Creative economy November 2012

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The broad theme of this paper is on the relations between creative economy and economic diplomacy in the Indonesian context. The paper believes that creative economy is a valuable asset in Indonesian economic diplomacy, besides other more established sectors, inter alia trade, investment, tourism, and services. The contribution of creative economy to the economic growth of Indonesia is evident from its share to the GDP growth, workforce absorption, and export balance. Furthermore with the establishment of the Ministry of Tourism and Creative Economy (being the first of its kind in the world), creative economy is also in synergy with the tourism sector in strengthening and promoting each other.

This paper recognized that in the venture of advancing creative economy, several challenges exist and if not carefully managed, they will shroud and hinder the creative economy to rise to a higher notch. Indeed there has to be a comprehensive approach to optimize the development of creative economy; including the creative ideas, creative technology, creative industries, and human resources. Furthermore, market penetration and access to financing have to be expanded.

Despite the current challenges that are still faced by the creative economy sector, the opportunity is still promising. The potency of the external market has not been fully utilized. In this regard, greater focus and attention for strategies to penetrate these markets, both in the traditional markets as well other countries as the nontraditional market are crucial. In addition to this, creative economy could play a very important role in promoting national tourism, including local culture and wisdom to the international audience.

On the recommendation part, this paper put forward ideas in the form of thirteen strategies to be considered by policy makers, as well as for diplomats posted in Indonesian Embassies/Consulate Generals abroad in doing their function in the economic and/or socio-culture sections, by emphasizing the synergy between the Ministry of Foreign Affairs and the Ministry of Tourism and Creative Economy.

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Creative economy November 2012

  1. 1. STRENGTHENING CREATIVE ECONOMY AS PART OF ECONOMIC DIPLOMACYIN INDONESIAN FOREIGN POLICY By : Danny Rahdiansyah JAKARTA – NOVEMBER 2012
  2. 2. EXECUTIVE SUMMARY The broad theme of this paper is on the relations between creative economy andeconomic diplomacy in the Indonesian context. The paper believes that creative economy isa valuable asset in Indonesian economic diplomacy, besides other more establishedsectors, inter alia trade, investment, tourism, and services. The contribution of creativeeconomy to the economic growth of Indonesia is evident from its share to the GDP growth,workforce absorption, and export balance. Furthermore with the establishment of theMinistry of Tourism and Creative Economy (being the first of its kind in the world), creativeeconomy is also in synergy with the tourism sector in strengthening and promoting eachother. This paper recognized that in the venture of advancing creative economy, severalchallenges exist and if not carefully managed, they will shroud and hinder the creativeeconomy to rise to a higher notch. Indeed there has to be a comprehensive approach tooptimize the development of creative economy; including the creative ideas, creativetechnology, creative industries, and human resources. Furthermore, market penetration andaccess to financing have to be expanded. Despite the current challenges that are still faced by the creative economy sector,the opportunity is still promising. The potency of the external market has not been fullyutilized. In this regard, greater focus and attention for strategies to penetrate these markets,both in the traditional markets as well other countries as the nontraditional market arecrucial. In addition to this, creative economy could play a very important role in promotingnational tourism, including local culture and wisdom to the international audience. On the recommendation part, this paper put forward ideas in the form of thirteenstrategies to be considered by policy makers, as well as for diplomats posted in IndonesianEmbassies/Consulate Generals abroad in doing their function in the economic and/or socio-culture sections, by emphasizing the synergy between the Ministry of Foreign Affairs andthe Ministry of Tourism and Creative Economy. --ooOoo--
  3. 3. CHAPTER ONE: INTRODUCTIONI.I. Background The concept of “Economic Diplomacy” is now interpreted widely. Its borders havebecome more and more blurred, intertwining various fields of economic, political, strategicstudies, as well as disciplines of the international relations and foreign policy. In a simple definition, “Economic Diplomacy” is related to the diplomatic officialactivities that are focused on increasing exports, attracting foreign investment andparticipating in work of the international economic organizations, i.e., the activitiesconcentrated on the acknowledgement of economic interests of the country at theinternational level.1 In other words, we can also say that “Economic diplomacy“ is the process throughwhich countries tackle the outside world, to maximize their national gain in all the fields ofactivity, including trade, investment and other forms of economically beneficial exchanges,where they enjoy comparative advantage; it has bilateral, regional and multilateraldimensions, each of which is important.2 In a more scientific formulation, “Economic Diplomacy” can be defined as the specificarea of modern diplomatic activity concerned with economic issues3, connected with theuse of economic problems as object and means of struggle as well as cooperation in theinternational relations. Economic diplomacy, as well as diplomacy in general, is acomponent of foreign policy4, related to the international economic activity of the country.5 As a main actor in international relations, Indonesia - as a state - also implementseconomic diplomacy to pursue the economic growth and prosperity for its people; by doingthe abovementioned activities, including trade, investment and other forms of economicallybeneficial exchanges in bilateral, regional and multilateral dimensions, as appropriate.Currently there is common understanding that Indonesia has a stronger economicfoundation then before, and is performing well in the international fora.1 Pavol Baranay, “Modern Economic Diplomacy”, Publication of Diplomatic Economic Club, 2009, p.122 Kishan S Rana, “Economic Diplomacy: the Experience of Developing Countries”, http://www.cuts-citee.org/CDS03/pdf/ CDS03-Session1-02.pdf3 Raymond Saner and Lichia Yiu, “International Economic Diplomacy: Mutations in Modern Times”, Netherlands Institute ofInternational Relations ‘Clingendael’, 2003, p.134 The foreign policy defines the objectives and purposes of economic diplomacy which represents the whole set of activities, forms,means and the methods used for realization of foreign policy5 Pavol Baranay,op.cit, p.2
  4. 4. Figure 1. McKinsey Report which wasrecently published in September2012 stated that Indonesia’seconomy has enormous promise.Currently Indonesia is already the16th largest economy in the world,and Indonesia has the potential tobe the 7th biggest economy in theworld by 2030. Source : McKinsey Global Institute, September 2012 In recent years, Indonesia has made enormous strides in its macroeconomicmanagement. Inflation has dropped from double into single digit, and government debt as ashare of GDP is now lower than in the vast majority of advanced economies.6 According to the World Economic Forum’s competitiveness report, in 2012 Indonesiaranked 25th on macroeconomic stability. It is a dramatic improvement from its 2007 rankingof 89th place. Indonesia now ranks ahead of Brazil and India, as well as several ASEANneighbors including Malaysia, Thailand, and the Philippines.7 Furthermore the report also stated that Indonesia has a young population and isquickly urbanizing, powering growth in incomes. Between now and 2030, Indonesia will behome to an estimated 90 million additional consumers with considerable spending power. This growth in Indonesia’s consuming class is stronger than in any economy of theworld apart from China and India. It is a signal to international businesses and investors ofconsiderable new opportunities.8 Economic diplomacy is a broad concept. As has been briefly pointed out previously,it covers a wide range of issues, including ,but not limited to, Trade, Investment, Tourismand Services. These sectors when grouped together are popularly known as TTIS. As abridge to the subsequent parts of this paper, the following part will outline the broad policyof Indonesia in these sectors.6 McKinsey Global Institute, “The Archipelago Economy: Unleashing Indonesia’s Potential”, September 2012, p.17 McKinsey Global Institute, Ibid8 McKinsey Global Institute, Ibid
  5. 5. I.I.1. Trade Based on the document of Strategic Plan of the Ministry of Trade, 2010-2014,9 thebroad direction of Indonesian foreign trade policy is “to increase the competitiveness ofnon-oil-and-gas export products, with the aim to boost the market diversification for exportdestination, as well as to enhance the variety, quality and image of export products”. In this connection, the strategy of promoting Indonesian foreign trade policy for theperiod of 2010-2014 includes the following aspects: (1) To increase high value-addedexport products, (2) To promote export of creative products and services, especiallyproducts and services produced by small and medium enterprises (SMEs), (3) To diversifyexport-destination markets and to reduce dependency from certain countries (traditionalmarkets), (4) To maximize the utilization of various preferential trade schemes andinternational trade cooperation for the benefit of national interest, (5) To promote thedevelopment of border exports, (6) To strengthen institutions for foreign trade. I.I.2. Investment In the field of investment policy, the current directive which serves as the guidelinesof investment in Indonesia is the Presidential Regulation (Perpres) No. 16 year 2012.According to this regulation, the policy direction for investment in Indonesia, includes: 10 (1)Improvement of investment atmosphere, (2) Diversification of investment, (3) Particularfocus on investment in Food, Infrastructure and Energy sectors, (4) Promotion of greeninvestment, (5) Promotion of small and medium enterprises, and cooperatives, (6)Facilitation and incentive for investment, and (7) Promotion of investment. I.I.3. Tourism and Services In the tourism sector, based on the document of Strategic Plan of the Ministry ofTourism and Creative Economy (Kemenparekraf) 2012-2014, the priority of national policyin this field includes: (1) Development of tourism industry, through enhance of investment,(2) Development of competitive tourist destinations in global market, (3) Development ofmarketing and promotion of tourism sector, and (4) Development of human resources intourism sector.119 Strategic Plan of the Ministry of Trade, 2010-2014, p.6710 Presidential Regulation (Perpres) No. 16 year 2012 on General Planning for Investment, Art.211 Strategic Plan of the Ministry of Tourism and Creative Economy (Kemenparekraf) 2012-2014, p. 119
