E

WIPO-IFIA/SEL/02/3
ORIGINAL: English
DATE: December 2002

INTERNATIONAL FEDERATION OF WORLD INTELLECTUAL

INVENTORS’ ASSOCIATIONS PROPERTY ORGANIZATION

WIPO-IFIA INTERNATIONAL SYMPOSIUM ON

THE COMMERCIALIZATION OF INVENTIONS
IN THE GLOBAL MARKET

organized by
the World Intellectual Property Organization (WIPO)
and
the International Federation of Inventors’ Associations (IFIA)
in cooperation with
the Korean Intellectual Property Office (KIPO)
and
the Korea Invention Promotion Association (KIPA)

Seoul, December 4 to 7, 2002

PARTNERING WITH VENTURE CAPITALISTS TO ACHIEVE GROWTH AND DEVELOPMENT

Document prepared by Dr. Finarya Legoh, Assistant to the Deputy Minister for
Science and Technology Diffusion Mechanism, Ministry for Research and Technology of
the Republic of Indonesia, Jakarta
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 S&T FACTS IN INDONESIA (1/3)
1. OECD: Globalization - Links between investment, productivity and
growth: greater investment can increase TPF (total productivity
factor)- R&D and S&T development play a crucial role in economic
growth
2. Government/regional governments should create motivation and
provide stimulation and facilitation, as well as build a conducive
environment to the development of a S&T system; so that the
government must define direction, main priorities, focuses and policies,
which is stated in THE NATIONAL STRATEGIC POLICY OF S&T
DEVELOPMENT
3. Priorities and policies must include strengthening the development of
basic science, strategic S&T, capacity-building of R&D institutions,
strengthening the development of technology-based industry, and
strengthening the capability of technology audit

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 S&T FACTS IN INDONESIA (2/3)
1. Function of Ministry for Research and Technology:
• define policies, direction, main priorities, focuses for
national development of S&T
• Coordinating RDE institutions, including set annual
budget through S&T sector within national budget –
0,54 % from total
• Accelerate linkages between R&D sector and industry –
such as: give incentives for R&D with different targets
accordingly
2. Total IPR risen significantly:
Year Local Abroad
1998 202 1785
1999 320 2808
2000 369 3772
2001 408
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 Strength of Regional Innovation (3/3)

Above
Manado
Average Medan

Around
Average
Padang

Samarinda
Below
Average
Bandung JogjakartaSemarang Surabaya Mataram Makassar

Source : “PERISKOP PROJECT” 2001 - MRT

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POLICY HIERARCHY FOR NATIONAL DEVELOPMENT OF S&T
S&T Nat Syst Law
Long term National GBHN 1999
Guidelines No 18 / 2002
(Regulations for S&T
doers interaction)
Short Term PROPENAS
Guidelines

POLICIES
Jakstra
Ipteknas
2000-2004
STRATEGIES
PUNAS
RISTEK
2001-2005

MECHANISM National
R&D
PROGRAM
Research
TECHNICAL
Agenda
ACTIVITIES

(Milestones, focus
industry)
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 KEY PERFORMANCE INDICATORS
- NATIONAL STRATEGIC POLICY OF
S&T DEVELOPMENT -
1. Increasing S&T products within national and
international levels, including: prototype, intellectual
properties, and national standards
2. Improving the R&D products/results (including
innovations) which are applicable and utilized by the
community within national and international levels
through increasing and strengthening “techno-
industrial cluster and techno-preneurship”
3. Increasing cooperation among R&D institutions and
business sectors
4. Improving the quality and quantity of S&T resources

