As part of the annual US-Indonesia Investment Initiative, co-sponsored by the US Chamber of Commerce and AmCham Indonesia, three of the biggest entertainment companies in the world visited Jakarta last week to meet Indonesian government officials during a two-day mission to discuss the creative economy industry and the potential for investment.
The companies, the Walt Disney Company, Time Warner and 21st Century Fox, were eager to understand the emerging rules of the road for creative industries in Indonesia’s more open economic environment under President Joko Widodo.
“This was an exciting mission and a sign of real enthusiasm on the part of US companies to be part of this vibrant sector in Indonesia,” said Lin Neumann, AmCham’s Managing Director. “But it will take more than just opening the sector to investment – what is needed is greater understanding of the industry and the important role played by US companies in the sector.”
During the mission—held October 6 and 7 – executives from the companies met communications minister Rudiantara, justice minister Yasonna Laoly and Thomas Lembong, the chairman of the Indonesia Investment Coordinating Body (BKPM).
The packed schedule also included talks with senior officials at the Ministry of Trade, the office of Vice President Jusuf Kalla and the Creative Economy Agency (BEKRAF). The visit was rounded out by talks with the private sector through the Indonesian Chamber of Commerce and Industry (Kadin) and other players.
Robert Gilby, Managing Director for Disney in Southeast Asia, noted the benefits for local businesses of foreign investment in the sector. “For every dollar made by our company, there are two to three dollars made by local companies, our partners,” he said.
The companies’ shared their concerns during the visit on a wide range of issues including protection for intellectual property rights (IPR), regulations under the 2009 film law and helping to build a system to welcome foreign companies eager to make movies in Indonesia.
In setting the stage for growth in the sector, Stanley Cheung, chairman of Disney in Greater China, noted how the development of China’s creative economy started with serious IPR protection by the Chinese government, which helped nurture profits for both Chinese and foreign investors.
Cheung said the growth of foreign investment in movie production and distribution in China helped open the door for a now-booming domestic movie industry.
“Creative economy supports Indonesia’s economic growth,” said Dody Edward, Director General of International Trade at the Ministry of Trade. He also noted that the ministry realizes that opening up the sector for foreign investment through the recent relaxation of the negative investment list (DNI) should be followed by real action.
IPR protection
Iman Pambagyo, Director General of Trade Negotiations at the ministry added that IPR protection was a key agenda of the latest Trade and Investment Framework Agreement (TIFA) meeting with the US, and that the government is currently in the process of creating a national action plan for IPR protection.
Rudiantara, the Minister of Communication and Information Technology, also emphasized the importance of IPR Protection, noting that his office has a joint decree on IPR protection.
He also spoke of his office’s work on the migration from analog to digital TV and his hopes for an analog switch off in the near future, while admitting this is a challenge as currently there are still 50 million analog TVs in Indonesia. As a result, he is coordinating with the Ministry of Industry to boost manufacturing of digital TVs.
Responding to a question from one company on the safe harbor policy, which deals with the protection of personal data, Rudiantara explained that the ministry intended to explore the possibilities of Indonesia adopting a safe harbor policy, especially to promote innovation in the digital industry
During a meeting with the Office of the Vice President and KADIN, led by Wijayanto Samirin and Shinta Kamdani from KADIN it was emphasized that IPR should not be seen as a “fight” between foreign and domestic companies. Both parties have the same interests when it comes to IPR protection, said Wijayanto, to ensure their products are protected. He suggested that foreign companies collaborate with local associations to convey IPR issues directly to the government.
The first day of the mission closed with a dinner with the US Embassy. Brian McFeeters, Chargé d’Affaires; Jim Mullinax, Counselor for Economic Affairs; and Rosemary Gallant, Senior Commercial Officer, joined the dinner.
Day Two began with a joint meeting with BEKRAF and Perum Produksi Film Negara (Perum PFN), the state-owned movie production company.
Production and regulation
Ricky Pesik, the deputy chairman of BEKRAF, said his office is now working with the Ministry of Education and Culture on seven implementing regulations for the 2009 film law, some of which have raised concerns among investors.
BEKRAF is also working with the Directorate General of Tax at the Ministry of Finance to prepare incentives for the movie sector. In response to a question on the issue of permits for location shooting, he said BEKRAF is rolling out strategies to work with local governments to support the creation of one-stop-services for permitting and production of movies.
Later in the day, BKPM Chairman Thomas Lembong said he understands the challenges in the creative industry, and asked the companies to be patient as Indonesia changes its ways of doing business. He admitted that despite Indonesia hoping to develop its creative economy, many government officials still don’t fully understand what it takes to boost the industry.
“This is not something that can be changed overnight, but we are going in that direction,” Lembong said, noting that he realizes that if bureaucrats make it hard for the formal sector to grow, there will be more people working in the informal sector.
The mission closed with a wide-ranging discussion with the Ministry of Law and Human Rights. Minister Yasonna Laoly said Indonesia is serious about IPR protection and the government has just signed a memorandum of understanding with the World Intellectual Property Organization (WIPO) to speed up IPR protection. On the Copyright Law, Yasonna said the revised version takes out the rights of law enforcement bodies on IPR infringement to avoid any abuse of power. IPR owners must report to the government if any infringement has been found before the police can take action.
More cooperation
One theme to emerge from the mission was the desire of Indonesian officials to engage more closely with AmCham and its member companies. Rudiantara said he is looking forward to working with AmCham on global practices in the creative digital economy, while KADIN hopes to collaborate on a creative economy document that is workable for both Indonesia and the US.
BEKRAF’s Ricky Pesik said he hoped AmCham would lead the way in helping to create a practical roadmap for foreign movie production. Yasonna said he welcomed collaboration between his ministry and AmCham on IPR and other issues.
“These discussions are just part of a process that began last year on creative issues,” said AmCham’s Neumann. “We expect to have many more follow-up sessions as a result of this visit.”