  6. 6. I.II. Main thesis of the paper Besides the abovementioned sectors (i.e. Trade, Investment, Tourism, Services),nowadays, Indonesia has also been advancing another sector as part of its economicdiplomacy at large. This sector is creative economy. This paper believes that the issue of creative economy is very much actual, highlyrelevant, and at the vanguard on the development agenda. In recent years, the creative economy sector has contributed positively to theIndonesian economic growth in general, including to its GDP as well as the absorption ofwork force and balance of trade. In 2010, creative economy contributed approximately Rp.468.1 trillion, or equivalent to 7.29% of national GDP.12 This significant contribution wasachieved through 14 subsectors of creative industry13 namely: Advertisement; Architecture;Artwork and antiques; Handicraft; Design; Fashion (mode); Film, Video and Photography;Interactive games; Music; Performing arts; Printing and publishing; Computer service(information technology) and software; Radio and Television; Research and Development.Besides these 14 subsectors, the Ministry of Tourism and Creative Economy also developsthe 15th sector of creative economy, namely Culinary. In the same year, creative economy also successfully absorbed approximately 8.6million workforce, or equivalent to 7.9% from the total national amount. In comparison, thetourism sector absorbed 7.4% million people, or 6.9% of national work force. In terms ofbalance of trade, in 2010, the value of export was much higher than the value of import.This resulted in high surplus of net trade, amounting to of Rp. 115 trillion. 14 In this connection, this paper also believes that creative economy is also inter-dimensional, where it is very closely linked with other various sectors of economy and needcoordination among its related stakeholders. Furthermore, there is a trend that creativeeconomy absorbs greater number of workforce in Indonesia. In other words, more andmore Indonesian people are becoming more dependent for their livelihoods to the creativeeconomy. Looking at the positive trend, this paper will attempt to dwell on the notion of creativeeconomy as a valuable asset in Indonesian Economic Diplomacy as well as means to furtheradvance the potential of creative economy to the betterment and wellbeing of Indonesian people.12 Ibid, p.xxvii13 Based on the Presidential Directive/Inpres No 6 year 2009 on Development of Creative Economy, 2009-201414 Strategic Plan of the Ministry of Tourism and Creative Economy (Kemenparekraf) 2012-2014, op.cit
  7. 7. I.III. Systematization of this paper This paper will be structured in four chapters, namely: Chapter 1: Introduction;Chapter 2: Theoretical Framework; Chapter 3: Analysis, and Chapter 4: Conclusion andPolicy Recommendation. The systematization of this paper is intended to provide a simplestructure and an easy-to-read message from the beginning until the end. Chapter 1 consists of the background, main thesis of the paper and systematizationof the paper. The background part initially describes the concept of economic diplomacy ingeneral, followed by the elements of economic diplomacy, in the Indonesian context. Themain thesis of the paper outlines the main argument of the paper, which will be elaboratedin the subsequent chapter. The systematization of the paper-part is self-explanatory, whichis to outline the structure of the whole paper from the beginning until the end. Chapter 2 consists of the theoretical framework on creative economy; including thebackground of the creative economy in the global context and some definition on theconcept. Chapter 3 consists of the discussion of the main thesis of the paper, namely thenotion of creative economy as a valuable asset in Indonesian Economic Diplomacy as wellas means to further advance the potential of creative economy to the betterment andwellbeing of Indonesian people. This chapter starts with the explanation of development of creative economy inIndonesia. Then, the chapter continues to discuss the challenges and opportunities. Finally,the chapter will present a set of policy recommendation for further advancing creativeeconomy as part of Indonesian economic diplomacy, with the emphasis of synergy betweenthe Ministry of Foreign Affairs and the Ministry of Tourism and Creative Economy. Chapter 4 consists of the conclusion and recommendation. It will reiterate the mainpoints of the paper as well as the suggested policy recommendation on how to furtheradvance the development of creative economy. --ooOoo--
  8. 8. CHAPTER TWO: THEORETICAL FRAMEWORK CONCEPT OF CREATIVE ECONOMYII.I. Background In the last decade, a novel developmentparadigm is rising that links the economy andculture. It embraces aspects of economic, cultural,technological as well as social aspects ofdevelopment at both the macro and micro levels. Afundamental element of this new paradigm is the factthat creativity, knowledge and access to informationare progressively more recognized as strongengines driving the economic growth and promotingdevelopment in a globalizing world.15 Source : UNCTAD 2008 The concept of creativity is associated with originality, imagination, inspiration,ingenuity and inventiveness. It could be found in all societies and countries – rich or poor,large or small, advanced or developing. In this regard, every society has its stock ofintangible cultural capital articulated by people’s identity and values.16 Furthermore,creativity is now acknowledged as fostering cultural, social as well as economic gains. 17Creativity is also understood as the formulation of new ideas and to the use of these ideasto produce original works of art and cultural products, functional creations, scientificinventions and technological innovations. In this regard, there is an economic aspect tocreativity, apparent in its way to contribute to promote entrepreneurship, encourageinnovation, increase productivity, as well as promote economic growth.18 In light of the above, the twenty-first century has seen a growing understanding of theinterface between creativity, culture and economics, the rationale behind the emerging concept ofthe “creative economy”. The notion of “creative economy” is an evolving concept. It has been gaining groundin the contemporary discourse on economic development. It involves a swing from thetraditional models towards a multidisciplinary model, dealing with the interface between15 Creative Economy Report 2008, “The Challenge of Assessing Creative Economy: toward informed policy making”, UNCTAD, 2008,p.316 Ibid17 European Union, “The Entreprenurial Dimension of the Cultural and Creative Industries”, December 2010, p.818 Creative Economy Report 2008, op.cit
  9. 9. economics, culture and technology. It also centered on the predominance of services andcreative content. Recognizing its multidisciplinary nature, creative economy can offer apractical option as part of a results-oriented development strategy for developing countries.Creative economy also encourages a more effective cross-cutting mechanisms andinnovative inter-ministerial policy action.19 In this connection, it is clear that creative economy has become a topical issue of theinternational economic and development agenda, calling for informed policy responses inboth developed and developing countries.II.II. Definition There is no single definition of “creative economy”. It is a dynamic concept that is stillbeing shaped. Nonetheless, there is a growing convergence in the international communityon the definition. One of the main reference with regard to the definition of creativeeconomy in the international community is the definition provided by the United NationsConference on Trade and Development (UNCTAD). In light of the above, UNCTAD proposed a definition for creative economy asfollows:20  The creative economy is an evolving concept based on creative assets potentially generating economic growth and development;  It can foster income generation, job creation and export earnings while promoting social inclusion, cultural diversity and human development;  It embraces economic, cultural and social aspects interacting with technology, intellectual property and tourism objectives;  It is a set of knowledge-based economic activities with a development dimension and cross-cutting linkages at macro and micro levels to the overall economy;  It is a feasible development option calling for innovative multidisciplinary policy responses and inter-ministerial action;  At the heart of the creative economy are the creative industries. In the academic field, the term “creative economy” first appeared in the year 2001, ina book entitled “The Creative Economy: How People Make Money from Ideas”, by aprominent scholar, John Howkins.21 In his book, Howkins argued that:19 UNCTAD Statement at the Second Meeting of the Ministers of Culture of the African, Caribbean and Pacific (ACP)Group of States, Santo Domingo, Dominican Republic, October 200620 Definition by the UNCTAD Creative Economy and Industries Programme, 200521 Marta-Cristina Suciu, “The Creative Economy”, Academy of Economic Studies, Bucharest. http://lexetscientia.univnt.ro/ufiles/17.%20Romania.pdf, diakses 15 Oktober 2012
  10. 10. “creativity is not new and neither is economics, but what is new is the nature and the extent of the relationship between them and how they combine to create extraordinary value and wealth”. However, Howkins’ use of the term “creative economy” is broad, covering fifteencreative industries extending from arts to the wider fields of science and technology. ForHowkins, there are two kinds of creativity: the kind that relates to people’s fulfillment asindividuals and the kind that generates a product. The first one is a universal characteristicof humanity and is found in all societies and cultures. The second is stronger in industrialsocieties, which put a higher value on novelty, on science and technological innovation, andon intellectual property rights (IPRs). In Indonesia, the definition of “Ekonomi Kreatif” was initially provided by the Ministryof Trade in 2008, as follows:22 “Era ekonomi baru yang mengintensifkan informasi dan kreativitas dengan mengandalkan ide dan stock of knowledge dari sumber daya manusianya sebagai faktor produksi utama dalam kegiatan ekonominya” Furthermore, after the reorganization of the Ministry of Culture and Tourism(Kementerian Budaya dan Pariwisata) to become the Ministry of Tourism and CreativeEconomy (Kementerian Pariwisata dan Ekonomi Kreatif/ Kemenparekraf) in 2011, thedefinition of “Ekonomi Kreatif” was further elaborated as follows:23 “Ekonomi Kreatif merupakan sebuah era baru ekonomi setelah ekonomi pertanian, ekonomi industri, dan ekonomi informasi, yang mengintensifkan informasi dan kreativitas dengan mengandalkan ide dan pengetahuan dari sumber daya manusia sebagai faktor produksi utama dalam kegiatan ekonominya. Ekonomi kreatif ini digerakkan oleh industri kreatif yang didefinisikan sebagai industri yang berasal dari pemanfaatan kreativitas, keterampilan serta bakat individu untuk menciptakan kesejahteraan serta lapangan pekerjaan melalui penciptaan dan pemanfaatan daya kreasi dan daya cipta individu.” Kemenparekraf’s definition on creative economy also included the concept of“creative industries”. In this connection, “creative industries” can be defined as the cycles ofcreation, production and distribution of goods and services that use creativity andintellectual capital as primary inputs. They comprise a set of knowledge-based activities22 “Pengembangan Ekonomi Kreatif Indonesia 2025: Rencana Pengembangan Ekonomi Kreatif Indonesia 2009-2015” DepartemenPerdagangan Republik Indonesia, 2008, p.123 Strategic Plan of the Ministry of Tourism and Creative Economy (Kemenparekraf) 2012-2014, p.5