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 S&T SYSTEM INSTITUTIONS

IPR Inst
Public Institutions Standardization Inst

R&D Inst

Consultant Inst Professional

Organization
Universities Private
Sectors

Environmental Condition
Policy Making Inst Consumer
Inst
Supervision
Inst

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R&D ORIENTATION & MANAGEMENT
DEVELOPMENT FLOW

Focus on research activities in

various scientific fields
Research Capacity
(uncertainty, risk taking)
Innovation Capacity Focus on clusters of technologies and
scientific competencies/ino. impr
Tech Marketing Active search for applications of
developed innovations, comm. gap
Tech Licensing Gain additional value through patents
and licensing
Establish high-value collaborations
Tech Partnering
with business enterprises
Leverage intellectual property through
Venturing
spin-off, equity positions, etc.
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 Identify Develop
Innovation Resource technology transfer
opportunities
Develop prospective
Management strategy
clusters of technology Provide support for
roadmap patenting of
Building up network of innovations
competency resources Identify technology
Strategic Technology transfer targets

Marketing
Build procedure and
legal of technology Support technology
licensing transfer process and
Build relations with negotiations
venture capital to secure Develop and deliver
financing support Technology professional and
Venturing accountable services
Help start-ups to Services
prepare business Maintain customer
concept satisfaction
Support start-ups to
initiate business

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 INCENTIVE PROGRAM FOR SUPPORTING
CAPACITY OF TECHNO-CLUSTER AND
TECHNO-PRENEURSHIP

• NAT. STRATEGIC COMPETITIVE RESEARCH (RUSNAS) -2000

• COOPERATION COMPETITIVE RESEARCH (RUK) -1995
• TECHNOLOGY INSURANCE (ASTEKNO) -2001
• IPR STRENGTHENING INCENTIVES:
- PATENTS, INDUSTRIAL DESIGNS -2000
- IPR CENTRE -2000
- TRADITIONAL KNOWLEDGE PROTECTION -2002
• TECHNOLOGY AND MANAGEMENT STRENGTHENING
(SIPTEKMAN) -2001
• S&T EMPOWERMENT IN INCREASING REGIONAL
INVESTMENTS (PRIDA) -2003
• BUSINESS FORUM -2003
• TECHNOLOGY INFORMATION KIOSK (WARINTEK) -2001
• START-UP CAPITAL -2003

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 OBJECTIVES
COOPERATION
COMPETITIVE RESEARCH
(1/4)

To bridge and accelerate the gap between industry

(technology users) and R&D (technology suppliers)
To increase capability and competitiveness of
industry and investment on R&D activities
To create atmosphere of productivity, value added,
creation and innovation
To increase utilization of local technology by
industry
To minimize risks in R&D investments

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 COLLABORATIVE MODEL
(2/4)
(RUK)

 R&D institution (one/more) should have an agreement with the

industry partner (one industry/more) to implement the program
actively
 Cost sharing between R&D institutions (funded by Government
through MRT) and industry partners
 Industry partners are responsible to continue the activities after
finishing the RUK program (within 2 years), and to develop/apply
technologies produced by RUK
 Royalty produced through IPR within RUK activities should be
shared appropriately including the amount of funding
 Outcomes of post-RUK activities are evaluated by MRT

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 Example 1: BOGIE FOR TRAIN
COLLABORATION OF PRIVATE COMPANIES – UNIVERSITY –
GOV., R&D INSTITUTIONS (3/4)
1996 - 1997
STUDY / RESEARCH
1997 - 1998
DESIGN &
ENGINEERING
1998 - 2000
PROTYPING

DES 2000
RUNNING TESTS
ON ANGGREK TRAIN

Up to now has
reached more than
FEB 2001 - AUGUST 2001 100.000 km and no
complains of the
OPERATIONAL TESTS performances
ON ANGGREK TR.

