries would likely benefi t, as would the rice-producing sector, while the mineral-extraction, capital-intensive

and service industries would shrink.27

This PER concentrates on one of these key areas for future growth: R&D. R&D can lead to greater innovation,

which a country needs in order to be fl exible in response to market changes and to capture larger amounts

of value-added throughout the value chain in the production of goods or services. In addition, the challenge

of continuing the momentum of poverty reduction also requires strengthening R&D in social science fi elds,

to support eff ective and evidence-based public policy making. This PER looks at what Indonesia’s R&D sector

produces relative to how much money is spent on it, and how. It will not only focus on the levels of spending on

the sector, but also on the policy, institutional, and managerial frameworks.

Within the R&D fi eld this PER pays particular attention to state policy and its eff ects. As the purpose of a

PER is to consider the effi ciency of public spending, this is a natural consequence of the type of analysis. How-

ever, this should not be taken to mean that only state action matters. The report considers the R&D output of the

private sector and how the government might stimulate more of it, but there are also wider benefi ts of greater

R&D activity that need to be kept in mind. For example, a well-educated workforce that can use research fi ndings

from a variety of fi elds may be likely to drive economic development in ways that are unpredictable and beyond

the scope of government planning. How this happens is beyond the scope of this report, but is a key constituent

of the dynamic, high value-added economic growth that Indonesia aspires to.

R&D is not solely about science and technology (S&T). Much of this report discusses the role of discoveries in

scientifi c research and how discoveries made by scientists can stimulate economic growth. However, R&D in the

social sciences can often be just as important, albeit in ways that are more diffi cult to measure. For example, the

study of management is a social science and has helped many fi rms around the world make signifi cant effi ciency

gains in their operations – the “just in time” approach in manufacturing and logistics being a good example.

Policy-making can also benefi t from “innovations” (more knowledge) in fi elds such as economics and political

science, as through a richer understanding of the world around them politicians and bureaucrats can make

choices that are better informed.

25 World Economic Forum, The Indonesia Competitiveness Report 2011: Sustaining the Growth Momentum, World Economic Forum, 2011, p1; Asian

Development Bank, Indonesia: Critical Development Constraints, Asian Development Bank, p55



Indonesia’s R&D Performance

III.

Photo by: Athit Perawongmetha


Indonesia’s R&D performance

The R&D sector in Indonesia does not appear to be burgeoning. On measures of pure research output,

innovation, or contributions to economic development, it would appear that Indonesia’s R&D sector has some

way to go. On the World Bank’s Knowledge Economy Index, Indonesia ranks poorly compared to both its richer

and poorer neighbors (see Table 1). The index combines factors that concern the economic incentives available

for researchers, the level of innovation and adoption of technology, the quality of education, and the information

technology infrastructure in place. In 2012 Indonesia ranked 108th in the world. Among other things, this

assessment would appear to support the claim of the World Economic Forum that Indonesia currently possesses

only a limited capacity for innovation.28

Table 1 Knowledge Economy Index Rankings, Select Countries, 2012

Country Global

rankKEI KI

Economic

incentive regime

Innova-

tion

Educa-

tionICT

Australia 9 8.88 8.98 8.56 8.92 9.71 8.32

Cambodia 132 1.71 1.52 2.28 2.13 1.70 0.74

China 84 4.37 4.57 3.79 5.99 3.93 3.79

Indonesia 108 3.11 2.99 3.47 3.24 3.20 2.52

Japan 22 8.28 8.53 7.55 9.08 8.43 8.07

Korea, Republic of 29 7.97 8.65 5.93 8.80 9.09 8.05

Lao PDR 131 1.75 1.84 1.45 1.69 2.01 1.84

Malaysia 48 6.1 6.25 5.67 6.91 5.22 6.61

Mongolia 83 4.42 4.45 4.30 2.91 5.83 4.63

Myanmar 145 0.96 1.22 0.17 1.30 1.88 0.48

New Zealand 6 8.97 8.93 9.09 8.66 9.81 8.30

Philippines 92 3.94 3.81 4.32 3.77 4.64 3.03

Singapore 23 8.26 7.79 9.66 9.49 5.09 8.78

Thailand 66 5.21 5.25 5.12 5.95 4.23 5.55

Vietnam 104 3.4 3.60 2.80 2.75 2.99 5.05

Source: World Bank (http://info.worldbank.org/etools/kam2/KAM_page5.asp#c10)

A lack of dynamism in R&D is a problem because it means that Indonesia is missing out on the public and

private benefi ts that come with greater investigation and discovery in the natural and social sciences.

These benefi ts can be both public and private. The results from research into a fundamental question can, upon

being made publicly available, stimulate businesses to seek commercial applications. In turn, a fi nding that was

motivated by a desire for private gain can increase competition in a market, thus forcing other fi rms to invent

new things and increasing overall welfare. There is a broad debate on the eff ects of R&D on economic growth

and, in particular, whether research can be divided into diff erent types (basic, applied or experimental, see Box

1 for details) but it is clear that more R&D can help a country to achieve higher quality goods and services from

which it might be able to capture a large share of the sale value.



Indonesia’s output of articles in scientifi c or technical journals is low. In 2009, Indonesian scientists published

only 262 articles in these fi elds (see Table 2). This speaks to some of the research capacity and funding issues

mentioned above. This may be a result of having comparatively few researchers with PhDs at the LPNK and public

universities. However, comparing the number of broad scientifi c papers published by Indonesia and a group of

select countries, and the frequency with which they were cited, research from Indonesia appears to be attracting

slightly more interest than that of its regional, developing peers.

Table 2 Scientifi c and Technical Journal Articles, Indonesia and Select Countries, 1999–2009

Country Name 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Australia 14,341 14,589 14,484 14,255 14,934 15,588 15,972 17,217 17,834 18,776 18,923

Cambodia 7 6 7 11 13 19 21 26 26 23 27

China 15,715 18,479 21,134 23,269 28,768 34,846 41,604 49,575 56,811 65,301 74,019

Indonesia 163 182 189 178 157 182 205 215 198 219 262

Japan 55,274 57,101 56,082 56,347 57,228 56,535 55,527 54,467 52,909 51,842 49,627

Korea, Rep. 8,478 9,572 11,007 11,735 13,401 15,255 16,396 17,910 18,469 21,091 22,271

Lao PDR 4 4 5 5 9 12 9 18 12 12 12

Malaysia 471 460 472 495 479 586 615 724 808 951 1351

Mongolia 12 12 19 16 18 20 22 21 22 27 42

Myanmar 10 7 6 7 6 9 11 16 13 10 10

New Zealand 2,915 2,851 2,851 2,740 2,800 2,825 2,987 3,082 3,176 3,323 3,188

Philippines 176 185 141 182 184 163 178 181 195 224 223

Singapore 1,897 2,361 2,434 2,632 2,939 3,384 3,611 3,838 3,793 4,069 4,187

Thailand 550 663 727 834 1,019 1,131 1,249 1,568 1,728 1,960 2,033

Vietnam 111 147 155 144 205 167 221 225 283 363 326

Source: World Bank

Table 3 Scientifi c Papers and Citations of Authors from Select Countries, 1999–2009

Country Name Paper Citations Citations per Paper

Australia 284,272 3,304,072 11.62

Cambodia 566 4,197 7.42

Fiji 633 2,955 4.67

French Polynesia 456 3,805 8.34

Indonesia 5,885 45,156 7.67

Malaysia 17,980 79,098 4.4

New Caledonia 950 7,780 8.19

New Zealand 55,253 575,803 10.42

Papua New Guinea 741 7,318 9.88

Philippines 5,370 44,295 8.25

Singapore 58,731 498,782 8.49

Thailand 26,896 188,759 7.02

Viet Nam 5,878 41,043 6.98

Thailand 550 663 7.27

Vietnam 111 147 1.55

Source: UNESCO, UNESCO Science Report 2010, p443

Indonesia’s R&DPerformance


Table 3 shows that between 1999 and 2009, Indonesian scientifi c papers attracted 7.67 citations per paper,

ahead of papers from countries such as Cambodia and Thailand. This supports the argument that despite there

being a low level of overall capacity there are some areas of strength in Indonesian scientifi c research. Finally,

what is being produced has tended to be concentrated in the fi elds of biology, biomedical research, and clinical

medicine, as shown in Table 4. Problems such as a low level of capacity have inevitable eff ects on the output of

the social sciences sector. Regarding social science fi elds, a recent report found that only 12 percent of peer-

reviewed social science research publications on Indonesia are undertaken by authors based in the country,

where the average among a group of developing countries including the Philippines, China, India, Thailand,

Malaysia and Brazil is approximately 28 percent.29

The picture of international collaboration over science research is mixed. UNESCO has argued that, despite

only modest increases in the output of academic papers, the growth that has occurred has been spurred by

international partnerships. According to UNESCO, Indonesian scientists collaborate mostly with their Japanese

peers, followed by those from the USA and Australia.30 This would again suggest that, despite low levels of overall

capacity, there is suffi cient quality to attract greater levels of international partnership.

Figure 2, showing the high level of growth in the number of Indonesian scholars in the United States, also

suggests that there is much greater potential to be exploited in the R&D system. Also see Table 5 for the number

of English-language scientifi c articles published by Indonesian scientists and their local peers.

Table 4 Publications by Major Scientifi c Field (percent), 2008

Country

Scientifi c Field

BiologyBiomedical

researchChemistry

Clinical

medicine

Earth and

space

Engineering and

technologyMathematics Physics

Indonesia 23.7 12.8 7.1 22.8 13.8 12 2.1 5.7

Source: UNESCO, UNESCO Science Report 2010, p443

Source: OECD, ‘Science and Innovation: Country Notes: Indonesia,’ in OECD, Science, Technology and Industry Outlook, OECD, 2010, p189

Figure 2 Average Annual Growth Rate in the Number of Foreign Scholars in the United States,

1997–2007

29 Suryadarma D, Pomeroy J and Tanuwidjaja S, “Economic Factors Underpinning Constraints in Indonesia’s Knowledge Sector: Final Report,” AusAID, 7th June

2011, p3


0123456789

10

India China Indonesia(1997-2004)

Brazil Total OECD(1997-2004)

Country

Pe

rce

nt

CzechRepublic

(1997-2004)

Estonia(1997-2004)

Russia Slovenia(1997-2004)


Table 5 English-Language Scientifi c Articles by Authors from Select Countries, 1998–2008

CountryYear

TotalGrowth

1998-

2008 (%)1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Australia 16,432 16,766 18,945 19,155 19,645 20,920 22,456 23,376 25,449 26,619 28,313 238,076 72.3

Cambodia 8 12 14 14 20 23 41 50 64 80 75 401 837.5

Indonesia 305 354 429 449 421 428 471 526 597 582 650 5,212 113.1

Malaysia 658 830 805 906 961 1,123 1,308 1,520 1,757 2,151 2,712 14,731 312.2

New Zealand 3,519 3,597 3,762 3,772 3,819 3,935 4,260 4,590 4,739 4,974 5,236 46,203 48.8

Phillipines 263 292 353 317 398 418 427 467 464 535 624 4,558 137.3

Singapore 2,264 2,729 3,465 3,781 4,135 4,621 5,434 5,971 6,300 6,249 6,813 51,762 200.9

Thailand 855 965 1,182 1,344 1,636 1,940 2,116 2,409 3,000 3,582 4,134 23,163 383.5

Viet Nam 198 239 315 353 343 458 434 540 617 698 875 5,070 341.9

Annual total 24,502 25,784 29,270 30,091 31,378 33,866 36,947 39,449 42,987 45,470 49,432

Annual growth 5.2 13.5 2.8 4.3 7.9 9.1 6.8 9 5.8 8.7

Source: UNESCO Science Report 2010, p441

Table 6 Number of Resident Patent Filings per Million Population, Select Countries, 2000–2010

Country of Origin 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Australia 100.66 112.66 120.30 121.54 127.14 125.28 137.07 128.98 131.22 113.61 107.89

China 20.07 23.62 31.09 44.06 50.76 71.71 93.30 116.14 146.89 172.07 218.98

Indonesia 0.74 0.98 1.07 0.91 1.01 1.03 1.25

Japan 3,028.30 3,010.76 2,865.58 2,804.49 2,883.63 2,879.79 2,716.58 2,610.13 2,584.96 2,315.14 2,276.03

Malaysia 8.80 11.31 13.13 15.00 20.40 20.00 19.97 24.77 29.74 44.15 43.41

New Zealand 379.23 455.61 465.75 458.13 399.02 457.92 514.51 447.46 294.22 360.30 362.88

Republic of Korea 1,549.33 1,556.56 1,607.87 1,887.06 2,190.93 2,538.29 2,598.01 2,656.04 2,615.14 2,611.77 2,696.78

Singapore 128.11 126.39 149.43 152.13 153.84 133.39 142.23 151.68 163.86 150.37 176.30

Thailand 8.88 8.36 9.51 12.27 12.40 13.36 15.46 13.94 13.21 14.92 17.56

Philippines 1.99 1.71 1.85 1.71 1.88 2.45 2.56 2.54 2.40 1.88 1.78

Mongolia 43.54 49.21 67.20 56.87 39.26 39.86

Source: WIPO

Source: WIPO

Figure 3 Resident Patent Filings per USD GDP, Select Countries, 2000–2010

Year

Resi

dent

pat

ent fi

lings

per U

SD G

DP

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Australia

China

Indonesia

Japan

Malaysia

New Zealand

Republic of Korea

Singapore

Thailand0

20

40

60

80

100

120



The lack of broad capacity in the R&D system is also revealed by Indonesia’s inability to innovate

signifi cantly, as shown by its low level of patenting activity. UNESCO has argued that the level of activity

since the turn of the century has shown very little growth.31 This is demonstrated by several diff erent international

comparisons. For example, between 2000 and 2006, the number of patents fi led by Indonesian residents grew

from only 0.74 per million population to 1.25 in 2006 (Table 6). This is a 59 percent increase, but from a very low

base. By comparison, in the same period, annual Malaysian patent fi lings rose from 8.8 to 43.41. Countries such

as China and Thailand have showed signifi cant progress in the same period. Figure 3 refl ects this somewhat, as in

comparisons of the number of fi lings against GDP, Indonesia’s performance has been stagnant while that of, say,

China, has been improving signifi cantly.