  11. 11. that produce tangible goods and intangible intellectual or artistic services with creativecontent, economic value and market objectives.24 Creative industries constitute a vast and heterogeneous field dealing with theinterplay of various creative activities ranging from traditional arts and crafts, publishing,music, and visual and performing arts to more technology-intensive and services-orientedgroups of activities such as film, television and radio broadcasting, new media and design.The creative sector has a flexible and modular market structure that ranges fromindependent artists and small-business enterprises at one extreme to some of the world’slargest conglomerates at the other.25 Nowadays in the most advanced countries, the creative industries are emerging as astrategic choice for rejuvenating economic growth, employment and social cohesion. Theso-called “creative cities” are proliferating in Europe and North America, boosting theeconomy of urban centers through cultural and social developments, offering attractivejobs, particularly to young people. The turnover of the European creative industriesamounted to 654 billion Euros in 2003, growing 12.3 percent faster than the overalleconomy of the European Union and employing over 5.6 million people.26 From the explanation above, it is clear that the concept of “creative economy” hasdynamically evolved over the last decade. It has become an important means of focusingattention on the role of creativity as a drive in contemporary economic life, exemplifying theproposition that economic and cultural development are not separate or unrelatedphenomena. Instead, the two are part of a bigger process of sustainable development,where economic and cultural growth and take place hand in hand and reinforce each other. In the context of developing countries, the notion of the creative economy attractattention to the rich creative assets and cultural resources that exists in them. The creativeindustries that use the cultural resources and creative assets could do a lot to boost theirprosperity, including by enabling countries to tell their own stories and to project their ownunique cultural identities to themselves and to the world (something commonly referred toas national branding), providing themselves with a source of economic growth,employment creation and increased participation in the global economy, as well aspromoting social inclusion, cultural diversity and human development. --ooOoo—24 Creative Economy Report 2008, “The Challenge of Assessing Creative Economy: toward informed policy making”, UNCTAD, 2008,p.1625 Creative Economy Report 2008, Ibid, p.426 See Economy of Culture in Europe, study prepared for the European Commission by KEA, European Affairs, Brussels, 2006
  12. 12. CHAPTER THREE: ANALYSISIII.I. Creative Economy as part of Economic Diplomacy in Indonesia III.I.1. Development of creative economy sector in Indonesia Different from tourism sector, creative economy is relatively a new sector which hasbeen elevated by the Government of Indonesia to be managed at a ministerial level. Prior tothe establishment of the Kemenparekraf, the creative economy sector had not beenproperly coordinated in a ministerial level. Instead it was scattered in several ministries,among others Ministry of Trade, Ministry of Industry, Ministry of Cooperatives and SMEs, aswell as Ministry of Culture and Tourism.Figure 2.Source :www.indonesiakreatif.net The elevation of creative economy to a ministerial level by the Government ofIndonesia by the establishment of the Ministry of Tourism and Creative Economy on 21December 2011 was a significant achievement for Indonesia. Firstly, it has put Indonesia tobecome the first country in the world which combined the sectors of tourism and creativeeconomy in one ministry. And secondly, it has put Indonesia to become the second countryin the world, only after the United Kingdom, which elevated the sector of creative economyto a ministerial level.
  13. 13. The elevation could also be seen as the political commitment from the top nationalleadership to develop the creative economy as a source of competitive advantage and softpower that not only will contribute to growth, job creation and poverty alleviation, but also asa source of national pride and national branding.27 Furthermore, the combination of tourism and creative economy could create asynergy which reinforce each other. Creative economy is believed to be able to increasethe quality of tourism as well as to become promotion media for tourism. On the other hand,the advancement of tourism destination could be followed by the promotion and increase ofdemands for creative products. In this connection, the elevation of creative economy to aministerial level was also based on the recognition that creative economy has a number ofvery strategic values for Indonesia, namely:  Contribution to economic growth GDP, employment, exports;  Contribution to the creation of positive business atmosphere  Impact on business and employment in other sectors;  Contribution to the promotion of national identity and image Impact on tourism, creation of national icons and strengthening cultural heritage and traditional values;  Contribution to the use of renewable resources  Based on knowledge and ideas, sustainability approach;  Contribution to the promotion of innovation  Creativity that creates value added; and  Contribution to the promotion of positive social impacts  Quality of life, equitable development, increased social tolerance. To visualize this line of thinking, the following figure describes the strategic functionof creative economy for Indonesia. Figure 3. Source : Kemenparekraf27 Mari Pangestu, “Indonesia and the ‘fourth wave’ of creative economy”, Strategic Review, April-June 2012/Vol.2 No.2, p.20
  14. 14. Minister Mari Elka Pangestu stated in her article which was published in the StrategicReview, that creative economy is the “fourth wave”; after agriculture economy (first wave),industry economy (second wave), and information economy (third wave). The notion of thefourth wave is based on the main input used in the output, contributing to economic valueadded.28 The first wave uses land and labor to produce agriculture products initially for feedingits own population and eventually to export. The second wave uses more skilled labor,capital, production technology and innovation to produce industrial goods. The third wave isno longer just capital, land and labor, but also knowledge and information to produce goodsand services. The fourth wave on the other hand, utilizes creativity and ideas to turn thatknowledge and information to higher value added or new forms. In other words, creativeeconomy intensifies information and creativity, based on idea and knowledge from humanresources as the main production factor in their economic activities. Given the continuedchallenges of job creation and poverty alleviation in Indonesia, as well as its rich culturaland creative heritage, Minister Mari Pangestu believed that the fourth wave of Indonesianeconomy is ready to be unleashed.29 In advancing the creative economy sector, the Government of Indonesia, withKemenparekraf as its leading sector, has been developing 15 subsectors of creativeindustry, as follows:30NO SECTOR NO SECTOR1. Advertisement 9. Music2. Architecture 10. Performing arts3. Artwork and antiques 11. Printing and publishing4. Handicraft 12. Computer service (information technology) and software5. Design 13. Radio and Television6. Fashion (mode) 14. Research and Development; and7. Film, Video and Photography 15 Culinary8. Interactive games28 Mari Pangestu, Ibid, p.2129 Ibid30 Based on the Presidential Directive/Inpres No 6 year 2009
  15. 15. Figure 4.Source :www.indonesiakreatif.net Based on the Strategic Plan of Kemenparekraf 2012-2014, the development ofcreative economy in Indonesia will be geared towards strengthening the domestic marketas well as penetrating external markets, focusing on development of five sectors, namely:(1) Development of resources and technology; (2) Development of creative industry; (3)Increase of financing access to the practitioner of creative economy; (4) Increase of marketaccess to the practitioner of creative economy; and (5) Strengthening of institutions relatedto creative economy. To support the implementation the creative economy development in Indonesia, theMinistry of Tourism and Creative Economy has equipped itself with an organizationalstructure which cover the entire area of creative economy. Figure 5. Based on the current structure, thereare three departments in the Ministry, whichare closely related to the effort of advancingthe creative economy, namely: (1)Directorate General for arts and cultural-based creative economy; (2) DirectorateGeneral for media, design and science-basedcreative economy; and (3) Tourism andcreative economy resource developmentagency. Source : Kemenparekraf
  16. 16. III.I.2. Relationship between creative economy and tourism sector In Indonesia, as well as in many other countries, the sectors of creative economyand tourism are very closely related. Some ideas of this matter have been put forwardbriefly in the earlier part of this paper. To add to this line of thinking, this paper will elaboratefurther by emphasizing three elements. First, creative economy could strengthen the qualityof tourism; second, creative economy could create new tourism attraction; and third,creative economy and tourism could promote each other. In a more detailed account, the connection between the creative economy andtourism sectors could be elaborated as follows: Strengthening the quality of tourism. It is generally understood that quality of tourismis often measured by spending and duration of stay of tourist. In this connection, creativeeconomy is believed to be able to increase the spending of tourist as well as able to extendthe duration of stay of tourist, by the existence of creative products and services assouvenirs and entertainment in various tourist destinations. Further to the above, creative products such as handicraft, fashion and artworkscould serve as handy and memorable souvenirs for tourists. On the other hand, productsand services of culinary, music, performing arts, film, video, photography, design, andarchitecture could serve as means of entertainment in the tourist destinations. Creation of tourism attraction. Regions or districts who have unique and specificproducts and services of creative economy can be developed Into viable touristdestinations. In this line of thinking, creative traditional and contemporary events arepackaged in an attractive way to draw the attention of domestic and foreign tourists. Until now there have been various creative events in Indonesia that have becometourism attraction both for domestic as well as foreign tourists, namely among others:Jember Carnival, Solo Batik Carnival, Java Jazz, Lake Sentani Festival. For instance, theSolo Batik Carnival is annual event, started from 2008 which attracts many tourists, bothdomestic tourists as well as foreign tourists. In 2012, the Solo Batik Carnival has entered its5th year, with the theme: Metamorphoses.31 Promotion. Creative economy and tourism sectors could promote each other. In onehand, products and services of creative economy could be utilized as promotion materialsfor tourist destinations. On the other hand, tourism attraction could become inspiration forpractitioners to creative unique and creative products.31 http://solobatikcarnival.com/about-us/
