Innovation Is Key for Indonesia’s Industries to Survive Coronavirus Pandemic

JAKARTA, KOMPAS.com – Innovation is the secret to the resilience of Indonesia’s industries amid trying times like the coronavirus pandemic.

The rapid spread of the Covid-19 virus has paralyzed the Indonesian economy and weakened consumer spending.

The economic impact of the coronavirus pandemic has been disastrous and industries across all sectors have felt the brunt of it.

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However, innovation can stimulate efficient production processes.

Innovation provides companies the opportunity to present new products that are better for the environment and consumers.

The availability of capital and organizational transformation is integral to driving innovation.

Yet these factors are even more difficult to obtain during such uncertain economic times.

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Support from the government through effective policies are necessary to address these challenges.

Executive Director of the Indonesian Employers Association (APINDO), Danang Girindrawardana, said that because of the coronavirus pandemic, many large-scale companies have had to close.

Pressure from the economic crisis coupled with an inability to innovate led such companies to shut down.

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“Because Indonesia is in the process of recovering from the coronavirus pandemic, industries are under even greater pressure to stay afloat so as to prevent the national economy from worsening,” said Danang.

Similar opinions were shared by Head of the Indonesian Ministry of Finance’s Fiscal Policy Agency Febrio Kacaribu.

Febrio shared that the Indonesian government’s stimulus policies on investing in research and innovation reflect its priorities.

Such policies would incentivize industries to create added value.

Expert Staff at the Indonesian Ministry of Industries, Gatot Sudariyono, underlined the need for industries to swiftly respond to innovative needs in order to survive.

A World Bank report also points to signs of Indonesia’s weakness in the field of research and development.

In the new normal era, Indonesia can no longer be reliant on its raw resources. The country will need to turn to innovation or discover a breakthrough.

“In the new normal era, there will be rapid changes such as Industry 4.0. We hope it will happen within five years, but it will happen even faster now,” said Gatot.

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The Ministry of Industry has prepared a wide range of programs to accelerate Industry 4.0 in Indonesia.

The programs are stipulated in Indonesia’s Medium-Term Development Plans which applies until 2024.

For Indonesia to attract companies to invest in innovation and research and development, the country will need a targeted incentive.

“That’s the point, how can tax instruments be used to push for innovation. It’s likely that excise can also be an effective instrument,” said Bawono Kristiaji from the Danny Darussalam Tax Center. 

(Editor: Sakina Rakhma Diah Setiawan) 

Source: https://money.kompas.com/read/2020/06/22/201232826/inovasi-jadi-kunci-industri-bertahan-di-masa-pandemi