Indonesian fi lings at specifi c patent offi ces also do not show any sign of signifi cant recent improvement.

Patents applied for and granted at patent offi ces abroad, particularly in the United States, are a good barometer

of science and innovation activity as they refl ect the degree to which a country is producing goods and services

that are unusual enough to require protection, and potentially valuable enough for the holder of the intellectual

property to bear the costs of applying for protection. Table 7 shows that Indonesian inventors and fi rms have

increased their patent applications in the United States since the early 2000s, but that the level of applications

remains low. This low level is also refl ected in the applications to the European Patent Offi ce. As for granted

applications.

Table 8 reveals that the success rate of Indonesian applications to the USPTO has fallen, and that between 2007

and 2010 only around fi ve patents were granted each year. Unfortunately, this refl ects poorly on the Indonesian

R&D system and suggests only a small ability to produce commercially viable inventions.

A lack of innovation is also revealed by the level of technology in Indonesia’s exports. By looking at the

output of academic papers, and at innovation as demonstrated through patent applications, it has been possible

to assess the productivity of Indonesia’s R&D system from several diff erent angles. By looking at it from another

position - the degree to which the country’s exports refl ect technical advancement - it is possible to judge some

of the direct economic eff ects of Indonesia’s R&D activity. Unfortunately, Table 9 shows that these eff ects are small

and possibly shrinking. In 2000, 16.4 percent of Indonesia’s exports were considered to be “high technology”.

Since then, the proportion has declined until, in 2010, the level reached 11.4 percent. This is not directly counter

to the experience of its region as a whole, but shows a much more precipitous decline. Table 9 reveals that in

the same period the same percentage in the East Asia and Pacifi c region fell from 33.1 percent to 26.4 percent.

Table 7 Indonesian Patent Applications at the European Patent Offi ce and in the United States,

2002–2010

2002 2003 2004 2005 2006 2007 2008 2009 2010

European Patent Offi ce 3 3 3 2 1 6

United States 9 8 16 11 16 19 13 18 23

Source: WIPO

Table 8 Indonesian Patent Applications Granted at the European Patent Offi ce and in the United

States, 2003–2010

2003 2004 2005 2006 2007 2008 2009 2010

European Patent Offi ce 4 3 1 4 1 1

United States 9 4 10 3 5 5 3 6

Source: WIPO



Table 9 High-Technology Exports as a Percentage of Total Exports, Indonesia and Select Country

Groups, 1988–2010

Country/group 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

East Asia &

Pacifi c (all

income levels)

21.5 22.1 22.7 21.2 22.5 24.2 26.5 27.2 28.4 29.3 31.0 33.1 30.9 30.6 30.0 30.7 30.7 30.3 27.0 25.6 27.4 26.4

East Asia

& Pacifi c

(developing

only)

16.9 18.1 20.1 22.2 25.2 26.6 28.6 30.9 31.5 30.5 31.5 32.5 33.2 32.9 32.1 29.0 26.3 28.4 28.7

High income 15.1 19.0 18.9 19.4 19.2 20.2 20.5 21.1 21.4 22.8 23.3 23.9 25.7 24.2 23.1 21.6 21.4 21.3 21.5 17.6 17.1 18.4 17.4

Indonesia 1.5 1.6 1.9 3.1 4.5 6.7 7.3 9.0 11.6 10.4 10.4 16.4 14.2 16.7 14.8 16.4 16.5 13.5 11.0 10.9 12.9 11.4

Source: World Bank (http://data.worldbank.org/indicator/TX.VAL.TECH.MF.ZS)

Table 10 Manufacturing Value-Added (MVA), Indonesia and Select Country Groups, Assorted Years

(percent)

Indicator Year/Period Indonesia ASEAN Developing countries

MVA, average annual real growth rate (%)2000-2005 5.16 5.85 6.74

2005-2010 4.15 3.36 7.06

Non-manufacturing GDP, average annual

real growth rate (%)

2000-2005 4.58 4.72

2005-2010 6.28 5.3 5.88

MVA per capita, at constant (2000) US$

prices

2000 216.28 353.35 254.2

2005 258.19 426.44 322

2010 302.26 488.04 430.09

MVA as percentage of GDP, at constant

(2000) US$ prices

2000 27.75 27.97 19.47

2005 28.08 28.65 20.57

2010 26.4 27.24 21.66

Source: UNIDO (http://www.unido.org/index.php?ucg_EXT=1&id=4771&cc=INS&ucg_PATH=aHR0cDovLzE5My4xMzguMTA1LjU5L2RhdGEv

Z2VvZG9jLmNmbT9jYz1JTlMmbW9kZT1zdGF0cw==)

Note: Some years are UNIDO estimates.


On the key issue of value-added in manufacturing, Indonesia’s performance is either weakening or

stagnating. One of the primary reasons for a government to encourage greater R&D is for it to try and make sure

that domestic fi rms capture more of the value in the production of a good or service. The World Economic Forum

divides countries into groups primarily according to whether they are capable of simply producing commodities

or if they can also produce high–quality products that depend on technical, intellectual inputs. At present

Indonesia is only showing small movements towards the latter group.

Table 10 shows that it enjoyed an annual average real growth rate in manufacturing value-added (MVA) of 4.15

percent between 2005 and 2010. However, this was down from the 5.16 percent between 2000 and 2005 and

way down on the developing country rate of 7.06 percent. This led to the shrinkage in Indonesia’s portion of

regional MVA between 2000 and 2010 (Table 11), from 27.38 percent in 2000 to 27.33 percent in 2010 among

ASEAN countries, and from 3.8 percent to 3.08 percent among developing countries.

Overall, Indonesia’s R&D performance is mixed. Judging by some of the diff erent ways of looking at the

output of its R&D sector, overall capacity is low but there are some strengths to draw on. For example, it would

appear that Indonesian scientists are not publishing a great many papers but, when they do, their work attracts

attention from their foreign peers. However, whether because of a lack of fi nance or capacity, R&D eff orts in the

country are struggling to produce many commercially viable goods or services.


While R&D in the social sciences is an integral part of a country’s overall R&D system, internationally

comparable data on performance is not well established beyond direct output measures such as

journal publications. R&D in the social sciences can greatly embellish the knowledge that a country has of

itself, and improve the quality of public policy. For example, sociology can help public policies to be customized

to the reactions of diff erent groups of people in Indonesia; economics can help with the development of an

understanding of Indonesia’s competitive advantages in some areas but not in others; and political science can

help strengthen the democratic system for reforms. Other areas, such as education and health policy research,

can directly contribute to building Indonesia’s human capital, which is critical for sustained growth and shared

prosperity.

Table 11 Indonesia’s Share of MVA and Manufacturing in World Output, Assorted Years

Indicator Year/PeriodIn total of

Indonesia ASEAN Developing countries

MVA (share in %) in constant 2000 US$

2000 27.38 3.80 0.79

2005 26.91 3.55 0.87

2010 27.33 3.08 1.00

Manufactured exports (share in %)

2000 11.72 3.55 0.83

2005 9.96 2.42 0.66

2010 11.78 2.50 0.82

Source: UNIDO (http://www.unido.org/index.php?ucg_EXT=1&id=4771&cc=INS&ucg_PATH=aHR0cDovLzE5My4xMzguMTA1LjU5L2RhdGEv

Z2VvZG9jLmNmbT9jYz1JTlMmbW9kZT1zdGF0cw==)

Government R&D Policyand R&D Financing

IV.

Photo by: Nugroho Nurdikiawan Sunjoyo


Government R&D policy and R&D financing

R&D Policy

Research, science, and technology have long been part of the development agenda set by the Indonesian

Government. Since the early 1990s there have been a variety of government programs that aim at

stimulating R&D, particularly S&T. A majority of these eff orts have concentrated on putting in place a variety

of incentive schemes. According to LIPI, between the early 1990s and 2005 there were 22 incentive programs

operated by the government. Since 2005, state incentive programs have been grouped into fi ve categories:

incentives for basic research; incentives for applied research; the use of S&T in industry; the diff usion of S&T; and

the S&T development of certain economic sectors as part of the government’s industrial strategy. In addition,

there have also been a variety of community-based and technology-specifi c development programs.32

Today, the Indonesian government has extensive plans for the advancement of R&D in the country. Since

the Asian fi nancial crisis and the transition to democracy, there have been several comprehensive economic

plans and pieces of legislation that have placed R&D at the center of Indonesia’s economic development. These

foundation policies on the pursuit of higher economic growth, greater innovation, and scientifi c output are

supported by short and medium-term plans that focus on strategic areas of R&D development. The most recent

guiding documents include the “Masterplan: Acceleration and Expansion of Indonesia: Economic Development

2011–2025”, which emphasizes seven steps towards the improvement of the innovation system; and the 2010–

2014 KEMENRISTEK Strategic Plan, which lays out medium-term results to be expected and actions to be taken.33

Table 12 lists a range of key relevant policy and strategy documents on R&D.

The National Long-Term Development Plan (2005–2025) focuses on seven areas of R&D. The seven areas

are: food security; energy; transportation technology and management; information and communication

technology; defense and security technology; health and medicine; and advanced materials. Each area has a set

of specifi c sub-objectives with activities and outputs defi ned. For example, in the energy sector, R&D is intended

for the development of ways of extracting energy from renewable sources such as wind and ocean currents.

There are also objectives to map new energy sources, to develop new technology to meet the demand, to

disseminate information on the industry to relevant parties, and to improve the effi ciency of energy use. Overall,

the National Long-Term Development Plan is meant to form one of the key foundations for other, more detailed,

policies on economic development and R&D.

The Medium-Term Development plan sets out explicit steps to implement the National Long-Term

Development Plan. It is meant to form the basis for strategies developed by agencies and government

departments, and regional governments when formulating their own development priorities. It also directly

references the constitution and National Long-Term Development Plan, and is intended to feed into the annual

government work plans and annual budgets. It is thus a key document for showing the government’s priorities.

Both the Medium-Term Development Plan (2010–2014) and the National Research Agenda are targeted at

the two goals of making the innovation system more vibrant, and improving the quality and application

of R&D.34 These targets are meant to be achieved through R&D institutions’ improvements, to the extent that

they can supply industry with required technology improvements. Specifi c policies for achieving this change

include enhancements in the capacity of public R&D institutes and similar bodies in order to increase the fl ow

32 Akil HA et al., Study on the Status of Science and Technology Development in Indonesia, LIPI Press, 2011, p58

33 Republic of Indonesia, Masterplan: Acceleration and Expansion of Indonesia: Economic Development 2011-2025, Republic of Indonesia, 2011, p 41; State Ministry

of Research and Technology [RISTEK], Strategic Plan 2010-2014, State Ministry of Research and Technology, p35 [English translation]

34 Akil HA et al., Study on the Status of Science and Technology Development in Indonesia, LIPI Press, 2011


of technology transfer to industries that need it; increases in R&D capacity within industry, as well as a greater

appreciation of innovation and creativity in society; a strengthening of national and international networks of

R&D personnel in order to increase the production and utilization of R&D outcomes; increases in the output of

applicable technology from R&D institutes; and growth in the use of technology within industry.35

Table 12 Structure of Policies on Science, Technology and Research

Policy type Key element/examples Approach

Structural policies The constitution

Long-term

policies

Masterplan: Acceleration and Expansion of

Indonesia: Economic Development 2011–2025

Functions as a legal framework following the enactment of

Presidential Decree No. 32/2011

National Long-Term Development Plan (2005–2025) Specifi es seven priority areas for the development of R&Da

Law No.18 (2002) on the National System of

Research, Development and Application of Scienceb

Seeks to increase S&T capacity in order to improve national

competitiveness

Medium-term

policies

Medium-Term Development Plan (2010–2014) Seeks to improve the national innovation system through

improving the quality of R&D and S&Tc

National Research Agenda Seeks to improve the national innovation system through

improving the quality of R&D and S&Td

Masterplan for Acceleration and Expansion of

Indonesian Economic Development (2011-2014)