  17. 17. As an example, a movie which took place in a certain tourist destination, couldattract more tourists to come to that place; either to see the movie set, or to experience thesimilar experience. A recent Julia Roberts’ movie “Eat Pray and Love” in part was shot in Bali. Thismovie is an example how a creative product (movie) could promote certain touristdestination. On the other hands, contents of tourism promotion often use the creativeproducts and services from certain tourist destinations, such as : furniture from Jepara,handicrafts from Tasikmalaya, songket from Palembang, et cetera. The following figure visualizes the close relation between creative economy andtourism sectors. Figure 6. CONNECTION BETWEEN TOURISM AND CREATIVE ECONOMY Strengthening the quality of Tourism Creation of TOURISM Tourism attraction CREATIVE ECONOMY Promotion Promotion III.I.3. Contribution to Indonesian economic growth Creative economy sector so far has contributed significantly to Indonesian economicgrowth in general. This fact has been demonstrated by numbers from the last several years.In the period of 2002-2010, the creative economy sector contributed approximately 7.74%to the total Indonesian GDP, and contributed approximately 7.76% to the national workforceabsorption.32 This contribution is regarded as quite high in comparison with several economieswho have developed creative economy as an important and strategic industry, namelyUnited States (7.75% contribution to GDP - 2001), England (7.9% - 2001), Australia (3.3% -2000), New Zealand (3.1% - 2001), Taiwan (5.9% - 2001), and Singapore (2.8% - 2000).32 Elitua H. Simarmata ; Bastian Simarmata, “Bagaimana Posisi Strategis Industri Kreatif dalam Perekonomian Nasional?” 19November 2011, http://www.indonesiakreatif.net/index.php/id/news/read/bagaimana-posisi-strategis-industri-kreatif-dalam-perekonomian-nasional
  18. 18. Furthermore, in terms of workforce absorption, creative economy in the U.Sabsorbed 5.9% in 2001; England 4.6% in 1998; Australia 3.8% in 2000; New Zealand 3.6%in 2001; Taiwan 3.6% in 2001; and Singapore 3.4% in 2000. 33 Compared to the other national economic sectors, the contribution of creativeeconomy to the GDP growth in Indonesia is noteworthy. Creative economy sector placed innumber 6 out of 10 economic sectors with contribution of 7,74%, below the followingsectors: (1) manufacturing industry, (2) Agriculture, animal production, forestry, and fishery,(3) Trade, hotel and restaurant, (4) Mining and extraction, and (5) Social services. In connection to the above, the contribution of added value from the creativeeconomy is higher than the contribution of the following sectors: (1) Construction (7.71%),(2) Finance, real estate and company service (7.04%), (3) Transportation andcommunication (6.27%), and (4) Electricity, gas, and clean water (0.89%). In addition to this, in terms of workforce absorption, creative economy is in fifthposition out of ten national economic sectors.34 The following graph visualizes the contribution of creative economy (in the graph ismentioned as creative industry) to the national GDP, in the period of 2002-2010. Graph 1.Source : http://www.indonesiakreatif.net/index.php/id/news/read/bagaimana-posisi-strategis-industri-kreatif-dalam-perekonomian-nasional33 Ibid34 Ibid
  19. 19. In a more detailed account, the contribution of creative economy in terms of addedvalue to GDP, workforce absorption, number of companies, and international trade isshown in the following table:35 Table.1.Source : http://www.indonesiakreatif.net/index.php/id/news/read/bagaimana-posisi-strategis-industri-kreatif-dalam-perekonomian-nasional From other literatures, we can also see data on the development of creativeeconomy in the period of 2006-2010.36 This document stated that the average outputgrowth of creative economy in this period amounted to 3.1%. This number is relatively low,because in 2008, the world economy was affected by the global financial crisis, and it alsoimpacted the growth of the creative economy sector in Indonesia. In the subsequent years, the creative economy sector grows more positively andamounted to 7.28%. This achievement was higher than the growth in other sectors, such asfinance, real estate and company service (6.53%); transport and communication (6.5%);and electricity, gas and clean water (0.85%).37 In terms of workforce absorption, during this period, the creative economy absorbed7.75 million out of 108 million total national work force. Furthermore, it also created new job35 Ibid36 Elitua Simarmata dan Bastian Simarmata, “Peran Ekonomi Kreatif Secara Nasional”, 05 Oktober 2011,http://www.indonesiakreatif.net/index.php/id/news/read/peran-ekonomi-kreatif-secara-nasional37 Ibid
  20. 20. opportunities, amounted to average of 3 million companies out of total 47 millioncompanies. 38 In terms of international trade, creative economy sector accounted net income ofapproximately Rp. 97.3 billion, where export value amounted to Rp. 108.5 billion, in contrastto import value which only amounted to Rp. 11.2 billion. This numbers illustrate thesignificant role of creative economy in enhancing domestic revenues. The following table visualizes several indicators and performance of creativeeconomy in Indonesia, in the period of 2006-2010. Table.2. Source : http://www.indonesiakreatif.net/index.php/id/news/read/peran-ekonomi-kreatif-secara-nasional Graph 2. Furthermore, from all sectors ofcreative economy, during the period of2006-2010, several subsectors aremore dominant against the othersubsectors. In this regard, the fashionsector contributed 43.2% from thetotal contribution of creativeeconomy to Indonesian GDP,handicraft contributed 25.12%,followed by advertisement (7.18%),design (6.06%), music (5.30%), andprinting and publishing (4.86%).39 Source : http://www.indonesiakreatif.net/index.php/id/news/read/ peran-ekonomi-kreatif-secara-nasional38 Ibid39 Ibid
  21. 21. In the future, the creative economy sector is expected to raise its share in thenational economic growth by increasing its contribution to national GDP of 7.29% in 2012,and further increased to 7.5% in 2014. In terms of workforce absorption, creative economysector is expected to increase its contribution to 8.25% and further to 8.48% of total nationalworkforce in 2014. The raise of creative economy contribution to the national GDP as well as to theabsorption of workforce is expected through the creation of more creative entrepreneurs orpractitioners of creative economy, which will be supported by among others, greaterpenetration of international market and enhanced partnership with communities of creativeeconomy in other countries. Furthermore, the raise of creative economy is expected to materialize in line with theenhancement of public’s appreciation to the practitioners as well as the products of creativeeconomy. The enhancement of public’s appreciation is reflected from the increase ofconsumption of creative products and services by the people, as well as the creation ofpublic space for the society. In this regard, the Government of Indonesia through theKemenparekraf has targeted the increase of consumption of creative products to grow10.89% in 2014, while the public’s appreciation is expected to rise by 5% every year from2013 to 2014. In addition, it is expected that by 2014, 12 creative zones will be created. The efforts to achieve target of national development in the creative economy sectorin 2012-2014 are supported by building the capacity of the human resources anddeveloping the professionalism of the creative economy practitioners through variousmeans, including certification programmes and standard of competence for creativeeconomy professions, creation of innovation through relevant studies, as well as promotingof organizational performance. In the long run until the year 2025, based on the National Long Term DevelopmentPlan 2005-2025,40 the development of creative economy is expected to contribute further invarious aspects, including, but not limited to, the following:  Contribution of creative economy is expected to reach 9-11% of the national GDP, provided that the national economic growth reach 9-11% annually.  Contribution of creative economy export is expected to reach 12-13% of the total national export, provided that the total export growth reach 10-12% annually.  Contribution of workforce in the creative economy is expected to reach 9-11% of total national workforce absorption.40 “Pengembangan Ekonomi Kreatif Indonesia 2025: Rencana Pengembangan Ekonomi Kreatif Indonesia 2009-2015” DepartemenPerdagangan Republik Indonesia, 2008, p.39
  22. 22.  The number of companies working in creative economy sectors increase three- fourfold compared to the number of companies in 2006.  Increase the number of registration of patents, copyrights, brands, and industrial designs.  Increase the number of creative economy zones in Indonesia.III.II. Challenges and Opportunities III.II.1. Challenges In the implementation and development of creative economy, several challenges stillexist and need to be overcome by all related stakeholders in Indonesia. In various occasions, Minister Mari Elka Pangestu stated a number of challenges forcreative economy development in Indonesia. In one event, Minister Mari Elka Pangestustated that the main challenges for creative economy in Indonesia includes (1) the lowpurchasing power parity of Indonesian society, (2) financing and capital, (3) quality ofhuman resources.41 In another instance, she pinpointed several challenges in the creativeeconomy sector, including (1) the condition of export-import, (2) protection of intellectualproperty rights, (3) taxation issues, (4) public appreciation and (5) quality of humanresources.42 In a more recent occasion, Minister Mari Elka Pangestu mentioned that there areseven issues facing the development of creative economy in Indonesia, namely (1) policyregulations, (2) the lack of research for technology development and creative product, (3)human resources development, (4) infrastructure, (5) marketing, (6) institution and publicappreciation, (7) access to financing.43 Besides the statements by Minister Mari on different occasion as cited above,through literature research, there are other sources44 45 46 47 48 that also indicate variouschallenges of the creative economy in Indonesia. Based on the above-mentioned41 “Tiga Masalah Ganjal Perkembangan Ekonomi Kreatif”, Neraca 7 Desember 2011, http://www.neraca.co.id/2011/12/07/tiga-masalah-ganjal-perkembangan-ekonomi-kreatif/42 Ekonomi Kreatif Masih Diliputi Banyak Masalah, http://www.wartaukm.com/ekonomi-kreatif-masih-diliputi-banyak-masalah43 “Tujuh Sumber Masalah Ekonomi Kreatif”, Ekonomi dan Bisnis 22 Juni 2012, http://www.infobanknews.com/2012/06/nih-tujuh-sumber-masalah-ekonomi-kreatif/44 Industri Kreatif di Indonesia Masih Ada Hambatan, Suara Pembaruan 30 Juli 2012,http://www.suarapembaruan.com/ekonomidanbisnis/industri-kreatif-di-indonesia-masih-ada-hambatan/2288045 5 Kendala Pengembangan Ekonomi Kreatif di RI, 19 November 2011,http://economy.okezone.com/read/2011/11/18/320/531386/5-kendala-pengembangan-ekonomi-kreatif-di-ri46 SDM Kendala Industri Kreatif, 31 July 2012, http://citraindonesia.com/sdm-kendala-industri-kreatif/47 Challenges and Opportunities in the Creative Industry, http://www.gbgindonesia.com/en/services/article/2011/challenges_and_opportunities_in_the_creative_industry.php48 See Basuki Antariksa, “Konsep Ekonomi Kreatif: Peluang dan Tantangan dalam Pembangunan di Indonesia,http://www.budpar.go.id/userfiles/file/Art_17-2-Konsep%20Ekonomi%20Kreatif.pdf
