Asian Development Bank - Innovate Indonesia: Unlocking Growth Through Technological Transformation

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INNOVATE INDONESIA

UNLOCKING GROWTH THROUGH TECHNOLOGICAL TRANSFORMATION

MARCH 2020

Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO)

2020 Asian Development Bank

6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines

Tel +63 2 8632 4444; Fax +63 2 8636 2444

www.adb.org

Some rights reserved. Published in 2020.

ISBN 978-92-9262-039-4 (print); 978-92-9262-040-0 (electronic); 978-92-9262-041-7 (ebook)

Publication Stock No. SGP200085-2

DOI: http://dx.doi.org/10.22617/SGP200085-2

The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent.

ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. The mention of specific companies or products of manufacturers does not imply that they are endorsed or recommended by ADB in preference to others of a similar nature that are not mentioned.

By making any designation of or reference to a particular territory or geographic area, or by using the term country in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area.

This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) https://creativecommons.org/licenses/by/3.0/igo/. By using the content of this publication, you agree to be bound by the terms of this license. For attribution, translations, adaptations, and permissions, please read the provisions and terms of use at https://www.adb.org/terms-use#openaccess.

This CC license does not apply to non-ADB copyright materials in this publication. If the material is attributed to another source, please contact the copyright owner or publisher of that source for permission to reproduce it. ADB cannot be held liable for any claims that arise as a result of your use of the material.

Please contact if you have questions or comments with respect to content, or if you wish to obtain copyright permission for your intended use that does not fall within these terms, or for permission to use the ADB logo.

Corrigenda to ADB publications may be found at http://www.adb.org/publications/corrigenda.

Notes:

In this publication, $ refers to United States dollars and Rp refers to Indonesia rupiahs, unless otherwise stated.

ADB recognizes China as the Peoples Republic of China, and Korea and South Korea as the Republic of Korea.

Cover design by Mike Cortes.

CONTENTS

TABLES, FIGURES, AND BOXES
FOREWORD by the Minister of Finance, Republic of Indonesia
FOREWORD by the President, Asian Development Bank
ACKNOWLEDGMENTS
ABBREVIATIONS
EXECUTIVE SUMMARY
INTRODUCTION
	The Critical Role of Technological Transformation in Boosting Indonesias Economic Development
1.1	Introduction
1.2	Constraints on Indonesias Growth Potential
1.3	The Role of Technological Transformation in Economic Development
1.4	Potential Impact of New Technologies: International Evidence
1.5	Estimating the Potential Impact of New Technologies on Indonesias Development
1.6	Conclusions
	Technology and Sector-Specific Opportunities and Challenges for Indonesia
2.1	Introduction
2.2	Diversity of Emerging Technologies
2.3	Variety of Technological Applications across Sectors, Value Chains, and Firms
2.4	Technology and Sector-Specific Opportunities and Challenges: Selected Examples
2.5	Conclusions
	Indonesias Position in the Technological Transformation Journey
3.1	Introduction
3.2	Indonesias National Innovation System and Its Performance
3.3	Key Themes in the Policy Agenda
3.4	Analysis of Strengths, Weaknesses, Opportunities, and Threats Affecting Indonesias National Innovation System
3.5	Conclusions
	A Deep Dive into Industry 4.0 in Indonesia
4.1	Introduction
4.2	Relevance of Industry 4.0 for Indonesia
4.3	Industry 4.0 in Indonesia: Insights from a Manufacturing Survey
4.4	Industry 4.0 in Indonesia: Insights from Focus Group Discussions
4.5	Conclusions
	Five Pillars to Support Indonesias Technological Transformation
5.1	Introduction
5.2	Pillar 1: Advanced Innovation Infrastructure and Institutions
5.3	Pillar 2: Awareness of the Business Value of New Technologies
5.4	Pillar 3: Technology Transfer and Technical Support for Firms
5.5	Pillar 4: Low-Cost Plug-and-Play Technology Solutions for Indonesian Firms
5.6	Pillar 5: A Tech-Savvy Workforce
5.7	An Agenda for Future Actions
APPENDIXES
	Overview of Manufacturing in Indonesia
	Findings from Stakeholder Consultations
	Case Studies of International Policy Initiatives

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