Acceleration of improvements in R&D and technology

capacitye

Annual and other

policies

Presidential instructions and government

instructionsf

Writing of, and changes to, relevant legislation and guidelines

Departmental plans, annual work plans, and

thematic plans

Short-term plans for the application of longer-term policies

Sources:

a. Akil HA et al., Study on the Status of Science and Technology Development in Indonesia, LIPI Press, 2011, p11

b. Akil HA et al., Study on the Status of Science and Technology Development in Indonesia, LIPI Press, 2011, p1

c. Akil HA et al., Study on the Status of Science and Technology Development in Indonesia, LIPI Press, 2011, p3

d. Akil HA et al., Study on the Status of Science and Technology Development in Indonesia, LIPI Press, 2011, p3

e. World Bank, Indonesia Economic Quarterly: Current Challenges, Future Potential, World Bank, June 2011, p32

Notes:

f. Examples include Presidential Instruction No.4 of 2003 on the Strategic Policy Formulation and Implementation of National Science and

Technology Development; Government Regulation No. 20 of 2005 on Intellectual Property and Technology Transfer by Universities and

Research and Development Institutes; Government Regulation No.41 of 2006 Concerning Research and Development Permits for Foreign

Institutions; Government Regulation No.35 of 2007 on the Allocation of a Portion of Business Revenues for Engineering Capability Improve-

ment, Innovation and Diff usion of Technology; and Government Regulation No. 48 of 2009 on the Implementation of High Risk and

Dangerous Research and Development and Application of Science and Technology Activities. As quoted by Akil HA et al., Study on the

Status of Science and Technology Development in Indonesia, LIPI Press, 2011, p9

The Masterplan for Acceleration and Expansion of Indonesian Economic Development (2011–2014) is a

new initiative and specifi es steps for improvements in the S&T and innovation systems, as well as levels

of spending. As a whole, the Masterplan is meant to increase the growth rate of the Indonesian economy to

between 7 percent and 9 percent and, in so doing, make sure that Indonesia becomes one of the world’s top ten

economies by 2025. The plan has three strategies: 1) the development of six economic zones, or “corridors”; 2)

establishment of stronger connections between all of the disparate parts of the country; and 3) eff orts to increase

outputs from R&D and technology.36 With regard to the third R&D strategy, Table 13 shows its constituent policies,

plus the planned increase in spending and what the 2025 policy objectives in the fi eld are.





Table 13 Breakdown of the S&T Policy Approach in the Masterplan for the Acceleration of

Indonesian Economic Development (2011–2014)

Funding Policies Industries subject to policy

attentionObjectives to 2025

Establishment of an R&D fund

equal to around 1% of GDP until

2014, with a gradual increase in

funds to 3% of GDP by 2025

Increase in funds to come from

the government, state-owned

enterprises and the private

sector

Introduction of an incentive

and regulation system that

emphasizes innovation and

the use of products made in

Indonesia

Improvement in the quality of

human resources as well as their

fl exibility

Development of innovation

centers to support small- and

medium-sized industries

Development of regional

innovation clusters

Improvement in the

remuneration system for

researchers

Improvement in the

infrastructure of the R&D system

Development of a funding and

funding management system

that furthers innovation

Basic industries such as food,

energy, and water

Creative industries such as

those concerned with culture

and ICT

Local industries, especially S&T

and industrial parks

Strategic industries such as

defense and transportation

Strengthening of intellectual

property rights in fi elds that

directly aff ect economic growth

Improvement in the

infrastructure of S&T parks to

international standards

Achievement of self-suffi ciency

in food, medicine, energy, and

clean water

Double exports from the

creative industries

Increase in the proportion of

advanced goods in production

and improve the value added

produced by the economies of

all regions

Achievement of self-suffi ciency

in the defense, transportation,

and ICT industries

Achievement of sustainable

growth and equitable

prosperity.

Sources: Akil HA et al., Study on the Status of Science and Technology Development in Indonesia, LIPI Press, 2011, p6

There are several policies in the Masterplan that are particularly relevant to the funding, management,

and outputs from the public R&D system in the country. The fi rst of these is the drive to revitalize PUSPIPTEK

(Science and Technology Research Center) as an S&T park in order to try and foster a creative and connected

environment for small and medium enterprises (SMEs) involved with innovation. Fostering connections with

universities, researchers, and fi rms is a part of this vision. One of the main ways that the government hopes to

foster the development of the park is by making it a public agency. Here it should be noted that “science parks”

in Indonesia have long been used to agglomerate state-owned research labs rather than as a means to attract

private investment. The government’s plans for PUSPIPTEK and other parks would appear to be an attempt

to move away from the traditional approach. As for the economic clusters mentioned in the Masterplan, the

government wants to encourage regional governments to try and develop the innovation potential of particular

industries.37 Finally, among several other targets, the Masterplan also aims to increase the fl ow of people of

obtaining PhDs every year from 7,000 and 10,000 by 2014.38

The Science and Technology National Development Strategy, promulgated by the Ministry of Research

and Technology (KEMENRISTEK), is targeted at the development of science “for the welfare and progress

of civilization.”39 The strategy has two goals: 1) improvement of S&T both through research and utilization; 2)

increases in the capacity and eff ectiveness of S&T so that it can further the national aims of protecting Indonesia,

increasing welfare, and furthering the intellectual life of the country. The strategy states that these goals must

37 Akil HA et al., Study on the Status of Science and Technology Development in Indonesia, LIPI Press, 2011, p7 gives the examples of the agro-industry in East Java

Province; innovation programs to develop the palm oil, cocoa and fi sheries industries; and the energy innovation zone in East Kalimantan Province





be pursued on the principles of accountability, visionary strategic planning, innovation, and excellence through

all stages of policy development and implementation. The strategy has four main policies, which it is hoped will

achieve its aims:

1) to increase the capacity of the R&D system as a whole so that it becomes more productive;

2) to increase the capacity of public R&D institutes so that, in particular, more technology transfer can take

place;

3) to deepen networks of researchers both within the country and between national and international

researchers; and

4) to increase creativity and productivity, not least to supply more eff ective technologies to industry.40

Even though social science research has been an important dimension of R&D, in terms of setting

foundations for the social development agenda, and supporting public policy, there is no centralized

research agenda. R&D priorities in social fi elds have largely been set by the relevant sector Ministries, in pursuing

each sector’s own development agenda, which is usually set in each Ministry’s Medium-Term Development Plan.

The level of the government’s fi nancing of the R&D sector, as well as the way that the fi nancing is

administered, will play a signifi cant role in the achievement of these plans. The stipulation in the

Masterplan that funding will increase to 3 percent of GDP by 2025 signals the level of the government’s fi nancial

commitment in this area. However, the current levels of investments in the sector made by both the state and

private enterprise are low. The next section considers the recent levels of spending and what the eff ects of these

might be for the future development of the public R&D sector.

Resource mobilization

The amount of money that a country dedicates to its R&D is a reasonably good measure of its commitment

to creating and developing applications of new knowledge. Institutions and other factors also matter, but the

level of spending is likely to be a good barometer of the extent to which R&D is prioritized over other government

and private sector priorities. The main indicator for this is gross domestic expenditure on R&D (GERD). As the

Indonesian government has stipulated in its Masterplan, setting a target for the level of GERD is one tool that

policy makers can use to benchmark the amount of R&D and subsequent innovation in a given economy.41 For

example, in 2002 the European Union (EU) declared that it wanted GERD across the EU to be increased to 3

percent by 2010. The target was missed. Even with signifi cant increases, the EU’s share of world spending on R&D

shrunk. Between 1995 and 2008, total R&D investment rose by 50 percent, but over the same period the EU fell

from accounting for 29 percent to 24 percent of global R&D investment.42 This is actually unsurprising, given that

so many countries have increased their spending on R&D in the recent past. 19 of the 20 OECD countries with

the highest GERD in 1999 had increased their level by 2009.43 Between 1995 and 2008 the global increase was

around 100 percent, with Japan, South Korea, Singapore, and Taiwan combined registering a 75 percent increase

and China a level 855 percent higher.44 Figure 4 shows some of this growth.


41 OECD, Science, Technology and Industry Scoreboard 2011, OECD, 2011, p76

42 European Commission, Innovation Union Competitiveness Report 2011: Analysis: Part 1: Investment and Performance in R&D – Investing in the Future, European

Commission, 2011, p46


44 European Commission, Innovation Union Competitiveness Report 2011: Analysis: Part 1: Investment and Performance in R&D – Investing in the Future, European

Commission, 2011, p46


Indonesia’s GERD has only been growing insignifi cantly. From the available, comparative data, Indonesia now

spends more on R&D than it did at the turn of the century, but only marginally so. As shown by Figure 5 in 2009 (the

latest available data year), it spent just over 0.08 percent of its GDP on R&D, very little increase from 0.07 percent in

2000. The data from 2001, where the level slipped to below 0.05 percent, would suggest that the level has fl uctuated

over the recent past. However, it would seem unlikely that it has been much higher than the highest recorded levels

of 0.08 percent of GDP, despite the fact that some state bodies involvedin R&D fi nancing, such as the Directorate

for Higher Education, have increased their spending by large amounts in recent years (see Table 19). GERD is a

useful indicator in two ways: one, for comparing with how much other countries spend in a given year (the fl ow

of spending) and thus the level that Indonesia might target; two, for examining how much science, technology,

and other types of research might have benefi ted from the long-run accumulation of spending over time. This

diff erence is important to keep in mind as increases in the fl ow might, at least in the short-run, only compensate for

the lack of spending in the past, and R&D in general requires long-term investment.

Indonesia’s GERD level is low, compared even to its regional peers of several developing nations. Figure

6 shows a comparison between the known GERD levels of countries in the East Asia and Pacifi c Region that are

considered to be developing. The data are drawn from diff erent (but the most recent) years for each country.

Even compared to its peers, who have varying levels of human development and economic competitiveness,

Indonesia spends an extraordinarily low percentage of its GDP on R&D. For example, in 2010, Mongolia had a

gross national income (GNI) per capita of USD 1,870 but spent 0.24 percent of its GDP on R&D. In comparison,

Indonesia had a GNI per capita of USD 2,500 but, at 0.08 percent of GERD, dedicated fewer resources as a portion

of GDP to R&D.45 In the wider region, Indonesia is thus spending relatively less than even its poorer peers. It is

also, of course, spending much less than its burgeoning neighbor, China, which in 2008 spent 1.46 percent of

GDP on R&D activities.

Compared to its developed neighbors Indonesia’s GERD is tiny. It is important to keep in mind that diff erent

levels of development require diff erent spending priorities, but with such a big gap in spending between

Indonesia and nearly all of its neighbors – regardless of their level of development – it is reasonable to question

whether the country’s R&D sector will suff er in future years because of the lack of investment over the years.

In other words, current GERD levels in, say, the Region’s advanced economies (shown in Figure 7) may show

accumulated benefi ts over time. In several reasonable comparisons, Indonesia’s level of GERD is signifi cantly

lower than that of its neighbors and economic competitors.

Source: World Bank (see http://data.worldbank.org/indicator/GB.XPD.RSDV.GD.ZS/countries/1W?display=default)

Figure 4 GERD, Selected Regions, 1996–2009

R&D

Spe

ndin

g as

a P

erce

ntag

e of

GD

P(G

ERD

)

Year

1996 1997 1998 1999 2001 2002 2003 2004 2005 2006 2007 2008 20092000

0,5

0,0

1,0

1,5

2,0

2,5

3,0

East Asia & Pacific

Europe & Central Asia

European Union

Latin America &

Carribean

High Income OECD

45 Source: World Bank (see http://data.worldbank.org/indicator/NY.GNP.PCAP.CD)




Figure 5 GERD, Indonesia, Three Years of Comparable Data


Figure 6 GERD, Developing Countries, East Asia and Pacifi c Region, Most Recent Years

Indonesia200920012000

GER

D

0.00

0.02

0.04

0.06

0.08

0.10

0.0

0.3

0.6

0.9

1.2

1.5

GER

D

Cambodia China Indonesia Lao PDR Malaysia Mongolia Myanmar Philippines VietnamThailand

Country


Figure 7 GERD, Selected Neighboring Countries, Most Recent Years

0.0

0.5

1.0

1.5

2.0

3.0

3.5

4.0

2.5

GER

D

Australia Indonesia Japan Korea, Rep New Zealand Singapore

Country


Table 14 Indonesia GERD by Known

Source of Financing (percentage),

Available Years

SourceYear

2000 2001

Government 72.7 84.5

Higher education 1.1 0.2

Business 25.7 14.7

Private non-profi t Unknown Unknown

Foreign Unknown Unknown

Other 0.5 0.7

Sources: UNESCO (http://stats.uis.unesco.org/unesco/TableViewer/

document.aspx?ReportId=136&IF_Language=eng&BR_Topic=0)

Table 15 Indonesian GERD by Known Locus

of Activity (percentage), Available

Years

SourceYear

2000 2001

Government 69.8 81.1

Higher education 3.9 4.6

Business 26.3 14.3

Private non-profi t Unknown Unknown

Foreign Unknown Unknown

Unknown Unknown Unknown

Sources: UNESCO (http://stats.uis.unesco.org/unesco/TableViewer/

document.aspx?ReportId=136&IF_Language=eng&BR_Topic=0)

In terms of the sources of its R&D fi nancing, Indonesia also diff ers substantially from many other

countries. Some of the latest data is unfortunately only from 2001, but it would appear that the Indonesian

government both funds and conducts the vast majority of R&D in the country. In 2001, 84.5 percent of all R&D

was conducted with government money and in the same year, government organizations were the loci for 81.1

percent of all GERD (see Table 14 and Table 15). This is unusual. Among OECD countries, the business sector is the

dominant player in R&D and accounts for around 70 percent of all R&D activities.46 Regarding fi nancing alone, the

proportion from government sources in Indonesia in 2009 was higher than any of the most recently recorded

levels found among the country’s neighboring developing peers, as listed in Table 16.47 For example, in China in

2009, the level of government fi nancing was 23.5 percent, the level of business fi nancing 71.7 percent, and the

levels of activities accounted for by both was 18.2 percent and 73.2 percent respectively.