  23. 23. literatures, the main challenges of creative economy in Indonesia can be grouped into thefollowing elements: 1. The development of the creative industry is not yet optimal. This situation is mainly caused by several factors, including the lack of the attractiveness of the creative industry; the lack of mature business model for creative industry; as well as the high risk perceived by some practitioners. 2. The development of creative ideas, creative technology as well as software content is not yet optimal. This situation is mainly caused by the lack of adequate internet infrastructure; the lack of standardized exhibition/ performance buildings; the high cost of production hardware and software; the lack of content research; and the lack of content archiving. 3. The lack of market expansion and penetration for creative products and services, both domestically and in external markets. This situation is mainly caused by the lack of public appreciation on local creativity; the lack of connectivity of national distribution channel; the limitation of foreign markets; the high cost of promotional activities; and the lack of monitoring on royalty, license, and copyrights. 4. The lack of strong creative industries. This situation is mainly caused by the absence of legal umbrella which guide the governance of each creative industry subsectors; the lack of conducive business atmosphere; low appreciation to and rampant piracy of creative products. 5. The lack of financial access to the practitioners of creative economy. This situation is mainly caused because the characteristics of creative economy and the current existing financial schemes; fluctuation of cash flow; and intangible assets. 6. The development of natural and human resources in creative economy is not yet optimal. This situation is mainly caused by the scarcity of resources, the lack of resources research, the gap between education and industry, and the lack of adequate standardization and certification. III.II.2. Opportunities Apart from the challenges in the creative economy sector, which has beenelaborated above, on the other hand, there is also an ample opportunity for the creativeeconomy to further blossom.
  24. 24. Based on Renstra Kemenparekraf, in 2008, the global market opportunity forcreative products and services amounted to US$ 588.635 million. In the same year, thetotal Indonesian export of creative economy reached US$ 11.872 million. This numbersignifies that Indonesia currently only controls a tiny share (2.02%) of the creative productsand creative services in the global market. In this connection, there is still a very big spacefor Indonesia to expand its production and maximize the potency of the global creativeeconomy market. Furthermore, ten world biggest importers of creative products and services are notvery different from ten biggest export destinations of Indonesian creative products andservices. The United States is currently the biggest importer of creative products andservices, and at the same time it is also the biggest export destination of Indonesiancreative products and services. 49 Other main export destinations are Japan, England, andGermany. These countries are also lucrative markets for Indonesian products. Table 3. Source : Kemenparekraf As an example of the potency of Indonesian creative products, local Indonesianbrands are gaining international recognition such as Bagteria, a boutique bag producerusing traditional craft and embroidery techniques. The brand reflects the potential forinternational success of other Indonesian designers many of which are already makingheadway in areas such as Muslim fashion and batik.50 In the media content sub-sector, opportunities for investment and partnershipremains large. Indonesian consumers represent a large, youthful and highly adaptivemarket. Currently Indonesia is Facebook’s second largest market and Twitter’s third largestworldwide. The success of smart phones such as Blackberry which counted 3 million users49 Strategic Plan of the Ministry of Tourism and Creative Economy (Kemenparekraf) 2012-2014, p.6350 Challenges and Opportunities in the Creative Industry,http://www.gbgindonesia.com/en/services/article/2011/challenges_and_opportunities_in_the_creative_industry.php
  25. 25. at the end of 2010 is giving rise to third party applications, tailored advertising solutions andsoftware. 51 Furthermore, the film industry in Indonesia witnesses a revival, beginning from 2005 to2008, when there were 87 Indonesian films produced, in contrast to only 6 films produces inthe period of 2001-2002. There is potential for far more within the industry and the countrypossesses many talented film makers. The recent opening up of the sector to foreign investment will provide the room forgreater collaboration in this promising industry and support for burgeoning producers.Previously closed to foreign investors, foreign ownership is now permitted up to 49%.52III.III. Policy Recommendation Based on the Presidential Directive (Inpres) No 6 year 2009 on the Development ofCreative Economy, the President of the Republic of Indonesia had instructed 23 Ministers,4 Heads of Non-Ministerial Bodies (LPNK), all Governors, all Mayors and all Regents, tosupport the policy of Development of Creative Economy, 2009 – 2015. This policy entailsthe development of economic activities based on creativity, skills, and individual gifts, togenerate creations which have economic values and have positive impact to the welfareand prosperity of the Indonesian people. Furthermore, the President also instructed the Ministers, Heads of institutions,Governors, Mayors, and Regents to develop and implement action plan regardingdevelopment of creative economy in their respective ministries/institutions, in line with theirduties and functions. To coordinate all the relevant ministries and institutions, the President establishedthe Coordinating Team of Development of the Creative Economy. The CoordinatingMinister for Social Welfare sits as the Chair of the team, with the Coordinating Minister forEconomic Affairs as the Vice Chair. Minister of Trade serves as the 1 st Executive Officer(Pelaksana Harian) and Minister of Industry serves as the 2nd Executive Officer. Themembers of the team consist of the other relevant Ministers, Head of institutions,Governors, Mayors, and Regents. One important thing to note is that the Ministry of Foreign Affairs (Kemlu) is includedin this team. The rationale is quite obvious. The endeavor to develop national creativeeconomy has a strong external dimension. Creative economy of Indonesia has to be51 Ibid52 Ibid
  26. 26. promoted abroad, has to be able to penetrate foreign markets, as well as gain recognitionfrom international community. In this regard, all Indonesian missions abroad will play a verycritical role, as spearhead to promote Indonesian creative economy in their respectiveaccredited countries. Furthermore, it will be imperative for all Indonesian missions abroad toconduct close collaboration with Kemlu, Kemenparekraf and other related institutions infostering this undertaking. In light of the above, and also in line with the spirit of the Presidential Directive No 6year 2009, it is no doubt that a right mix of public policies and strategic choices areessential for harnessing the socio-economic potential of the creative economy fordevelopment gains.53 This paper argues that the synergy between Kemlu and all Indonesian Missionsabroad with Kemenparekraf as well as other related institutions, should be strengthenedand further intensified to address the challenges, maximize the opportunities, as well as tofurther advance the creative economy sector in Indonesia. The close cooperation betweenall these stakeholders will be crucial in many dimensions. This paper proposes that the collaboration among these stakeholders should be gearedtowards the achievement of five objectives. And to achieve these objectives, there are thirteenstrategies to be implemented. The objectives to be achieved are as follows: 1. Creative people with creative mindset 2. Competitive industry in domestic as well as foreign markets, with the active role of local entrepreneurs 3. Enabling technology which support the development of affordable creative products for the Indonesian people 4. Effective utilization of domestic resources for creative economy 5. Increase of appreciation and consumption of local creative products by domestic society as well international community. The following part will elaborate the strategies related to the achievement of theseobjectives. Furthermore, it will also present some examples/ best practices that has beenconducted in the past which support the argument of the relevance and the feasibility of theproposed strategies. Nonetheless, to maintain brevity of this paper, the detailed account ofeach example will be put in the Annex part. The following part will only touch upon the issuein a glimpse and provide simple reference to the issue.53 Creative Economy Report 2010, “Creative Economy: A Feasible Development Option”, UNCTAD, 2010, p.xxiii