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 Example 2: DEVELOPMENT OF
BIOFERTILIZER INDUSTRY (4/4)
Collaboration among R&D Inst. (Bogor Plantation),
Semi-private R&D Inst., (Biotecnology Institution) and
Semi-Gov. Owned company (PT Nusantara Plantation
III, V, VII, VIII)
Competitiveness:
• reduce 50% of artificial fertilizer usage
• 20-40% < cost of fertilizers
• environment friendly
Biofertilizer • can be used in all crops
EMAS® • has been patented: No. ID 0 000 206 S.
• has been licensed by PT Bionusa and a
biofertilizer factory has been constructed and
operated in Purwakarta (West Java) – its capacity
5,000 tonnes/year

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 TECHNOLOGY INSURANCE (1/3)

 For new business/business that applys new/local

technology -- face critical period in the up-scaling
phase
To bridge mis-match risks between pilot scale and
commercial scale
Risks:
- Real risks - in general covered by insurance
company
- Speculative risks  not always covered by
insurance company, unless has specific
characteristics
Participants:
inventors, investors (industry esp. SMEs),
insurance company consortium, and MRT as a
facilitator 15
 TECHNOLOGY INSURANCE (2/3)

Prototype/ Technology
Technology Pilot scale ready for com Technolo
producers gy users
(Inventors) (Investors)

High High Risks

budgetting of
investments
Engineering
Phase (Upscaling)

Techn. Insurance
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 TECHNOLOGY INSURANCE (3/3)

The program started in 2001 and was implemented

successfully, and at the moment 3 packages were
given to 3 industries:

 development of Industry for Flower Seedling

(investment of US$61,000)
 development of Type B Gelatin Business as a by-
products from leather industry (investment of
US$103,500)
 development of Activated Bleaching Earth
Technology for Bentonit Refinement Industry
(investment of US$940,000)

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 WARINTEK
(Technology Information Kiosk) (1/3)

– Incentives to increase and to empower S&T

information by improving S&T information
access, developing IT quality and HR
competency for regional development, in order to
support SMEs development, includes:
1. S&T information services
2. Development of local/regional S&T
data-bases and packages
3. Training, HR capacity building in the field of
documentation, information, library, etc.
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 BUSINESS MODEL OF WARINTEK (2/3)
• Partnership between MRT and private providers - MRT’s
role: giving supervision/TA, management training and IT
content starter-package, and making sure that the program is
implemented properly according to terms and conditions;
provider’s role: provide funds for hardware investments,
technical assistance, S&T information development, technical
training (IT platform products and services), internet access
services
• The business model pattern is adopted - to create better
management, quality and standard of services
• This model is quite popular - approximate 2,300 outlets
within community (IT providers, universities, libraries,
regional governments)
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WARINTEK (Warung Informasi Teknologi) (3/3)

( July 2002 = 2,358 kiosks in 30 Provinces; Target 9,000 by end of 2003 )

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 START-UP CAPITAL (1/2)
• Technology commercialization process is in emergence phase, usually
need investment that is difficult to be given by a bank loan, because:
– Innovation products still don’t have reliable markets (innovation
based)
– Investment is needed in the long run
– New company usually doesn’t have track record (not solid business
road map) and minimal business system development (lack of qualified
management to develop business plan), as well as less physical asset
for collateral
• To develop technology-based industry in emergence phase - need early-
stage financing to help new industry:
– To prove concept and develop business plan
– To develop products and to explore potential market
– To make limited production

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 START-UP CAPITAL (2/2)

• Incentives given as seed capital to a new business applying domestic/

new technology
• Collaboration between MRT and PT PNM Techno-Venture
• At the moment very limited business candidates fulfil requirements of
investment through venture capital
• Proposals that not yet reliable for venture capital, will be re-evaluated
for start-up company incentives within 2-3 years - to bridge the gap
towards venture capital financing

 BPPT has a Research Institute for Incubator Technology - at the

moment has several tenants to be nurtured towards start-up companies

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• The Ministry for Research and Technology of the Republic of
Indonesia
• The Indonesian Inventor Association
• Assistant to Deputy Minister for S&T Diffusion Mechanism -
Deputy for S&T Utilization and Socialization
• Building II BPP Teknologi, 6th floor,
Jl. MH. Thamrin No. 8, Jakarta 10340
• Tel: +62-21-316 9166–9, 391 6329
• Fax: +62-21-310 1952, 391 6329

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