47 See Akil HA et al, Study on the Status of Science and Technology Development in Indonesia, LIPI Press, 2011

Indonesia also has a skewed balance of R&D funding compared to its advanced neighbors. Table 16 shows

the balance between R&D fi nancing by the government and the private sector in the most advanced countries in

the East Asia and Pacifi c Region. Between 1998 and 2008, New Zealand had the highest proportion of government

fi nancing, with 50.6 percent in 1999. In contrast, the highest proportion of private fi nancing was 78.1 percent in

Japan in 2008. Judging by the high levels of knowledge discovery and R&D output seen in these countries, it would

seem that a high degree of private funding is necessary for greater R&D productivity in a given country.

Given the current low levels of spending on R&D and the plans to increase it substantially, the manner

in which the spending is administered needs to be carefully considered by the Indonesian government.

Judging by the data discussed so far, the Indonesian government spends very little on R&D, what is spent is

directed towards state agencies, and the private sector has historically shown a low level of interest in pursuing

the mooted benefi ts of R&D in the development of goods and services. Because this approach is signifi cantly

removed from the more common, and often successful, practice of the private sector pursuing a great deal of

R&D in a given economy, public spending mechanisms will likely determine the ability of the R&D system to

produce the benefi ts from higher spending that the government is now targeting.



Table 16 R&D by Source of Financing (percentage), Selected Neighboring Countries, 1998–2008

Source and

country

Year

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Government

Australia 46.8 45.5 41.1 40.2 37.5 34.9

Japan 19.3 19.6 19.5 19.0 18.3 18.0 18.0 16.7 16.1 15.6 15.6

New Zealand 50.6 47.0 43.7 43.2 42.6

Republic of Korea 25.9 24.9 23.9 24.9 25.3 23.8 23.1 23.0 23.0 24.7 25.4

Singapore 43 42.1 40.2 38.4 42.2 41.7 37.8 36.4 36.3 34.8 29.8

Business

Australia 45.8 46.2 50.6 54.6 58.0 61.4

Japan 72.5 72.1 72.4 73.0 74.0 74.6 74.8 76.1 77.0 77.7 78.1

New Zealand 34.1 37.8 38.2 41.0 40.1

Republic of Korea 69.1 69.9 72.3 72.4 72.2 74.0 74.9 74.9 75.4 73.6 72.8

Singapore 53.0 53.6 54.9 54.1 49.8 51.5 55.2 58.7 58.3 59.8 63.4

Sources: UNESCO (http://stats.uis.unesco.org/unesco/TableViewer/document.aspx?ReportId=136&IF_Language=eng&BR_Topic=0)

Resource allocation and utilization

The multiplicity of government agencies and institutions involved in R&D is an important factor that

determines the patterns of resource allocation and utilization. The state bodies involved with public R&D

are arranged in a disparate manner. KEMENRISTEK coordinates the LPNK, discussed below, and sets a national

research agenda. The KEMENRISTEK minister receives advice from the National Research Council (DRN). The

sector Ministries then constitute a group by themselves. There are 22 of them and they follow a research agenda

for their sector. They also each have a research arm, some of which are quite small. There are also other important

advisory bodies, including the National Innovation Committee and the National Development Planning Agency

(BAPPENAS), which report directly to the presidential administration and do not have any other bodies under

their control. The Indonesian Academy of Sciences (AIPI), an autonomous body receiving state budget under the

Secretary of State Administration, is mandated to advise the nation on scientifi c matters.

For the seven independent research institutes (LPNK), each plays a specifi c role in the R&D system.

Several of the LPNK, such as the Indonesian Institute of Sciences (LIPI), have long-standing reputations. They

each concentrate on a research fi eld. The remaining six are the Agency for the Assessment and Application

of Technology (BPPT), the National Institute of Aeronautics and Space (LAPAN), the Geospatial Information

Agency (BIG), the National Nuclear Energy Agency of Indonesia (BATAN), the National Standardization Agency of

Indonesia (BSN), the Nuclear Energy Regulatory Agency of Indonesia (BAPETEN). Other institutes with a degree

of autonomy are the Eijkman Institute (for molecular biology), which is under KEMENRISTEK, and the Center of

Meteorology, Climatology and Geophysics (BMKG).

The universities account for a large amount of resources and activity in the sector. There have been some

signifi cant changes in government policy towards the higher education sector as a whole over the past decade,

particularly with regard to improving the quality and autonomy of leading institutions. Across the sector there

are 92 public universities with varying degrees of autonomy, and over 3,200 private institutions comprising

universities, academies, and religious higher learning institutes. With regard to R&D funding, each of the public

universities has a research function, but 50 of them have dedicated R&D institutes.48



Some recent research has delineated the universities according to their status and quality of research.49

Only about fi ve universities (Universitas Indonesia, Institut Pertanian Bogor, Institut Teknologi Bandung, Universitas

Gajah Mada, Universitas Airlangga) are considered by the quality of their research to be “research-oriented”, or more

specifi cally to have the staff , range of subject expertise, and history of published work to suggest that they can

conduct research at a high level. There are then a small handful of polytechnic-type universities that concentrate

on teaching towards certain professions, providing experience for pupils in given fi elds or collaborating with

industry on projects. Several universities concentrate on the quality of their teaching rather than research, such

as the private Universitas Bina Nusantara and Universitas Surabaya. Finally, the vast majority of public universities

are categorized as being neither particularly strong in research nor outstanding in teaching, although many of

them aspire to excel in research.

The other arms of the state’s involvement in R&D consist of spending on science parks and state

corporations. Each of these has some involvement with S&T and the creation of new knowledge. There are

several science parks with the most prominent, PUSPIPTEK, having been discussed above.

There is also a range of private and not-for-profi t research centers. 65 fi rms are thought to have their own

research bodies across 15 sectors. These are in a range of sectors, with many involved with the manufacture of

wood, metal, and plastics products. The chemicals sector has by far the largest number with 21, although this still

only means that 9.5 percent of the companies in the sector have a specialized research unit. The quality of these

research centers is unclear, although it is likely that Indonesia will need many more such centers, achieving high

standards of research, as it grows. Table 17 shows the overall breakdown of research centers by sector.

The number of organizations in the public R&D sector suggests that it is organized in a disparate manner.

As suggested by Table 18, which lists all of the public organizations involved, R&D fi nancing and expertise is

spread through all of the government ministries, the LPNK, the diff erent planning and policy bodies, the regional

arms of any given R&D body, and the public universities. The complex structure naturally leads to the concern

that the small amount of available funding can be spread quite thinly.

Table 17 Private R&D Centers by Industry Sector

Sector Number of companies with

a research center

Percentage of sector companies with

a research center

Food products and beverages 6 2.0

Wood and wood products 2 2.6

Paper and paper products 3 7.1

Publishing, printing and recorded media 2 5.4

Chemicals and chemical products 21 9.5

Rubber and plastics 4 3.2

Other non-metallic products 4 7.7

Basic metals 3 8.6

Fabricated metal products 4 8.0

Machinery and equipment 7 5.9

Electrical machinery and apparatus 3 5.8

Radio, television and communication equipment 1 1.4

Motor vehicles and trailers 1 1.9

Other transport equipment 2 4.2

Furniture 2 3.0

Total 65

Sources: LIPI, “Chapter 1: S&T Policy and Development Strategy,” LIPI, 2010, p37




Table 18 Organizations Involved in R&D, Divided by Typea

Organization type Organizations Function

Umbrella organizations

Presidential administration Agenda-setting

Ministries Ministry of Research and Technology

(KEMENRISTEK)

Agenda-setting

Ministry of Finance Budget-setting

20 other ministries Departmental R&D

Agencies National Development Planning Agency

(BAPPENAS

Responsible for development planning and coordination in

the fi elds of economy management, budgeting, information

management, education and training, and other areasb

National Research Council (DRN)c Provides advice to the minister for KEMENRISTEK. Umbrella

body for the 31 regional research councilsd

Regional Research and Development Agency Umbrella body for 42 regional, and 27 provincial, research and

development agenciese

National Innovation Committee (KIN) An autonomous body responsible for advising the presidentf

Indonesia Academy of Sciences An autonomous body advising the nation on scientifi c matters

Government R&D

organizations (independent

of ministries, LPNK)

Seven institutes R&D

Ministerial R&D institutes

(BALITBANG)

22 ministries with R&D institutes R&D for the ministries

Higher education

Oversight bodies Directorate General of Higher Education Responsible for administering higher education institutions

Public universities 76 non-autonomous public universities and

institutes, and seven autonomous universities,

each with a research function, and 50 with a

dedicated R&D institute

Private universities Over 3,200 higher education institutes The great majority of the higher education institutes do not

conduct research and development

Private sector

Non-profi t national research

institutes

Six research institutes

Non-profi t international

research institutes

Five research institutes

Company research centers 65 companies with a research center in 15

diff erent sectors

Think-tanks R&D

State fi rms Unknown

Research bodies, groups

and consortia

Consortia Six research consortia R&D and collaboration

Research areas and science

parks

Science and technology parks Four science and technology parks Involved in scientifi c research

Agriculture technology parks Five agriculture technology parks Involved in the cultivation and processing of agriculture

technology

Educational parks One educational park Promotes academic and industry training among children and

young people in the surrounding area

National parks Forty national parks Conservation areas that act as places for scientifi c research

PUSPA IPTEKg Museum for science

Sources:

a. Akil HA et al., Study on the Status of Science and Technology Development in Indonesia, LIPI Press, 2011. See annex 1 for a more detailed version of this table.

b. See http://translate.google.co.uk/translate?sl=id&tl=en&js=n&prev=_t&hl=en&ie=UTF-8&layout=2&eotf=1&u=http%3A%2F%2Fwww.bappenas.go.id%2F&act=url

c. See http://translate.google.co.uk/translate?sl=id&tl=en&js=n&prev=_t&hl=en&ie=UTF-8&layout=2&eotf=1&u=http%3A%2F%2Fwww.drn.go.id%2Findex.php&act=url

d. Karetji PC, “Overview of the Indonesian Knowledge Sector: Milestone 8: Final Report,” AusAID, 30th September 2010, p35

e. Akil HA et al., Study on the Status of Science and Technology Development in Indonesia, LIPI Press, 2011, p24

f. OECD, Science, Technology and Industry Outlook, OECD, 2010, p188 (see http://www.oecd.org/dataoecd/41/24/46664553.pdf )

g. See http://www.thebiggestsundial.com/


All of the organizations concerned with R&D exist within broader developments that the state

administration is undergoing. Indonesia’s public administration has signifi cantly improved in recent years,

but weaknesses still exist. On the World Economic Forum’s competitiveness index, Indonesia ranks 47th on

“eff ectiveness of government”, which puts it ahead of many developing countries. However, on several parts of

this measure the country still ranks poorly. For example, according to the same source, businesses in Indonesia

see the policy making process as not being transparent enough (rank 91), and the most cited problem for

business executives is “bureaucracy.”50

Public fi nancing both refl ects and exacerbates some of the broad issues in public administration. The

fi rst of the broad problems regards the ability of government departments to absorb budget allocations. For

example, between 2010 and 2011, spending allotted for capital expenditures increased by around 40 percent,

but by the middle of 2011 only around 10 percent of the budget had been spent.51 There are many reasons

for low disbursement of public spending. The frequent delay of budget confi rmation and execution until April

eff ectively shortens the execution period by four months each fi nancial year. There is also caution among

government administrators to commit to multi-year construction contracts as they face issues in guaranteeing

the availability of funds from one year to the next, as the government-wide focus on the single-year budget

cycle is so strong.52 Improvements in the capacity of personnel, especially local personnel, are also key issues.53

Overall, the inability to administer funds in an allotted time frame suggests that development in government

services and improvements in myriad policy areas do not solely depend on greater spending, but also on the

administration of spending. Furthermore, it suggests that there should be caution over spending increases being

prioritized over administrative reform.

The government is making eff orts to improve spending administration. In 2008 the government allowed

procurement procedures to start in the few months before the beginning of a new fi nancial year, thus allowing

more time for planning and expenditure. A presidential regulation was also recently signed which allows

greater room for multi-year contracting and expenditure in areas that are determined by seasonal factors,

such as planting and the supply of medicine. Also, budget execution documents are more likely to be issued

in January of the budget year, where before they might have been delayed by budget reviews conducted by

the given parliamentary commission. Finally, for the 2011 budget, the government introduced a “Medium-Term

Expenditure Framework” and the use of program-based budgeting, both of which it hoped would improve

planning, administration and output.54

The nature of R&D activities requires enabling funding arrangements. At the start of research it is often the

case that the outcome is uncertain, that is, the researchers do not know what they will fi nd, if anything, and the

time it will take to produce any new knowledge is unclear. This requires an approach to R&D funding that expects

worthwhile results on the whole, but is tolerant of uncertainty around the results and able to facilitate discovery

through a funding system that underpins the R&D process.