  27. 27. III.III. 1. First Objective : Creative people with creative mindset To achieve the first objective, there are four strategies to be taken into account,namely: 1. To provide support to talented creative economy practitioners to obtain proper and adequate opportunities in the international fora. This strategy is very relevant to Indonesian missions abroad because one of the main duties of economic officer or the social culture officer at an Indonesian Embassy is to facilitate and promote Indonesian people or companies in the accredited country. 2. To develop and expand database and success story of creative products and practitioners of creative economy from Indonesia. An example of a success story of creative products and practitioners of creative economy from Indonesia is about the “Gold award for outstanding exhibit untuk Booth Indonesia pada Hong Kong Flower Show 2012. The information was displayed in the website of Kemlu on 11 April 2012.54 Detailed information on this success story appears in Annex 1 of this paper. 3. To facilitate the growth of networks and to promote cooperation between practitioners of creative economy from Indonesia and their relevant counterparts in the accredited country. As has been presented in the previous section, many other countries are also promoting creative economy. In this regard, Indonesian missions abroad should engage the community of practitioners in their accredited countries and bridge the community with practitioners from Indonesia. An example of a success story of facilitation of networks and promotion of cooperation between practitioners of creative economy from Indonesia and their relevant counterparts through the event of film festival in the accredited country is about “Four Indonesian films partake in the first Asian Film Festival in Brazil”. The information was displayed in the website of Kemlu on 10 August 2012.55 Detailed information on this success story appears in Annex 2 of this paper.54 http://www.kemlu.go.id/hongkong/Pages/Embassies.aspx?IDP=40&l=id55 http://www.kemlu.go.id/Pages/Achievement.aspx?IDP=77&l=en
  28. 28. 4. To promote and facilitate practitioners of creative economy from abroad coming to Indonesia, to share experience and knowledge as well as to develop business network in creative economy sector. An example of a success story of a facilitation of practitioners of creative economy from abroad coming to Indonesia is about a photography exhibition entitled "Archiving the Exotic and Unfamiliar". The information on this issue was displayed in the website of Indonesia Kreatif on 12 September 2012, 56 www.indonesiakreatif.net. Detailed information on this success story appears in Annex 3 of this paper. III.III. 2. Second Objective : Competitive industry in domestic as well as foreign markets, with the active role of local entrepreneurs To achieve the second objective, there are four strategies to be taken into account,as follows. 1. To broaden the distribution scope of creative products, both in the domestic market as well as the foreign market. There are still many untapped potentials in accredited countries. Indonesian missions abroad play important role in mapping these potentials in the respective countries, and promote greater distribution of creative products from Indonesia. An example of a success story of broadening the distribution scope of creative products in the foreign market is about a new Indonesian Restaurant which was opened in Hong Kong.57 The information was displayed in the website of Kemlu on 12 January 2012, www.kemlu.go.id/successstories. Detailed information on this success story appears in Annex 4 of this paper. 2. To amplify market appreciation (both domestic as well as foreign) towards creative products. Indonesian missions abroad should continue to encourage practitioners of creative economy to participate in various prestigious events in the accredited countries.56 http://www.indonesiakreatif.net/index.php/en/news/read/archiving-the-exotic-and-unfamiliar-attempts-to-archive-the-space-and-time57 http://www.kemlu.go.id/Pages/Achievement.aspx?IDP=31&l=en
  29. 29. An example of a success story of the endeavor to amplify market appreciation towards Indonesia creative products, in this case photography, is about the “Three Indonesian Photographers Win International Photo Competition in Dubai”.58 The information was displayed in the website of Kemlu on 29 March 2012, www.kemlu.go.id/ successstories. Detailed information on this success story appears in Annex 5 of this paper. 3. To perform marketing research of creative products, both domestically as well as at the accredited countries. Marketing research is very important to identify the opportunity for Indonesian creative products and services to be exported to the accredited countries. 4. To conduct promotion of creative products at the accredited countries. An example of promotion of creative products at the accredited countries is about “Indonesia awarded in Asia Festival in Oklahoma”. 59 The information was displayed in the website of Kemlu on 21 May 2012, www.kemlu.go.id/ successstories. Detailed information on this success story appears in Annex 6 of this paper. III.III. 3. Third Objective : Enabling technology which support the development of affordable creative products for the Indonesian people To achieve the third objective, the strategy to be taken into account is by fosteringmutual partnership with relevant institutions in accredited countries which have advanceknowledge and technology in creative economy. This strategy is most relevant the moredeveloped countries where technology in the creative economy sector is more advanced.Nonetheless it doesn’t mean that missions in developing countries could not implement thisstrategy, because the creative economy grows very fast worldwide. An example of fostering mutual partnership with accredited countries which haveadvance knowledge and technology in creative economy, in this case Japan, is about“Wisata dan Produk Kreatif RI makin menarik bagi Jepang”. 60 The information wasdisplayed in the main page of the website of Kemlu at 24 September 2012,www.kemlu.go.id/. Detailed information on this success story appears in Annex 7 of thispaper.58 http://www.kemlu.go.id/Pages/Achievement.aspx?IDP=43&l=en59 http://www.kemlu.go.id/Pages/Achievement.aspx?IDP=59&l=en60 http://www.kemlu.go.id/ptri/Pages/News.aspx?IDP=5830&l=id
  30. 30. III.III. 4. Fourth Objective : Effective utilization of domestic resources for creative economy To achieve the fourth objective, the strategy to be taken into account is to fostermutual partnership with accredited countries which have advance processing technology. Indonesian Embassies and Consulate Generals in accredited countries which havedeveloped creative economy as well as have advance processing technology, need to bemore active to provide mapping of the relevant institutions and communities, with the viewto forge mutual partnership for the benefit of practitioners of creative economy fromIndonesia. III.III. 5. Fifth Objective : Increase of appreciation and consumption of local creative products by domestic society as well international community Last but not least, to achieve the fifth objective, there are three strategies to be takeninto account, namely: 1. To develop concept, strategy and implementation of campaign and promotion on Indonesia. There is a necessity for all related ministries/institutions in Indonesia to sit together, agreeing on one vision, one direction, and one approach for promotion on Indonesia, including on the creative economy. This coordinated policy will serve as guidance for all Indonesian missions abroad in their promotion activities. 2. To develop cultural diplomacy as part of the important function of the Indonesian mission abroad. 3. To promote creative products with high economic value and distinctive Indonesian characteristics to the international market. This strategy is very closely related with Indonesian diplomacy in the issue of Intellectual Property Rights (IPR), whether it is in multilateral, regional as well as bilateral fora. Indonesian diplomacy in IPR is crucial to protect the practitioners of creative economy from piracy. In this connection, strong Indonesian diplomacy in IPR could further promote the appreciation from international community towards Indonesia’s creative products and services. --ooOoo--
  31. 31. CHAPTER FOUR: CONCLUSION AND RECOMMENDATIONIV.I. Conclusion Throughout the chapters, this paper has attempted to deliberate on the notion ofcreative economy as a valuable asset in Indonesian economic diplomacy. From the analysis, this paper reiterates it conviction that creative economy has asignificant contribution to the economic diplomacy. This can be seen by its contribution to thenational GDP, absorption of workforce as well as the contribution to the foreign trade ofIndonesia, whereby the amount of export is much higher than import. Furthermore it is also evident that thecreative economy sector is on the rising trend.From many instances, including from the examplesprovided, Indonesian creative economy has gainedgreater recognition from international community.Cooperation and partnership with external partiesalso enhances the capacity of the practitioners ofcreative economy as well as increasing the qualityof Indonesian creative products and services. This paper recognized that in the venture ofadvancing creative economy, several challengesexist and if not carefully managed, they will shroudand hinder the creative economy to rise to a highernotch. Indeed there has to be a comprehensiveapproach to optimize the development of creative economy; including the creative ideas,creative technology, creative industries, and human resources. Furthermore, marketpenetration and access to financing have to be expanded. Despite the current challenges that are still faced by the creative economy sector,the opportunity is still promising. The potency of the external market has not been fullyutilized. Currently Indonesia still occupy a tiny share (2.02%) of the total global market ofthe creative economy. In this regard, Indonesian economic diplomacy has to give greaterfocus and attention for strategies to penetrate these markets, both in the traditional marketslike the US, Japan, England, and Germany, as well other countries as the nontraditionalmarket for Indonesian creative products and services. In addition to this, creative economy
  32. 32. could play a very important role in promoting national tourism, including local culture andwisdom to the international audience.IV.II. Recommendation In its latter part, this paper has also endeavored to propose policy recommendation,geared towards further advancing the potential of creative economy for the betterment andprosperity of Indonesian people at large. In great details, this paper has put forward ideas in the form of 13 strategies to beconsidered by policy makers, as well as for diplomats posted in Indonesian Embassies/ConsulateGenerals abroad in doing their function in the economic and/or socio-culture sections. In a nutshell, those policy recommendations are structured in such a fashion toobtain the five following objectives, namely: 1. Creative people with creative mindset 2. Competitive industry in domestic as well as foreign markets, with the active role of local entrepreneurs 3. Enabling technology which support the development of affordable creative products for the Indonesian people 4. Effective utilization of domestic resources for creative economy 5. Increase of appreciation and consumption of local creative products by domestic society as well international community. The following matrix summarizes the policy recommendations/strategies in theprevious chapter for development of creative economy in Indonesia, by emphasizing thesynergy between the Ministry of Foreign Affairs and the Ministry of Tourism and CreativeEconomy.
