Global Business Guide Indonesia

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Services | Indonesia’s Creative Industries

Home to the art form of batik, varying musical and performance styles; Indonesia’s rich cultural diversity and heritage provide fertile ground for a thriving creative industry. Long time cottage industries of art and crafts have the scope to become internationally sought after commodities, illustrated by the sudden growth in Indonesia’s contemporary art market. Such creativity is extending into other industries such as advertising, fashion, music production and publishing contributing a total of 7.2% of GDP and 9% of export value in 2010. The potential of the creative industry is a core priority of the government through the Ministy of Trade, with the target of 8% of GDP for 2011 as well as increasing total export value to 12% by 2015.

The creative industry is highly diverse split broadly over 14 industry categories including advertising, fashion, design, music and software development. Fashion remains the dominant subsector of the creative industry in Indonesia in terms of contribution to GDP at 63.3% for 2010 followed by crafts at 33.2%. The sector is made up of thousands of SMEs at an estimated 6.74% of total companies in Indonesia and is a major source of new entrepreneurism among the country’s youth. Contribution to exports increased by over 35% from 2006 to 2010 (Ministry of Trade) which is impressive considering its relative novelty as a commercial subsector.

The government has been notably active in promoting Indonesia’s creative talents and export potential. Under the Ministry of Trade, 2009 was designated as the ‘Year of the Creative Industry’ with the organisation of exhibitions throughout the country and abroad to showcase local companies and products. Such enthusiasm was also reflected in concrete action under Presidential Instruction No. 6/2009 requiring 24 governmental bodies to formulate programs for developing the sector. For 2011, the trend continues with 50 billion RP allocated by the Ministry of Trade for promotion and overseas skills training. State owned banks are also being directed to lend more to entrepreneurs in the creative fields. The future development of ‘creative cities’ that would create clusters in specific creative subsectors is a further move by the ministry to develop Indonesia’s human resource potential. Such cities are being created alongside the British Arts Council and are expected by 2014 as part of the Creative Economy Blueprint and will be found initially in Bandung, Semarang, Yogyakarta and Bali. They will play a key role in facilitating the transition from being hubs for heavy industry to that of knowledge based economies of scale.

Indonesia’s creative industries hold great potential and government initiatives are building strong foundations for the sector. Immediate strengths lie in traditional areas of production such as batik which is reflected in the fashion industry as well as furniture such as rattan and teak. Yet, the rise of the digital age in areas such as advertising, music and software is seeing a gradual shift in the dominance of subsectors within the industry. The coming years will see greater personalisation in the digital market to meet consumer as well as business needs as internet penetration increases rapidly. The next steps will be to make the creative industry sustainable and will require a substantial shift on the part of the government in intellectual property rights to protect its entrepreneurs.

Global Business Guide Indonesia - 2012

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