In two important ways the approach to state fi nancing has constraining eff ects on R&D because of

the investigative nature of research. Firstly, an emphasis on single-year budgeting makes it diffi cult for R&D

institutes that rely on government funding to plan. Without a multi-year view it is diffi cult to start a research

project that has unknown outcomes, as the researchers do not know whether funding will be available for a

second year if the target discovery has not been made in the fi rst year. This problem is further exacerbated by



52 There is a strict “use it or lose it” policy in place, which means that departments are under pressure to spend all of the money they receive in one year.

Administrative constraints, plus the risk of allocating spending from one year to the next, inhibit capital investment. See World Bank, Indonesia Economic

Quarterly: Current Challenges, Future Potential, World Bank, June 2011


54 World Bank, Indonesia Economic Quarterly: Maximizing Opportunities, Managing Risks, World Bank, December 2010, p19-20



the fact that all unspent monies have to be returned to the Ministry of Finance (even if the original allocation was

received a few months into the fi nancial year as a result of disbursement issues), and it is diffi cult to buy expensive

equipment with a given budget if it is unclear whether it will be used for future research projects.

Secondly, the necessity to achieve a research outcome within a given fi nancial year induces further

caution over which research topics to pursue. The budgeting system requires that R&D institutes show what

has been produced for the money spent. It thus seems likely that this approach would induce caution among

researchers as to which topics they choose, that is, they might be more likely to pick less signifi cant topics that

are likely to produce some results in the budgeted timeframe rather than risk being deemed unsuccessful and

thus unable to attract follow-up support. Ensuring the eff ectiveness of public spending generally justifi es the

demand for results, but it hampers the uncertain, investigative nature of R&D.55 Again, a cross-sector issue with

state administration is aff ecting R&D in a manner specifi c to the nature of R&D.

The disbursement of funds for the R&D sector is also marked by a high degree of centralization. While the

issue of decentralization may come to aff ect the R&D sector more signifi cantly in future years, according to the

latest available data, a great deal of the money for R&D comes from spending items identifi ed in the state budget

rather than from private fi nancing or through other sources.

Table 19 shows a breakdown of IDR funding of R&D for two years, 2006 and 2009. Regardless of the destination

of the funds, the most striking feature is the extent to which funding is dominated by the central government,

including the Directorate for Higher Education. Of the IDR 2.3 trillion spent in the sector in 2006, around IDR 1.9

trillion came directly from these sources, with signifi cant amounts of it likely to have been distributed via line-

item spending. With regard to the overall levels of funding it should also be noted that the Directorate for Higher

Education increased its support for R&D by nearly eight times between 2006 and 2009. In 2006 a further IDR 460

billion was given to the sector in the form of contracts or grants. Figure 9 summarizes this.

55 Corruption is a signifi cant problem in Indonesia but is subject to several government attempts to reduce it. Indonesia has a rank of 100 on Transparency

International’s index of the perceived level of corruption in a country. Along with changes elsewhere, there is some suggestion that the “big bang”

decentralization reform may have allowed corruption to spread while new administrative practices were being worked out (Asian Development Bank,

Indonesia: Critical Development Constraints, Asian Development Bank, 2010, p37). In a 2007 survey of fi rms, 86 percent said that they had to make informal

payments and bribes to offi cials, and that these averaged 6.1 percent of fi rms’ annual production costs. The fi rms also said that visits by government offi cials

were frequent, with visits from policy and military offi cers particularly frequent. In recent years the government has dedicated more money to fi ghting

corruption and declared in 2009 that it would implement the Extractive Industries Transparency Initiative (EITI), and has now been accepted as a candidate for

membership of the EITI by the organization behind it. (See http://eiti.org/indonesia).

Source: LIPI

Figure 8 Total State R&D Funding by Source, 2006

Funds from Central Government

(The Directorate for Higher Education)

Funds from Central Government(Non-higher Education Sources )


Table 19 R&D Funding Distribution, 2006 and 2009

Year

Government (IDR)Higher education (public

universities only)(IDR)

2006 2006 2009

BALITBANG BALITBANGDA LPNKPublic

universities

Funds from central government

(non-higher education sources)

1,342,200,000,000 35,100,000,000 319,800,000,000 57,450,957,000 277,408,230,978

Funds from central government (the

Directorate for Higher Education)

145,642,883,000 1,153,388,724,795

Funds from other sources

Domestic research contracts 50,500,000,000 4,300,000,000 24,800,000,000 211,497,460,000 204,569,634,507

Government (discretionary funds) 7,200,000,000 4,300,000,000 12,500,000,000 171,278,506,000 180,727,384,916

Private/ industry 41,100,000,000 11,800,000,000 35,751,020,000 21,669,036,275

Not-for-profi t organization 2,200,000,000 500,000,000 4,467,934,000 2,173,213,316

Foreign research contracts 11,400,000,000 37,300,000,000 47,208,267,000 37,603,267,481

Foreign government 10,046,401,000 17,289,557,449

Private/industry 11,950,290,000 10,730,753,000

Multilateral/international org 20,063,351,000 7,577,775,432

Not-for-profi t 5,148,225,000 2,005,181,600

Domestic grants 56,791,041,000 61,835,137,472

Government (discretionary funds) 51,084,999,000 51,344,355,522

Private/industry 3,611,187,000 10,151,281,950

Not-for-profi t 2,094,855,000 339,500,000

Foreign grants 10,080,147,000 26,403,653,962

Government 3,420,504,000 8,339,871,560

Private/Industry 985,000,000 3,841,378,500

Multi-lateral/International 2,913,663,000 8,389,609,721

Not for profi t 2,760,980,000 5,832,794,181

Other 2,000,000,000 2,600,000,000 2,462,560,000 10,522,159,500

Total 1,406,100,000,000 39,400,000,000 384,500,000,000 531,133,315,000 1,771,730,808,695

Sources: LIPI, totals may not sum due to rounding

The spending data reinforce the impression that, overall, R&D funding is dominated by the state. They

show that, at least in 2006, there was very little interest from the private sector or foreign bodies in using even

the LPNK or the public universities for the investigation of research topics. Furthermore, because of the likely

heavy use of line-item funding it is not just that the vast majority of the money comes from the state, but that it

is distributed in the most specifi c manner.

Table 19 also shows that alternative funding is available, albeit small in amount. As with the role of the Directorate

for Higher Education, funds could be distributed by a given public or private body, in order to meet what might

be ad-hoc demands for knowledge. But, as shown by Figure 8, these approaches accounted for only just over a

quarter of funding in 2006. On top of the amount of funding being low, it is both dominated by the state, and in

a manner that is highly specifi c and not devolved to a dedicated body.



The insignifi cant role of contract funding would also suggest low usage of competitive fi nancing. When

R&D is funded by contracts rather than block grants or line-item funding, it is more likely to be conducted under

competitive terms. Where line-item funding is used, the demands of administering and tracking the fl ow of funds

is likely to require high levels of specifi cation as to where it is going and for what purpose – two characteristics

of R&D funding in Indonesia that were discussed above. By contrast, if money is allocated to R&D and is then

distributed by research contracts it is sometimes easier for that funding to take place through a competitive

bidding process that requires research bodies to show that they have the adequate expertise and track record to

carry out the research. The lack of complete information on this process in Indonesia, however, makes it diffi cult

to say for certain whether these contracts are all awarded based on competitive selection.

The budgets of the diff erent agencies involved in R&D refl ect, as would be expected, the dominance

of centrally distributed institutional funding. As shown by Figure 9, the BALITBANG receive over three

quarters of non-higher education central government research funding. The nature of the research they conduct

is discussed below but, at base, they account for an important portion of the most important source of R&D

funding. Interestingly, this would suggest that, on top of most R&D funds being administered very centrally, they

are also not distributed very far from central control. Each of the BALITBANG is under the direct control of its

respective Minister and is not often tasked with the basic scientifi c investigation or development and application

of knowledge that a pure scientifi c institute might be concerned with. In other words, R&D at the BALITBANG

is characterized by work driven by the requirements of the respective Ministry. This is contrary to the OECD’s

recommendation that public funding of R&D is likely to show greater returns if it is directed towards universities

rather than public institutes.56 However, any redirecting of research away from the BALITBANG and towards the

universities should take into account the diff erent strengths of the respective organizations. For example, it is

possible that the BALITBANG may be better at policy research where the aim of the work is already reasonably

well known, while the universities may have an advantage in projects that involve analysis and measurement

of, say, policy results, or do not have a particular research outcome in mind. Some of these respective strengths

might even be combined through collaborative work. However, based on the current distribution of funds it is

possible to conclude that, on top of the great majority of R&D funding coming from highly specifi ed, centralized

sources, a lot of it goes to the organizations in the R&D sector that are perhaps the least independent. This is

reinforced in Figure 10, which shows the dominance of BALITBANG R&D funding by central government. In other

words, most of the centralized funding stays central.

Source: KEMENRISTEK, “Governmental R&D Survey,” KEMENRISTEK, 2006

Figure 9 Non-Higher Education Central Government R&D Funding by Destination, 2006

LPNK

BALITBANG

BALITBANGDA

Public Universities

56 OECD, Governance of Public Research: Toward Better Practices, OECD, 2003, p22


The LPNK and BALITBANGDA also show the dominance of central government funding. The LPNK, because

of their status as being independent from KEMENRISTEK, might be expected to be able to attract a great deal of

their fi nancing from non-state sources. The exact level would depend on demand and other factors - the private

sector might be expected to commission the LPNK to conduct R&D, particularly in the development of goods

and services. The status of some of the LPNK, such as LIPI, would only be expected to increase this tendency.

However, the funding data shown in Figure 11 belies this expectation. The stipulations in the budgeting laws

are behind this, as any external funds collected by the LPNK must be sent to the Ministry of Finance as non-

tax revenue, only to be reclaimed through the annual budget process. Furthermore, even under the guise of

research contracts, state funding dominates. Figure 12 shows how half of all research contracts attracted by the

LPNK come from state discretionary funds. In 2006 the LPNK only managed to gain around IDR 12 billion from

independent, domestic sources. However, they also attracted nearly IDR 40 billion in foreign research contracts.

The BALITBANGDA (Figure 13), which receive all of their R&D funding from the government, also refl ect the

dominance of central government funding over other methods.


Figure 10 BALITBANG Funding by Source, 2006

ForeignResearch Contracts

Other

DomesticResearch Contracts

Funds fromCentral Government

(Non-higher EducationSources)


Figure 11 LPNK Funding by Source, 2006

Other


(Non-higher Education Sources)

Domestic Research Contracts

ForeignResearch Contracts




Figure 12 LPNK funding by domestic research contracts

Non-for-profit Organization

Government(Discretionary Funds)

Private/Industry


Figure 13 BALITBANGDA Funding by Source, 2006


Figure 14 Public Universities’ Funding by Source, 2009


(Non-higher Education Sources)

Domestic Research Contracts

Funds from Central Government(Non-higher Education Sources)

Funds fromCentral Government

(The Directoratefor Higher Education)

Domestic ResearchContracts

Foreign Research Contracts

Domestic Grants


However, the funding of public universities appears to be diff erent to that of other organizations that

receive public fi nancial support for R&D. The proportions accounted for by the diff erent funding streams

are shown in Figure 14. In 2009, funds from central government only accounted for around IDR 280 billion. In

contrast, nearly IDR 1.2 trillion came from the Directorate for Higher Education. There would appear to have been

some signifi cant changes in the budgeting for R&D at the public universities in recent years as funding from

central government and the Directorate for Higher Education combined increased from around IDR 200 million

to IDR 1.4 trillion between 2006 and 2009.

The largest proportion of funding for public universities’ R&D is funneled through the Directorate for

Higher Education, under the Ministry of Education and Culture. It is diffi cult to know whether this aff ects

the manner in which research projects are conducted, although it is nonetheless notable for it not being as

centralized as the funding for much of the rest of the sector. Nonetheless, the public universities still show the

same degree of reliance on state rather than private, or even foreign, funding. In 2009 they received around

IDR 205 billion from domestic research contracts. Approximately IDR 180 billion of this was from government

discretionary funds and only around IDR 21 billion from companies and suchlike.

The Directorate for Higher Education distributes its funding in several diff erent ways. Around 65 percent

goes to the public institutions under its remit through a mix of block grant funding and line-item budgeting. But

it also operates grant schemes. These schemes have recently been focused on university-industry collaborations,

but over the past 20 years, money has also been given for fundamental research. In 2012 the Directorate for

Higher Education made 4,297 grants worth a total of IDR 286 billion, with the vast majority going to the public

universities rather than the private ones, and the seven leading public universities in particular (Institut Pertanian

Bogor, Institut Teknologi Bandung, Universitas Airlangga, Universitas Gajah Mada, Universitas Indonesia,

Universitas Pendidikan Indonesia, Universitas Sumatera Utara). It is possible that this refl ects the balance of R&D

expertise, although this may also refl ect the preference given to the leading public universities.57

The “RAPID” research program is one of the Directorate for Higher Education’s grant schemes for

encouraging university-industry collaborations. The scheme makes awards in six areas: energy, ocean and

fi sheries, health, agriculture and food, information technology, and manufacturing. It was launched in 2007 and

is still ongoing. It is only a small part of the overall funding scheme.