  33. 33. Matrix of Objective and Strategy For Development of Creative Economy in Indonesia Objective Strategy Institutions1. Creative people with 1. To provide support to talented  Ministry of Foreign Affairs creative mindset creative economy practitioners to  Ministry of Tourism and obtain proper and adequate Creative Economy opportunities in the international  Other related ministries/ fora. institutions 2. To develop and expand database  Ministry of Foreign Affairs and success story of creative  Ministry of Tourism and products and practitioners of Creative Economy creative economy from Indonesia  Other related ministries/ institutions 3. To facilitate the growth of  Ministry of Foreign Affairs networks and to promote  Ministry of Tourism and cooperation between Creative Economy practitioners of creative economy  Other related ministries/ from Indonesia and their relevant institutions counterparts in the accredited country 4. To promote and facilitate  Ministry of Foreign Affairs practitioners of creative economy  Ministry of Tourism and from abroad coming to Creative Economy Indonesia, to share experience  Other related ministries/ and knowledge as well as to institutions develop business network in creative economy sector2. Competitive industry 5. To broaden the distribution  Ministry of Foreign Affairs in domestic as well as scope of creative products, both  Ministry of Tourism and foreign markets, with in the domestic market as well as Creative Economy the active role of local the foreign market  Other related ministries/ entrepreneurs institutions 6. To amplify market appreciation  Ministry of Foreign Affairs (both domestic as well as  Ministry of Tourism and foreign) towards creative Creative Economy products  Other related ministries/ institutions 7. To perform marketing research  Ministry of Foreign Affairs of creative products, both  Ministry of Tourism and domestically as well as at the Creative Economy accredited countries  Other related ministries/ institutions 8. To conduct promotion of creative  Ministry of Foreign Affairs products at the accredited  Ministry of Tourism and countries Creative Economy  Other related ministries/ institutions
  34. 34. 3. Enabling technology 9. Fostering mutual partnership  Ministry of Foreign Affairs which support the with relevant institutions in  Ministry of Tourism and development of accredited countries which have Creative Economy affordable creative advance knowledge and  Other related ministries/ products for the technology in creative economy institutions Indonesian people4. Effective utilization of 10. To foster mutual partnership  Ministry of Foreign Affairs domestic resources for with accredited countries which  Ministry of Tourism and creative economy have advance processing Creative Economy technology  Other related ministries/ institutions5. Increase of 11. To develop concept, strategy  Ministry of Foreign Affairs appreciation and and implementation of  Ministry of Tourism and consumption of local campaign and promotion on Creative Economy creative products by Indonesia  Other related ministries/ domestic society as institutions well international 12. To develop cultural diplomacy  Ministry of Foreign Affairs community as part of the important function  Ministry of Tourism and of the Indonesian mission Creative Economy abroad  Other related ministries/ institutions 13. To promote creative products  Ministry of Foreign Affairs with high economic value and  Ministry of Tourism and distinctive Indonesian Creative Economy characteristics to the  Other related ministries/ international market institutions --ooOoo--
  35. 35. ANNEXAnnex 1.GOLD AWARD FOR OUTSTANDING EXHIBIT UNTUK BOOTH INDONESIA PADA HONG KONG FLOWER SHOW 2012 Rabu, 11 April 2012Untuk keempat kalinya, KJRI Hong Kong telah berpartisipasi dalam Hong Kong Flower Show yang diselenggarakan pada 16-25Maret 2012 oleh Hong Kong Leisure and Cultural Services Department (LCSD) di Victoria Park, Hong Kong, sebagai salah satuupaya untuk mengenalkan lebih luas kekayaan flora Indonesia serta seni tradisional Indonesia. Pada tahun 2012 ini, selain bekerjasama dengan Taman Bunga Nusantara sebagai penata booth Indonesia, keikutsertaan KJRI HongKong juga dimeriahkan oleh tim kesenian Indonesia dari Kementerian Pariwisata dan Ekonomi Kreatif RI yang akan tampil secarakhusus pada center stage Hong Kong Flower Show pada 25 Maret 2012 mendatang. Booth Indonesia juga dimeriahkan oleh Abang dan None Jakarta mengenakan baju pengantin Palembang yang sangat diminati olehpengunjung Flower Show. Kemeriahan booth Indonesia yang pada tahun ini menampilkan tema Sumatera Selatan kembali mendapatapresiasi dari para pengunjung pameran serta kembali meraih penghargaan “Gold Award for Outstanding Exhibit”. Ini adalah penghargaan yang ketiga kali untuk booth Indonesia setelah pada tahun 2010 dan 2012 lalu yang menampilkan tema Baliserta Jawa, Indonesia mendapat penghargaan yang sama atas keindahan penataan booth dan bunga Indonesia serta minat besarpengunjung pada booth Indonesia. Tidak kurang dari Madam Selina Tsang, istri Chief Executive of Hong Kong, mengagumi boothIndonesia dengan berkunjung khusus ke dalam booth yang kemudian dianugerahi kain songket Palembang oleh Konsul Jenderal RI diHong Kong. KJRI Hong Kong memanfaatkan HKFS 2012 ini sebagai salah satu kesempatan untuk mempromosikan Indonesia secara utuhsekaligus untuk semakin menggugah minat masyarakat Hong Kong berkunjung ke Indonesia, baik untuk tujuan wisata maupun bisnis. Lebih jauh lagi, even ini diharapakan dapat semakin menumbuhkan animo pengusaha lokal dalam menjalin kerja sama denganIndonesia dalam bidang bunga dan tanaman hias. KJRI Hong Kong akan selalu mendukung seluruh even di wilayah Hong Kong SARdan Macau SAR yang dapat digunakan sebagai ajang untuk mempromosikan seni budaya serta kekayaan alam Indonesia. (sumber:KJRI Hongkong)Source : http://www.kemlu.go.id/hongkong/Pages/Embassies.aspx?IDP=40&l=id
  36. 36. Annex.2.A. Success StoryFOUR INDONESIAN FILMS PARTAKE IN THE FIRST ASIAN FILM FESTIVAL IN BRAZIL Friday, 10 August 2012Lovely Man (Director Teddy Soeriaatmadja),Mata Tertutup (The Blindfold - Director GarinNugroho), The Mirror NeverLies (DirectorKamila Andini) and The Perfect House(Director Affandi Abdul Rachman) took part in the Traffic 1ª Festival de Cinema e CulturaAsiatica de Sao Paulo held from 2 to 9 August2012 in Sao Paulo, Brazil.The four Indonesian films were featured alongwith 28 other films from China, the Philippines, Hong Kong, Japan, SouthKorea,Malaysia, Taiwan, and Thailand in this first large-scale Asian Film Festival in Brazil.The organizer of the Traffic Festival invited John Badalu, a filmmaker and a film producer from Indonesia, to act as the curator of thefestival. John Badalu took such opportunity to talk about the development of cinema in Southeast Asia.The Asian Film Festival holds significance for the world of Asian cinema and culture, including Indonesia, as it provides a bridge thatconnects it to the gate of Latin America.Source : http://www.kemlu.go.id/Pages/Achievement.aspx?IDP=77&l=en
  37. 37. Annex.3.ARCHIVING THE EXOTIC AND UNFAMILIAR: ATTEMPTS TO ARCHIVE THE SPACE AND TIME September 12, 2012 | Views (123)Text & photo: Jaya Liem | Editor: Intan LarasatiFrom May to August 2012, Thomas Breakwell, a photography artist born in Melbourne, Australia, attended the residency programorganized by Ruang MES 56 in Yogyakarta. During his residency Thomas created a visual archive that would be exhibited at the endof his residency period in a solo photography exhibition entitled "Archiving the Exotic and Unfamiliar". Thomas is an artist who hasan idea about man and the surrounding nature. He works with several issues on how man is connected to the surrounding environmentwhere he lives, such as the urban area and its entire content thats visually related with natural landscape, human portraits and everycomponent existing on earth.During his residency period in Yogyakarta, Thomas adopted the archaeologic method in his works. He collected things, fromglassware, vintages, coins, stones, trunks and roots of plants, to leaves, which later were documented in photographs. Also hedocumented empty and abandoned lands within the city that looks like jungles.Yet, different from what archeologists do, Thomas does not try to further investigate and gives explanations on the things he collectedand documented. For Thomas, there are objects or artifacts that have the capacity to represent activities referring to mans daily lives.Meanwhile, objects related to natural lives, the organic world were living in, can indicate a reality that they exist now, or existedthen.Thomas understanding on the objects is following his imagination that came because of his curiosity and fascination when he sawnew things, the exotic experience of being a foreigner. Thomas related the objects with his personal imagination to create a fictionalidea. He tries to reveal what are we as human connected with these surrounding objects and what are we as human being representedby these artifacts.On the other hand, the objects or images of the objects are Thomas visual experience that was gained from direct observation whenhe was traveling around Yogyakarta, thus its involvement isnt merely as a memory images, but also as an imaginative narrationconnected to stories behind those objects. The collected objects became some sort of documentation to refresh our memories on storieshappening within a time and space of our daily moves. Documents are tools of narration related to memory, and narration is a way torecognize and remember documentation, which are closely interconnected.From these two understandings Thomas then experimented with our ways of understanding this objects based on our knowledge andexperience, on how the objects are being used and represented. The objects then was made into a visual archive by adapting thearchaeologic methods that later developed freely following Thomas imagination in entering a new dialogue, of the past and thepresent. With photography as a way of seeing, the depiction of the culture of the past and historical story is not only when the photo istaken, but also when the photo is observed in a different time, in a stratum of time.The concept of a limited stratum of time is related to a space formed from various human experience, with objective and non-measurable objective qualitative substance. The qualitative dimension of space is length, width and height of an existed and movingobjects. The existence of an object can be determined from the qualitative structure formed from duration to discover the process anddevelopment, the progress of its existence in the past, present and future.In photography an object should be able to be defined with space and time where the photograph is taken. But Thomas imaginationdeveloping within the visual archive of collected objects, Thomas relation with the objects as they were found and documented,causing the relation of space and time within his photos had different understanding later on. Therefore in the exhibition Thomasfinally no longer talks about the objects, but only presenting them and invite the audience to reflect on his found objects.Archiving The Exotic and Unfamiliar exhibition, held from 11 to 31 August 2012, was the first program of Ruang MES 56 in their newlocation, Minggiran no. 61A, Yogyakarta. I his opening speech, Anang Saptoto as Ruang MES 56 program manager stated that RuangMES 56 residency program is not only for foreign photography artists. All photography artists can apply for this program bycontacting MES 56 at http://mes56.com.Source:http://www.indonesiakreatif.net/index.php/en/news/read/archiving-the-exotic-and-unfamiliar-attempts-to-archive-the-space-and-time
