BizCLIR

IPR is an umbrella term for various legal entitlements the government awards to individuals or organizations principally over creative works: inventions, literary and artistic works, symbols, names, images, and designs used in commerce. The holders of these legal entitlements may exercise various exclusive rights in relation to the subject matter of IP, including, among others, the right to control, produce, copy, distribute, and license property in question within a country. IP laws and enforcement vary from jurisdiction to jurisdiction. However, there are numerous international instruments to harmonize these laws, the most commonly known of which is the 1994 WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). IP consists of a few main categories, some better known or understood than others: patent, trademark, copyright, industrial design, geographical indicators, and trade secrets. Other, more specific categories, such as protection of plant varieties and integrated circuits, exist as well, often as a subset of the other categories mentioned.

In the modern global economy, the creation of knowledge and its adaptation to product designs and production techniques are increasingly essential for commercial competitiveness and economic growth. Research indicates that higher levels of IP protection have a positive effect on bilateral manufacturing imports into both small and large developing economies. In addition, they help to stimulate technology transfer through investment in production and research facilities, as well as through cross-border technology licensing. Moreover, is has been shown that foreign and international firms are most likely to choose foreign production over export if the attributes of a particular location favor production abroad, including strong IP protections (as well as, for example, lower wages or proximity to international markets). For many developed countries, IP-intensive goods and services constitute a rising share of the income they derive from their presence in foreign and developing markets. In addition, IP protections can lead to improved public safety and health as counterfeit (and therefore unregulated) goods have a difficult time entering the flow of commerce. In sum, stronger IPRs can have a significantly positive effect on total trade.

International policies toward protecting IPRs have seen profound changes over the past two decades. Rules on how to protect patents, copyrights, trademarks, and other forms of IP have become a standard component of international trade agreements, and are being adopted more broadly on a domestic basis. Indonesia has been part of this trend. Since the late 1990s, Indonesia has adopted numerous international and local IP standards to strengthen its domestic legal framework. However, implementation lags behind, and Indonesia ranks poorly in numerous categories related to IPR, including having one of the world’s highest rate of pirated goods in categories such as optical discs, books, and software. This situation has, according to reports, been a cause for lowered FDI in the country. Beyond the establishment of the legal framework, and despite a number of well-intentioned efforts, public and private institutions have not succeeded in significantly improving IP protections or knowledge. Entrenched cultural attitudes that limit the population’s interest or capacity in appreciating the importance of IP protections exacerbate these problems.