Figure 15 Public Universities’ Funding by Source, 2006 and 2009

Year

RUP

(in B

illio

n)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

20092006

Funds from Central Government(Non-higher Education Sources)

Funds from Central Government(The Directorate for Higher Education)




Table 20 shows the total amount of awards between 2008 and 2012, and how some of the leading public

universities have been benefi ciaries, alongside some private ones, too. KEMENRISTEK also has some similar

schemes, including one that makes awards in the areas of food resilience, energy, information technology,

transportation, defense and security, health and medical technology, and advanced material, or the target areas

in the Long-Term Development Plan (2005–2025).58

Table 20 Distribution of RAPID Grants, 2008–2012

University Number of grants Average grant size Total amount awarded

Institut Teknologi Bandung 13 275,766,923 3,584,970,000

Institut Sepuluh Nopember 7 250,935,714 1,756,550,000

Universitas Negeri Semarang 6 246,416,667 1,478,500,000

Universitas Padjadjaran 6 214,870,000 1,289,220,000

Universitas Hasanuddin 5 256,230,000 1,281,150,000

Universitas Muhammadiyah Surakarta 5 235,100,000 1,175,500,000

Universitas Brawijaya 4 250,950,000 1,003,800,000

Institut Teknologi Telkom 4 232,425,000 929,700,000

Universitas Tadulako 3 269,873,333 809,620,000

Universitas Muhammadiyah Malang 3 263,333,333 790,000,000

Universitas Indonesia 3 236,000,000 708,000,000

Universitas Muria Kudus 3 234,166,667 702,500,000

Universitas Sumatera Utara 2 283,825,000 567,650,000

Universitas Sam Ratulangi 2 270,000,000 540,000,000

Universitas Widya Gama 2 266,666,500 533,333,000

Universitas Pendidikan Indonesia 2 262,500,000 525,000,000

Universitas Mataram 2 245,000,000 490,000,000

Institut Pertanian Bogor 2 239,850,000 479,700,000

Universitas Wijaya Kusuma 2 207,500,000 415,000,000

Universitas Gadjah Mada 1 299,650,000 299,650,000

Universitas Sebelas Maret 1 287,300,000 287,300,000

Universitas Jenderal Ahmad Yani 1 275,000,000 275,000,000

Institut Teknologi Adhi Tama 1 272,500,000 272,500,000

Politenik Manufaktur Bandung 1 272,100,000 272,100,000

Universitas Ciputra 1 270,760,000 270,760,000

Universitas Negeri Malang 1 270,000,000 270,000,000

Universitas Yogyakarta 1 270,000,000 270,000,000

Universitas Haluoleo 1 250,000,000 250,000,000

Sources: PT. Trans Intra Asia (TIA), Development of Strategies for University-Industry-Government Partnership, PT. Trans Intra Asia (TIA),

August 2012, p19

58 PT. Trans Intra Asia (TIA), Development of Strategies for University-Industry-Government Partnership, PT. Trans Intra Asia (TIA), August 2012, p19


There are questions over the quality of the research carried out in several parts of the public R&D sector.

The World Economic Forum assesses Indonesia as having poor research institutes (which it ranks as the 44th

best in the world). Furthermore, some reports have argued that LIPI is in a “critical condition” because its budget

is declining in real terms and an ever-greater portion of it is being dedicated to the remuneration of staff .59 As a

part of LIPI’s historically important status it has three tasks: 1) to conduct research in the pursuit of knowledge; 2)

to communicate its research fi ndings to its stakeholders, such as the government, private sector and universities;

and 3) to assist with policy problems. However, some assessments of it suggest that it might not be fulfi lling

some of these roles with great eff ectiveness, despite the fact that it is thought to be the only state body with any

signifi cant capacity in the social sciences or humanities.60

One of the key criticisms of LIPI is that the quality of its research has fallen. One of the reasons for this might

be that it has suff ered from reductions in government funding. For example, in 1998 LIPI subscribed to 1,600

foreign journals while today it has subscriptions to only six. Research produced by the organization appears to

be strong in certain areas but weak where money is needed to carry out fi eldwork or collect data. Furthermore,

linkages between LIPI and work conducted in its fi eld elsewhere are possibly hampered by the fact that its

reports are only published in Indonesian.

The type of funding that LIPI receives appears to be largely based on budget allocations rather than

competitively awarded contracts. For example, Table 21 shows the breakdown of the social science research

projects at LIPI by area of research and type of funding received. “Thematic” refers to budgeted, or allocated, funds.

In 2010 nearly half of LIPI’s projects were funded in this way. “Competitive” refers to money that is distributed

according to the abilities of the given researchers but is conducted largely through internal, rather than external,

competition. The most competitive funding is distributed by the Ministry of Education and KEMENRISTEK.

However, this last and most competitive method of funding only accounted for a smaller share of research

projects. It would thus seem that, as suggested by the overall fi gures on R&D funding, budget allocations are more

common than competition-based funding. Across the social science sector there also appears to be insuffi cient

use of peer reviews which, like competitive allocations of research budgets, help to increase research standards

through oversight and quality control.61 Finally, because of its status as a government-fi nanced institution, LIPI is

barred from bidding on research contracts on off er from the private sector.62

Table 21 LIPI Social Science Research Projects by Type of Funding, 2010

Funding type

Area of research

TotalPolitics

Culture and

societyEconomics Demography

Regional

resources

Thematic 9 10 10 6 7 42

Competitive 4 4 4 4 1 17

Special assignment 1 3 4

From Ministry of Education or RISTEK 10 14 6 4 4 38

Total 24 28 23 14 12 101

Sources: Oey-Gardiner M, “Study of the Role of the Indonesian Institute of Sciences (LIPI) in Bridging Between Research and Development

Policy,” AusAID, August 2010, p25

59 Karetji PC, “Overview of the Indonesian Knowledge Sector: Milestone 8: Final Report,” AusAID, 30th September 2010, p36

60 Oey-Gardiner M. “Study of the Role of the Indonesian Institute of Sciences (LIPI) in Bridging Between Research and Development Policy,” AusAID, August 2010, p12

61 Australian Aid (2011), Revitalizing Indonesia’s Knowledge Sector for Development Policy, draft design document, Australian Aid, 2011, p11

62 Oey-Gardiner M, “Study of the Role of the Indonesian Institute of Sciences (LIPI) in Bridging Between Research and Development Policy,” AusAID, August 2010



Table 22 Distribution of Staff at the Seven LPNK, Most Recent Years

LPNK

BIG BAPETEN BATAN BPPT BSN LAPAN LIPI

Overall staff 607 3334 2838 193 1320 4747

of which aged

<35 142 470 517 115 342 1543

36-40 52 262 431 28 142 655

41-45 105 614 638 13 223 598

46-50 151 893 616 14 274 910

51-55 146 924 527 14 273 821

56-60 11 143 95 9 45 172

61-65 0 28 14 0 21 48

Overall staff of which known researchers 270 386 2035 1182 152 658 1428

of which known education

Doctoral 10 10 106 170 3 32 245

Master's 56 92 299 567 22 152 409

Bachelor's 157 240 1185 422 113 419 689

Associate's degree/diploma 47 44 445 23 14 55 85

of which known responsibility

Research assistants 6 0 65 4 8 74 381

Young researchers 11 3 87 39 2 86 339

Researchers 24 7 194 137 4 89 390

Principal researchers 5 0 81 76 0 29 209

Active research professors 2 1 33 24 0 5 63

Note: This table is based on the best estimates made by World Bank staff according to the data provided.

Competition is also not commonly used to determine remuneration for LIPI researchers. Firstly, as the

institute is required to conform to government recruitment practices, researchers can only join the rank that is

predetermined by their level of education. After the completion of one year in the job, the person becomes a civil

servant, at which point tenure is also conferred. These practices would suggest that LIPI and the other LPNK are

likely to struggle to attract highly experienced or talented researchers if those researchers can only be remunerated

according to their predetermined grade. Also, given the low usage of competition for the awarding of research

contracts, it would appear that researchers at LIPI are not subject to particularly strong competitive pressures.63

The distributions of staff at the seven LPNK tend to be bottom-heavy. At LIPI, for example, there are a

large number of staff relative to the number of researchers (4,747 against 1,428, see Table 22), while youth and

education to only the level of a bachelor’s degree are more common than the opposite. Figure 16, for example,

shows that the number of staff (rather than just researchers) under 35 is just over 1,500 while the number of staff

in the age brackets most likely to have experienced staff , 46–50 and 51–55, is only slightly higher (1,731). This

is somewhat refl ected in the comparatively large numbers of junior researchers relative to senior researchers,

shown in Figure 18. Finally, there are only 245 researchers at LIPI with a doctorate, while there are 689 with just a

bachelor’s degree. Each of these patterns is somewhat replicated at each of the other LPNK, thus suggesting that,

broadly, the research skills of staff at the LPNK may not be as high as might be expected. Table 22 shows the data

available on the staff structures at all of the LPNK.

63 Oey-Gardiner M, “Study of the Role of the Indonesian Institute of Sciences (LIPI) in Bridging Between Research and Development Policy,” AusAID, August 2010


Source: LIPI

Figure 16 Distribution of LIPI Staff by Age Group, Assorted Years

Figure 17 Distribution of LIPI Researchers by Education Level, Assorted Years

Source: LIPI

Level of Education

Num

ber

0

200

400

600

800

Doctoral Master’s Associate’s Degree/

Diploma

Bachelor’s

Source: LIPI

Figure 18 LIPI Staff by Level of Seniority, Assorted Years

Level of Responsibility

Num

ber

0

100

200

300

400

Research

Assistants

Young

Researchers

Researchers Active Research

Professors

Principal

Researchers

Age

Num

ber

0

400

800

1200

1600

36-40< 35 46-5041-45 56-60 61-6551-55

The formal career path in the public R&D institutes also adds to the diffi culty in attracting staff . In the

early part of her career, a researcher must choose between a technical or an administrative path. A dilemma

arises in that the administrative choice off ers better benefi ts and remuneration than the technical path, even

though the researcher might have been trained for the latter. Many researchers are thus attracted away from the

technical career that they might have preferred in order to receive the greater fi nancial benefi ts in other posts.

This may go some way to explaining the staff distribution at the LPNK.



The funding and employment conditions at the LPNK and the public universities aff ect large portions of

the total number of researchers in public organizations.

Figure 19 shows the distribution of researchers (excluding staff ) across all of the public sector organizations

that are known to pursue R&D and employ researchers. The LPNK, while only receiving around a quarter of the

line-item funding that is given to the BALITBANG, have nearly twice the number of staff and account for around

25 percent of the total. This might go some way to explaining the funding squeeze with regard to LIPI that was

discussed above. However, the data also reveal that, while the public universities receive only a small portion of

line-item spending and nearly all of their money from the Directorate for Higher Education (see Figure 15), they

account for nearly 60 percent of the researchers in the sector. This suggests that, while centrally administered

funding going to somewhat centrally controlled organizations is the norm for state spending on the sector as a

whole, in terms of the number of researchers it is more a question of the majority being accounted for by more

independent university researchers.

Table 23 Number of Researchers per Million Population, Select Countries, 1996–2009

Country Name 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Australia 3332.0 3355.5 3444.0 3732.5 4038.6 4203.6 4258.5

Cambodia 17.4

China 446.9 475.6 388.7 421.7 547.7 581.2 630.3 666.5 712.2 855.5 930.9 1077.1 1198.9

Indonesia 210.8 197.6 89.6

Japan 4946.2 4999.9 5209.2 5249.0 5150.9 5187.1 4942.8 5170.0 5176.2 5385.0 5415.6 5408.9 5189.3

Korea, Rep. 2212.1 2269.8 2034.1 2190.4 2356.5 2950.3 3057.2 3244.1 3335.8 3822.2 4231.0 4672.2 4946.9

Lao PDR 15.8

Malaysia 89.1 153.0 274.3 291.9 495.1 364.6

Mongolia

Myanmar 7.6 7.6 11.5 12.7 18.4

New Zealand 2202.6 2296.9 3361.5 3935.1 4169.0 4323.7

Philippines 71.2 80.6 78.5

Singapore 2546.6 2643.7 3029.9 3276.8 4243.8 4205.1 4493.9 4900.5 5134.2 5576.5 5676.6 5954.6 5834.0

Thailand 100.2 72.4 166.9 277.2 277.1 307.4 315.5

Vietnam 115.9

Sources: World Bank

Source: LIPI

Figure 19 R&D Sector Researchers by Organization Type, Assorted Years

Organization Type

Nu

mb

er

of

Re

sea

rch

ers

0

5000

10000

15000

20000

25000

LPNK Universities BALITBANG Other


Apart from institutional capacity, the number of researchers in the country suggests that sector capacity

as a whole is low. Table 23 shows that in 2009, Indonesia had only 89.6 researchers per million population, while

a year earlier its developed regional peers had between 4,000 and 5,000. In the same year China had around

1,200.