  38. 38. Annex.4.B. Success StoryMORE CULINARY VARIETY, A NEW INDONESIAN RESTAURANT OPENED IN HONG KONG Thursday, 12 January 2012Another addition to the already rich variety of cuisine in Hong Kong, the ‘So Bali Bali’ a new restaurant serving uniquely Indonesiandishes was officially open for business. The Indonesian Consulate General Teguh Wardoyo expressed his hope that So Bali Bali wouldtake part in promoting the rich diversity of Indonesian cuisine in Hong Kong. “Hopefully, this restaurant would also play a part inintroducing Indonesia as a whole”, added Teguh.The Consulate General also said that the restaurant that is located at 31 Elgin Street Soho will also function as an art gallery where anumber of paintings by Indonesian artists will be put on display and offered for sale.The region of Soho is one of the elite areas in Hong Kong and it is famous as a culinary center serving foods from various countries. Itis also a well visited tourist destination for domestic and foreign tourist alike.The restaurant is owned by Mary So, a relative of a long time Hong Kong resident who just happen to be an Indonesian. Her love ofeverything Indonesian had encouraged her to open the restaurant. “This restaurant looks different compared to other restaurants inthe area because it is decorated with unique Balinese ornaments”, explained Mary. However, the restaurant serves more thanBalinese cuisine; it also serves numerous dishes from other parts of Indonesia.The restaurant’s official opening was celebrated with a performance of traditional dance from West Java and Bali by a dancer fromSanggar Budaya, an art and cultural group under the auspices of the Indonesian Consulate General in Hong Kong.A number of APPIH members, representatives of Indonesian State Owned Companies, staff from the Consulate General and ordinaryHong Kong residents were present at the event and it was also covered by Indonesian media in Hong Kong.According to the Consulate General’s record, currently there are several large and small Indonesian restaurants in Hong Kong(source: Indonesian Consulate General, Hong Kong. Ed/Yo2k).Source: http://www.kemlu.go.id/Pages/Achievement.aspx?IDP=31&l=en
  39. 39. Annex.5.SUCCESS STORYTHREE INDONESIAN PHOTOGRAPHERS WIN INTERNATIONAL PHOTO COMPETITION IN DUBAI Thursday, 29 March 2012A total of three Indonesian photographers managed to come out as the first and second winner among the 16 winners of internationalphoto contest of Dubai’s Crown Prince Award, "Hamdan International Photography Award (HIPA)". Winners Categories are dividedinto "Love of the Earth", "The General Pivot", and "Dubai". A total of 4046 participants from 99 countries, including 19 Arabcountries, take part in this photo contest.Trophy ceremony is done directly by Sheikh Hamdan Bin Mohammad Bin Rashid AlMaktoum, Dubai Crown Prince, who was accompanied by Sheikh Majid Bin Mohammad Bin Rashid Al Maktoum, Chairman of "TheDubai Culture and Arts Authority” on the Armani Hotel Dubai on March 27, 2012. Also present as guests of honor are ConsulGeneral of Dubai, Mansyur Pangeran, as well as high officials of the Dubai government, and other invitees.The three photographers are Zulkifli Qincay Zhu, residents of Kerinci, Jambi, which is currently a student at the Bung HattaUniversity, Padang, West Sumatra, his photograph is selected as the first winner in the category of "The General Pivot"; ArfiantoAmri, a resident of Indonesia who have lived for 4 years in Dubai, becoming the first winner of the category of "Dubai"; and ArminDay, part-time photographer who also works at an NGO in Yogyakarta, became the second winner in the category of "Love of theEarth".The main winner (Grand Prize) for the entire category is won by the French photographer who got the trophy and cash prize ofU.S. $ 100,000, -. Meanwhile, the first winner of the category "The General Pivot" received the prize money of U.S. $ 14,000, - and thecategory of "Dubai" of U.S. $ 16,000, -. While the second winner of categories of "Love of the Earth" earned U.S. $ 16,000, -. Theother winners are from Bangladesh, France, Italy, Argentina, Germany and Kuwait, in addition to the special winner of UAE citizensfor each category.Responding to the victory of Indonesias three photographers, Consul General Mansyur congratulated the winners directly after thetrophy ceremony, while expressing his admiration for their photographs and pride because Indonesia can be selected as the winnerfrom the thousands of participants from around the world who followed this photo contest.Consul General Mansyur added that thework of Indonesia photographers chosen as the winner in this contest gave international recognition for quality and value creation ofIndonesian photographers who are not inferior to other photographers from around the world. Furthermore, the Consul GeneralMansyur stated that participation in this contest and the success to be the winner have also helped promote Indonesia at theinternational level. Whats more the work shown describes the natural conditions and social realities of everyday life of the people ofIndonesia which are considered to be very interesting as an object of photography. Through photography which is a universalcommunication medium, each image is presented to bring the message and meaning of its own, while also to be enjoyed visually.The work of Zhu Qincay Zulkifli managed to record the expressive moment of cow race, depicting a citizen of Indonesia spurring twocows in the middle of a muddy field. Meanwhile, Amri Arfianto work that captures the architectural object of Terminal 3 Arrivals ofDubai International Airport, managed to capture the recesses and details of buildings and reforms it into works of stunningphotographs.While Armin Day captures the activities of a farmer who was farming with mountains as background and a light mist which envelopedhim. The point of view makes the work of Armin Hari very mindblowing. At first the HIPA committee received about 7,000 photos fromaround the world which are sent via HIPA internet site. But then they selected about 6,000 photos and after going through the judgingprocess for 30 days, the jury chose the 16 winners. The committee bring all the winners to Dubai. The overall cost of transportationfrom home country to Dubai and accommodation for the winner in Dubai is also borne by the committee.This photography contest hadthe full backing of the Dubai government and is an initiative that is integrated with the "Dubai Strategic Mission 2015" to developculture and art in Dubai and made the city of Dubai as a hub of culture and arts in the region and internationally. This new activity,undertaken for the first time, will be held regularly every year. The jury of this competition are the chosen people in the field ofinternational art and photography.The photographs of the winners and also the diverse work of Sheikh Hamdan Bin Mohammad Bin Rashid Al Maktoum at the DubaiMall is also on display for 1 week until March 31, 2012 and has been put in a book with the title "Love of the Earth", which is printedin a language English and Arabic. (Source: Consulate General in Dubai)Source: http://www.kemlu.go.id/Pages/Achievement.aspx?IDP=43&l=en
  40. 40. Annex.6.C. Success StoryINDONESIA AWARDED IN ASIA FESTIVAL IN OKLAHOMA Monday, 21 May 2012Two art performances by the Indonesian contingent, the solo violin performed by Nathaniel Parker and the Topeng Cirebonan danceby Sarah Shutts, earn a special award during the Asian Festival 2012 which is held last Saturday (19/05) in Oklahoma City, UnitedStates.Nathaniel performed a classical number from West Java titled PanonHideung. Both performances are deemed highly-rated andimpressive by the audience.The Asian Festival, with participants from China, the Philippines, India, Iran, Japan, Vietnam, and Taiwan, is organized by theIndonesian-American Association of Oklahoma (IAAO), the Asia Society of Oklahoma (ASO) and the Indonesian Consulate Generaloffice (KJRI) Houston.Indonesia’s Consulate General, Al BusyraBasnur, in his opening speech, expresses, among others, that the Asian Festival possesses astrategic meaning in the effort to improve the relationship and friendship between Asia and the US, especially with the people inOklahoma.“By performing the Asian art, culture, and exhibitions, the American people, especially from Oklahoma and its surrounding, will getto know and understand Asia better,” Al Busyra says.”Al Busyra also conveys his gratitude to the Asian-American community in Oklahoma who has given the opportunity for Indonesia toorganize this year’s event.“Organizing the Asian Festival is an opportunity and achievement for Indonesia,” tells Al Busyra.Several government officials and politicians from Oklahoma also attend the festival, such as US Rep. James Lankford, Sen. AlMcAfrey, Rep. Anastasia Pittman, City Councilman David Greenwell, as well as representatives from various Asian organizations inOklahoma from China, the Philippines, India, Indonesia, Iran, Japan, Korea, Taiwan, and Vietnam.Beside art performances, a music competition and a Miss Asia pageant, with contestants from 9 countries, are also held during thefestival.As the host of the festival, Indonesia obtains a 30-minute time allocation to perform dances from Bali, West Sumatra, and West Java,as well as a fashion show of traditional clothes from some parts in Indonesia by Indonesians in Oklahoma.During the event, the Houston KJRI opens a WarungKonsuler that provides services and information related to consulate forIndonesians. (Source: KJRI Houston)Source: http://www.kemlu.go.id/Pages/Achievement.aspx?IDP=59&l=en

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