Finally, the number and subject concentrations of the researchers with PhDs at the public universities

also suggests a need to increase capacity. Table 24 shows the breakdown of all researchers at the public

universities by subject fi eld. Agricultural sciences shows by far the highest level of expertise, with more PhDs

than the chemistry, life sciences, and physics fi elds combined. However, as with the level of expertise at the

LPNK, the staff structure appears to be weighted towards junior members. In the 24 fi elds listed in Table 24, the

number of researchers with only a master’s degree exceeds the number with a doctorate in all but three fi elds

(astronomy and astrophysics, earth and space sciences, and logic). Across the public universities the number of

the former was greater than that of the latter, at least in 2009, by 7,669. This appears to be a particular issue in two

of the social sciences, economic sciences and political science, where there are over three and four times more

researchers with bachelor’s degrees than PhDs respectively.

Table 24 Public University Researchers by Field of Study, 2009

Field of StudyPublic Universities (2009)

Bachelor Master’s Doctor Total

Agricultural sciences 302 2114 1111 3527

Anthropology 17 94 48 159

Astronomy and astrophysics 0 6 13 19

Chemistry 45 511 337 893

Demography 0 57 16 73

Earth and space sciences 15 104 126 245

Economic Sciences 116 1190 330 1636

Ethics 23 67 14 104

Geography 13 143 35 191

History 34 175 46 255

Juridical sciences and law 93 839 110 1042

Life sciences 47 655 302 1004

Linguistics 63 281 94 438

Logic 16 29 45 90

Math 123 602 229 954

Medical sciences 247 1625 914 2786

Pedagogy 151 982 237 1370

Philosophy 14 124 17 155

Physics 49 471 234 754

Political science 51 348 77 476

Psychology 14 237 65 316

Sciences of arts and letters 58 280 91 429

Sociology 61 452 141 654

Technological sciences 284 1582 703 2569

Other 7 74 38 119

Total 1843 13042 5373 20258

Sources: Pappiptek-LIPI, “State University R&D Survey,” 2007-2010, Pappiptek-LIPI



In economic terms, the quality of the research taking place and the positive eff ects it has for policy and

growth are two of the key measures of eff ectiveness. So far this PER has looked at the amount of money

being spent, the main ways in which that money is being spent, and the position of some of the organizations

that receive the money. Several comparisons have been made with Indonesia’s neighbors and accepted good

practice elsewhere. The defi ning characteristics of its public R&D system appear to be that funding is low, that

it is highly centralized in terms of both administration and fi nal destination, and that there are structural and

institutional questions over the quality of research and research bodies. However, the question of the fi nal use of

funds and their eff ect still needs to be explored a little further.

The balance of funding for basic and applied research among the public R&D sector research bodies tends

to refl ect their institutional focus. For example, at the BALITBANG (Figure 20), funding for applied research

predominates, as might be expected given that policy development is a core part of their remit. This is also

shown in the breakdown of BALITBANGDA funding, as shown by Figure 21. The LPNK, on the other hand, receive

nearly a quarter of their funding for basic research. Finally, the public universities receive around a quarter of their

funding for basic research and the rest for applied research or experimental development (Figure 23). However,

it should be kept in mind that these breakdowns only have descriptive value, as it is often diffi cult to know what

counts as basic, applied, or experimental development. The OECD has argued that while the distinctions are

worthwhile for statistical purposes, they lack value for policy makers. Furthermore, the OECD argues that it is

more important for public R&D to strike a balance between the demands of research and the needs of enterprise,

and that there are trade-off s over short-term and long-term research; the generation of knowledge versus its

application; and the respective benefi ts of diff erent types of funding.64

64 OECD, Governance of Public Research: Towards Better Practices, OECD, 2003, p100


Figure 20 BALITBANG Funding by Type of Research, 2006

Basic Research

Applied Research

Experimental Development


Figure 22 LPNK Funding by Type of Research, 2006


Figure 23 Public Universities’ Funding by Type of Research, 2009

Source: Pappiptek-LIPI, “State University R&D Survey,” 2007–2010, Pappiptek-LIPI

Basic Research

Applied Research

ExperimentalDevelopment

Basic Research

Applied Research


Figure 21 BALITBANGDA Funding by Type of Research, 2006


Basic Research

Applied Research




Box 1 The Boundaries between Basic Research, Applied Research, and

Experimental Development

It is often diffi cult to defi ne diff erent types of research, although there are authoritative guidelines on how

to do so. The defi nitions and guidelines matter because whether a research project is meant to discover new knowledge about the foundations of the universe, or develop a good or product to make it more economically viable, can help to determine whether it receives funding. The OECD defi nes the three types of R&D as follows:

Basic research: “…experimental or theoretical work undertaken primarily to acquire new knowledge of the under-lying foundations of phenomena and observable facts, without any particular application or use in view.”a

Applied research: “…original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specifi c practical aim or objective.”b

Experimental development: “…systematic work, drawing on knowledge gained from research and practical ex-perience, that is directed to producing new materials, products and devices; to installing new processes, systems and services; or to improving substantially those already produced or installed.” c

The OECD defi nitions appear straightforward and easy for policy makers to use, but there is signifi cant

disagreement among scientists as to which defi nitions are most appropriate. A good example of this is that there does not appear to be a common understanding among scientists of what basic research is and how it diff ers from other types of research. Some defi ne it as research that is unpredictable in what it will fi nd, others that it looks at basic principles of how things work, while further views cite the place of the research or how its results are published as being the defi ning characteristic.d Delineating one type of research from another can also be diffi cult when a research program is ongoing and the same staff are working on diff erent aspects of it, some of which might be considered as basic research and the rest as applied research.e

One, highly debatable, way of delineating the types of research has been to argue that they follow each

other. This is known as the “linear model” and approaches works by saying that basic research will produce new knowledge of fundamental things, which can then be worked on in applied research and, fi nally, developed into a product or service. However, it is not clear that research works like this. For example, it has been claimed that the science of thermodynamics owes more to the steam engine, which came fi rst, than the other way round. In other words, the development of something practical, the steam engine, led to interest in its properties and thus thermodynamics – the opposite sequence of events to that predicted by the linear model of R&D.f

The unpredictable nature of research is ultimately what makes it diffi cult to defi ne into diff erent types and

thus for policy makers to manage. In funding R&D, a government might have several objectives, including the cultural benefi ts of knowledge, the greater welfare that might be gained for some members of a given society, or the fi nancial profi ts that might be produced by having goods and services that are derived from valuable dis-coveries. These are all legitimate aims, but myriad examples from R&D projects around the world suggest that it is diffi cult for governments to demand certain outputs. Instead, it is better if funding agencies require coherent proposals with some aims; for the research to be properly monitored; and for there to be tolerance and fl exibility in funding towards R&D that doesn’t produce the results that were hoped for, diff erent results from those that were expected, or might make a discovery with more time.

Source:

a. OECD, Frascati Manual 2002, OECD, p77

b. OECD, Frascati Manual 2002, OECD, p78

c. OECD, Frascati Manual 2002, OECD, p79

d. Calvert J and Martin BR, “Changing Conceptions of Basic Research?”, Science and Technology Policy Research, September 2001

e. OECD, Frascati Manual 2002, OECD, p79

f. Llewellyn Smith CH, “The Use of Basic Science,” European Organization for Nuclear Research (see http://public.web.cern.ch/public/en/

about/BasicScience1-en.html)


Improving Indonesia’sR&D Public Financingfor the Future

V.

Photo by: Curt Carnemark


Improving Indonesia’s R&D Public Financing for the Future

In order for Indonesia to achieve its high ambitions for R&D over the next decade or so, an increase in

public funding is needed. The Indonesian government has outlined a strategy for the country’s economic

growth and has identifi ed R&D and S&T as important sources of future growth. Given Indonesia’s current

development, this is the right approach. However, currently Indonesia spends very little on R&D either in the

public or private sectors, and is likely falling behind its peers in several ways as a result. The commitment in the

government’s Masterplan to increase GERD to 3 percent by 2025 goes some way to meeting that gap. However,

there are also issues in the public R&D sector that need addressing before an increase in funding can be spent

effi ciently.

There is a need to improve state administration of budgeting and spending, which is aff ecting the

effi cient pursuit of R&D projects. There is a need to give special consideration to R&D projects where fl exibility

and predictability of funding are needed. There are signs that some of the main issues are being addressed,

but the emphasis on a single-year budget cycle is unlikely to be conducive to giving researchers the time and

stability they often need to pursue complex questions with unknown outcomes. This issue is further exacerbated

by the state-wide problem of delayed disbursement of public funds. Second, there is a need to rethink fund

allocation mechanisms in order to improve R&D output and outcome, and leverage private funding.

Currently, Indonesia’s R&D funding is largely characterized as “institutional funding” through the public budget

allocation system. Competitive R&D funding, a mechanism that has been adopted in many countries to incentivize

those R&D activities of the highest quality, is close to non-existent in Indonesia. In addition, the wide range of

organizations that receive a public R&D budget suggests that resources are distributed thinly. More importantly,

the budget allocation lacks innate incentives for better R&D results. A competitive funding pool for R&D can

introduce a new approach to public fi nancing, stimulating and benefi ting Indonesia’s scientifi c communities

at large. In addition, innovative mechanisms can be put in place, such as matching funds to leverage private

fi nancing for R&D.

In order to eff ectively use public R&D funding, a range of institutional reforms at public research entities

should be considered. Institutional autonomy and accountability should be at the center of these reforms.

Most of the R&D agencies and units in Indonesia function as part of the government offi ces and bureaucracies.

For example, the BALITBANG, which receive over three quarters of all government line-item funding, are under

the direct control of their respective ministries. The LPNK are relatively independent but cannot retain revenues

from private sector research contracts. While most of the accountability and autonomy reforms have started in

the leading public universities, regulations and operational guidelines for the new autonomy law need to be

prepared to guide the institutional reforms.

Indonesia also needs to create a richer “enabling environment” for the conduct of R&D. The Indonesian

Government can adopt schemes that encourage fi rms, research bodies and universities to conduct R&D, but

there is also scope for these bodies to conduct their own research independently, especially with regard to

companies and their pursuit of commercialgain through discoveries that they can protect and sell. R&D should

not be dependent on public incentives. In fact, without private initiative it is much harder for any country to make

the discoveries that it might want to.


Improving Indonesia’sR&D Public Financingfor the Future

A good business environment allows and supports private R&D, and Indonesia will need to make

improvements in this areain order to encourage more spending by fi rms. According to the Doing Business

index Indonesia is one of the hardest places in the world in which to start a fi rm: out of 185 economies it ranks

166th. This is a sign that engaging in commerce in Indonesia is harder than it needs to be, thus, in turn, hampering

the appetite for private R&D in the country. Furthermore, on the Doing Business indicator that looks at how easy it

is for a fi rm to get credit, Indonesia also performs poorly, ranking 129th. This is likely to be a signifi cant impediment

to greater R&D output, because in developing their products and services fi rms often need to borrow money

against the future revenues that they expect from their investigations. Without being able to raise the money for

research less of it is likely to be undertaken.

For the most part, a better-educated and higher-skilled workforce also boosts innovation. There is a

broad literature on how increases in human capital can help fi rms to develop more complicated products and

thus encourage more sophistication in an economy.65 However, Indonesia would need to look in detail at how

this can be achieved. At the very least, given that Indonesia needs to start increasing its R&D output, it is likely that

a workforce with more skills would support that aim and, in turn, induce more demand for highly educated staff .

Indonesian universities and public research bodies may also need to become more commercially

orientated. Businesses in countries such as Indonesia tend to draw on research fi ndings from universities

and such like because they often lack the internal capacity to conduct R&D. As such, the more awareness that

publicly-funded researchers have of commercial needs and the potential economic value of their discoveries,

the more that they can stimulate economic growth and further advance knowledge of goods and services that

have a valuable, practical use. There several ways to do this, such as using research agreements between fi rms

and public research bodies, or the employment of commercially aware staff in universities that can identify

discoveries made by university researchers that have the potential to be commercialized.

Strengthening the capacity and elevating the expertise of research staff is simply the foremost necessary

condition for Indonesia’s R&D sector to take off . The data on staffi ng levels and educational background

across the public R&D sector, and especially at the LPNK, showed that a given research body is likely to be bottom-

heavy, that is, to have a large number of staff with bachelor’s degrees and junior positions, and often likely to be

young. The corollary of this is that often only a minority of staff hold doctorates, meaning that research institutes

may only have a small pool of research expertise to draw on. Given the relatively weak postgraduate programs

particularly at doctorate level, Indonesia still needs to rely on broadening international collaborations to train

fi rst-rate researchers, and to gain critical mass in R&D fi elds, including building stronger postgraduate programs

in the long term. Strengthening human capacity has to go hand in hand with institution reforms in order to

adequately incentivize researchers to generate fi rst-rate outcomes and contribute to Indonesia’s development

eff ectively.

Also, despite the emphasis in this report on R&D in the S&T sphere, Indonesia also needs to pay attention

to the funding needs of social science research. Innovations in management, economics and other fi elds can

produce signifi cant effi ciency gains in the ways that fi rms operate, and greater knowledge in many of the social

science fi elds give policy-makers a better chance of producing the outcomes that they are looking for. However,

as with funding for S&T Indonesia would need to make changes to the administration of funds while also encour-

aging improvements in the capacity of researchers and research institutions.

65 Toner P, Workforce Skills and Innovation: An Overview of Major Themes in the Literature, OECD, 2011


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Organization type Organizations Sub-organizations Function

Umbrella organizations

Presidential

administration

Agenda-setting

National Economic Committee Advice to the president

Ministries Ministry of Research and

Technology (KEMENRISTEK)

Agenda-setting

Ministry of Finance Budget-setting

20 other ministries

Agencies National Development

Planning Agency (BAPPENAS)

Responsible for development,

planning, and coordination in

the fi elds of economy manage-

ment, budgeting, information

management, education and

training, and other areas67

National Research Council

(DRN)

31 regional research councils, which are the

Research Council of North Sumatra Province;

the Research Council of West Sumatra Province;

the Riau Provincial Research Council; the Jambi

Provincial Research Council; the Bengkulu Pro-

vincial Research Council; the Lampung Provincial

Research Council; the Research Council of South

Sumatra Province; the Banten Provincial Research

Council; the Research Council of Jakarta Province;

the Research Council of West Java Province; the

Research Council of Central Java Province; the DIY

Provincial Research Council; the Research Council

of East Java Province; the Research Council of East

Nusa Tenggara Province; the Research Council

of West Nusa Tenggara Province; the Research

Council of West Kalimantan Province; the

Research Council of Central Kalimantan Province;

the Research Council of East Kalimantan Province;

the Research Council of South Kalimantan Prov-

ince; the Research Council of the North Sulawesi

Province; the Research Council of the Central

Sulawesi Province; the Research Council of South

Sulawesi Province; the Research Council of the

South East Sulawesi Province; the Gorontalo Pro-

visional Research Council; the Research Council

of Moluccas Province; the Research Council of

Papua Province; the Research Council of the Yog-

yakarta Region; the Research Council of the East

Java Region; the Palangkaraya Urban Research

Council; the Research Council of the Regency of

Kutai Kartanergara; and IPTEKS (Coordinator for

Research, Development and the Application of

Science in Bali).68

Provides advice to the minister

for KEMENRISTEK. Umbrella

body for the 31 regional

research councils69

Annex 1:Annex 1: Organizations Involved in R&D, Divided by Type66

66 Akil HA et al, Study on the Status of Science and Technology Development in Indonesia, LIPI Press, 2011

67 See http://translate.google.co.uk/translate?sl=id&tl=en&js=n&prev=_t&hl=en&ie=UTF-8&layout=2&eotf=1&u=http%3A%2F%2Fwww.bappenas.

go.id%2F&act=url

68 See http://translate.google.co.uk/translate?sl=id&tl=en&js=n&prev=_t&hl=en&ie=UTF-8&layout=2&eotf=1&u=http%3A%2F%2Fwww.drn.go.id%2Findex.php

%3Foption%3Disi%26task%3Dview%26id%3D7%26Itemid%3D2&act=url



References


Agencies Regional Research and

Development Agency

Umbrella body for 42 regional,

and 27 provincial, research

and development agencies70

Provincial Research and Development Agency

of Nangroe Aceh Darussalam


of North Sumatra


of West Sumatra


of Riau


of Jambi

Provincial Research, Development and Statistics

Agency of Bengkulu


of South Sumatra


of Bangka Belitung Island


of Lampung


of Banten


of West Java

Regional Research and Development Agency of

Bandung

Regional Planning Agency of Jakarta

Regional Planning Agency of Yogyakarta


of Central Java


Pati, Central Java


Magelang, Central Java


of East Java


Madiun, East Java


Kabupaten Madiun, East Java


Ponogoro, East Java


Magetan, East Java


Pacitan, East Java


Ngawi, East Java

70 Akil HA etal, Study on the Status of Science and Technology Development in Indonesia, LIPI Press, 2011, p24




Development Agency


Kediri, East Java


Kabupaten Kediri, East Java


Blitar, East Java


Kabupaten Blitar, East Java


Trenggalek, East Java


Tulungagung, East Java


Nganjuk, East Java


Malang, East Java


Kabupaten Malang, East Java


Batu, East Java


Pasuruan, East Java


Kabupaten Pasuruan, East Java


Lumajang, East Java


Bojonegoro, East Java


Tuban, East Java


Lamongan, East Java


Surabay, East Java


Mojokerto, East Java


Kabupaten Mojokerto, East Java


Gresik, East Java


Jombang, East Java


Sidoarjo, East Java


Pamekasan, East Java


Bangkalan, East Java


Sampang, East Java

Annex:Organizations Involved in R&D, Divided by Type




Development Agency


Sumenep, East Java


Jember, East Java


Situbondo, East Java


Bondowoso, East Java


Banyuwangi, East Java


of West Kalimantan


of Central Kalimantan


of East Kalimantan


of South Kalimantan


of South Sulawesi


of South East Sulawesi


of Central Sulawesi


of Gorontalo


of North Sulawesi

Regional Planning Agency of Bali


of NTB


of NTT


of Maluku


of North Maluku


of North Papua

National Innovation

Committee (KIN)71

Advice to the president

Government R&D

organizations

(independent of

ministries, LPNK)

Indonesian Academy of

Sciences (LIPI)

R&D

Agency for the Assessment

and Application of Technology

(BPPA)

R&D

National Institute of

Aeronautics and Space

(LAPAN)

R&D

71 Oey-Gardiner M and Sejahtera IH, “In Search of an Identity for the DRN,” AusAID, August 2011, p19



Government R&D

organizations

(independent of

ministries, LPNK)

Geospatial Information

Agency (BIG)

R&D

National Nuclear Energy of

Indonesia (BATAN)

R&D

National Standardization

Agency of Indonesia (BSN)

R&D

Nuclear Energy Regulatory

Agency of Indonesia

(BAPETEN)

R&D

Eijkman Institute R&D

Center of Meteorology,

Climatology and Geophysics

(BMKG)

R&D

Ministerial

R&D institutes

(BALITBANG)

Ministry of Foreign Aff airs R&D for the ministry

Ministry of Internal Aff airs R&D for the ministry

Ministry of Defense R&D for the ministry

Ministry of Law and Human

Rights

R&D for the ministry

Ministry of Energy and Mineral

Resources


Ministerial

R&D institutes

(BALITBANG)

Ministry of Industry R&D for the ministry

Ministry of Trade R&D for the ministry

Ministry of Agriculture R&D for the ministry

Ministry of Forestry R&D for the ministry

Ministry of Transportation R&D for the ministry

Ministry of Marine Aff airs and

Fisheries


Ministry of Manpower and

Transmigration


Ministry of Public Works R&D for the ministry

Ministry of Health R&D for the ministry

Ministry of National Education R&D for the ministry

Ministry of Social Aff airs R&D for the ministry

Ministry of Religious Aff airs R&D for the ministry

Ministry of Communication

and Informatics


Higher education

Oversight bodies Directorate General of Higher

Education

Responsible for administering

higher education institutions

Public universities 76 non-autonomous

universities and institutes

and seven autonomous

universities

Teaching and some R&D

50 universities with a

dedicated R&D institute, which

are:

Bogor Agricultural University R&D




Public universities Bandung Institute of

Technology

R&D

Sebelas Maret Institute of

Technology, Surabaya

R&D

Airlangga University R&D

Andalas University R&D

Bengkulu University R&D

Brawijaya University R&D

Cenderawasih University R&D

Diponegoro University R&D

Gadjah Mada University R&D

Haluoleo University R&D

Hasanudin University R&D

Indonesia University R&D

Jambi University R&D

Jember University R&D

Jenderal Sudirman University R&D

Khairun University R&D

Lambung Mangkurat

University

R&D

Lampung University R&D

Malikessaleh University R&D

Mataram University R&D

Mulawarman University R&D

Gorontalo University R&D

Jakarta State University R&D

Makasar State University R&D

Malang State University R&D

Manado State University R&D

Medan State University R&D

Padang State University R&D

Papua State University R&D

Semarang State University R&D

Surabaya State University R&D

Yogyakarta State University R&D

Nusa Cendana State University R&D

Padjadjaran University R&D

Palangkaraya University R&D

Pattimura University R&D

Ganesha University of

Education

R&D

Indonesia University of

Education

R&D

Riau University R&D



Public universities Sam Ratulangi University R&D

Sebelas Maret University R&D

Sriwijaya University R&D

Sultan Ageng Tirtayasa

University

R&D

Sumatera Utara University R&D

Syiah Kuala University R&D

Tadulako University R&D

Tanjungpura University R&D

Trunojoyo University R&D

Udayana University R&D

Private universities Over 3,200 higher education

institutes

Teaching and some R&D

Private sector

Non-profi t national

research institutes

Foundation of

Telecommunication and

Informatics, Jakarta

Research into

telecommunications and

informatics

Indonesian Society for Non-

Destructive Testing, Jakarta

Quality testing of materials

using non-destructive

techniques, such as

radiography and ultrasound

Centre for Strategic and

International Studies (CSIS),

Jakarta

Policy research into domestic

and international issues

Institute for Social and

Economic Research, Education,

and Information (LP3ES),

Jakarta

Operation of social and

economic development

programs; policy research

Laboratory of Development

and Environment (Lablink),

Bandung

Research into environmental

and developmental issues

Indonesian Center for

Biodiversity and Biotechnology

(ICBB), Bogor

Research into public

awareness campaigns

on biodiversity and

biotechnology

Non-profi t international

research institutes

Center for International

Forestry Research (CIFOR),

Bogor

Research into forest

management in developing

countries

Bremen Overseas Research

and Development Association

(BORDA), Yogyakarta

Operation of projects on

poverty alleviation, protection

of natural resources and social

issues

Research Triangle Institute

(RTI), Jakarta

Research into both science

and social policies

International Center for Re-

search in Agroforestry (ICRAF),

Bogor

Operation of projects on

deforestation and agro-

forestry

International Rice Research

Institute (IRRI), Bogor

Research into, and projects

on, social and environmental

issues in the production of

rice




Think tanks (examples

include)

Center for Strategic

International Studies72

R&D

Institute for Social and

Economic Research73

R&D

Leimena Institute74 R&D

Habibie Center75 R&D

Company research

centers

Sector Food and beverage

manufacturing

Number of companies with a research center: 6

Wood and cork manufacturing 2

Paper and paper products

manufacturing

3

Publishing, printing, and

media

2

Chemicals and chemical

products manufacturing

21

Rubber and plastics

manufacturing

4

Non-metallic mineral products

manufacturing

4

Basic metals manufacturing 3

Fabricated metals (not

machinery and equipment)

manufacturing

4

Machinery and equipment

manufacturing

7

Electrical machinery and other

manufacturing

3

Radio, television, and other

communication equipment

manufacturing

1

Motor vehicle and trailers

manufacturing

1

Other transport equipment

manufacturing

2

Furniture manufacturing 2

State fi rms Unknown







Research bodies,

groups and consortia

Consortia Indonesian Ganoderma

Consortium

Specializes in preventing the

spread of the ganoderma

disease in the palm industry.

Includes industry representa-

tives, research institutes, and

the Ministry of Agriculture

Indonesian Biotechnology

Consortium

A group of research institutes

working in the fi eld of

biotechnology; Includes

research institutes, universities

and industry representatives

North Sulawesi Mira Bahari

Consortium

A collaboration between

government and non-

government bodies in the

maritime industry

Eastern Indonesia Knowledge

Exchange (BaKTI)76

Jaringan Peneliti Kawasan

Timur Indonesia (JiKTI)77

Operates as a network for

researchers

Indonesian Regional Scientist

Association78

Research areas and

science parks

Science and

technology parks

Center of Science and

Technology (PUSIPTEK-

Serpong)

Currently subject to a

development plan. Consists of

35 research laboratories and

works under the coordination

of LIPI, BPPT, BATAN, and

two laboratories under the

Ministry of Environment

Cibinong Science Center

(CSC-LIPI)

Consists of institutes

conducting biology research

Bogor Botanical Garden (LIPI) Conducts research under the

guidance of LIPI into tropical

plants

Cibodas Botanical Garden Branch of the Bogor Botanical

GardenPurwodadi Botanical Garden

Eka Karya Botanical Garden

Solo Techno Park (STP) Facilitates links between

companies, academics, and

the government for regional

development






Agriculture

technology parks

Agro Techno Park Palembang Involved in the cultivation

and processing of agriculture

technology

Agro Techno Park Bahorok Involved in the cultivation


technology

Agro Techno Park Minahasa

Utara

Involved in the cultivation


technology

Agro Techno Park 50 Kota West

Sumatera



technology

Agro Techno Park Jimbaran

Bali



technology

Educational parks Jababeka Education Park, Kota

Jababeka

Promotes academic and

industry training among

children and young people in

the surrounding area

National parks Forty national parks Conservation areas that act as

places for scientifi c research

Science Museums PUSPA IPTEK 79 Museum for science

79 See http://www.thebiggestsundial.com/

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Indonesia: Research & Development Financing · Published in January 2013 Indonesia: Research &...

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