| Project Detail |
Macroeconomic context. In 2020, Indonesia was the worlds 4th most populous nation with over 260 million people and the 7th largest economy in terms of purchasing power parity. Indonesias annual gross domestic product (GDP) growth has averaged 5.0% since 2015,_and poverty levels fell to single digits in 2018 for the first time._However, due to the coronavirus disease (COVID-19) pandemic and the restrictions put in place to contain the spread of the virus, its GDP growth contracted by 2.1% in 2020, grew at a slower rate of 3.7% in 2021 and estimated to grow at 5.0% in 2022. To sustain economic recovery, Indonesia has to safeguard health and human development; reopen the economy, create jobs, and boost consumption; and pursue broader and deeper structural reforms to raise productivity and growth._
Project Name Promoting Research and Innovation through Modern and Efficient Science and Technology Parks Project
Project Number 55063-001
Country / Economy Indonesia
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 4272-INO: Promoting Research and Innovation through Modernization and Enhancement of Science and Technology Park (PRIME STeP)
Ordinary capital resources US$ 138.52 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector
Education / Tertiary
Gender Equity and Mainstreaming Effective gender mainstreaming
Description
Macroeconomic context. In 2020, Indonesia was the worlds 4th most populous nation with over 260 million people and the 7th largest economy in terms of purchasing power parity. Indonesias annual gross domestic product (GDP) growth has averaged 5.0% since 2015,_and poverty levels fell to single digits in 2018 for the first time._However, due to the coronavirus disease (COVID-19) pandemic and the restrictions put in place to contain the spread of the virus, its GDP growth contracted by 2.1% in 2020, grew at a slower rate of 3.7% in 2021 and estimated to grow at 5.0% in 2022. To sustain economic recovery, Indonesia has to safeguard health and human development; reopen the economy, create jobs, and boost consumption; and pursue broader and deeper structural reforms to raise productivity and growth._
Importance of research and development and innovation. Prior to the pandemic, the main factor constraining economic growth had been a flat productivity rate partly attributed to limited technology sophistication in Indonesian industries. Technology sophistication means using more advanced operations and technologies with extensive research and development (R&D) in production and industry processes. There is also a lack of absorptive capacity for technology and innovation knowhow among Indonesias workforce. A study by the Asian Development Bank (ADB) and the Ministry of Finance indicates that the adoption of new technologies could result in an additional annual GDP growth of 0.55 percentage points over the next two decades, thereby putting Indonesias economy in the high-income group._
Governments strategy. Indonesias policy on science and technology, and innovation is framed under the National Medium-Term Development Plan (RPJMN), 2020-2024, especially its pillar 1 and pillar 2. Pillar 1 emphasizes human development and mastery of science and technology, while pillar 2 focuses on sustainable economic development. The development of Science and Technology Parks (STPs) is part of the vision and mission of the President of the Republic of Indonesia and is affirmed by the Presidential Regulation Number 18 of 2020 issued on 27 January 2020. RPJMN 2020-2024 prioritizes the development of five STPs under the following higher education institutions (HEIs): Bogor Agriculture University (IPB), Institute of Technology Bandung, Gajah Mada University, University of Indonesia, and Institute of Technology Sepuluh Nopember. Indonesia has also taken important steps to strengthen its innovation system through new fiscal incentives for R&D, large investments in digital infrastructure, and new funding mechanisms to support research.
Project Rationale and Linkage to Country/Regional Strategy
Key government stakeholders. The Ministry of Education, Culture, Research and Technology (MOECRT) is mandated to formulate and determine policies in science and technology, and coordinate the implementation of science and technology policies in HEIs. R&D activities in Indonesia are conducted by HEIs,_government R&D agencies, and private sector organizations. Each HEI has an obligation to undertake the three pillars (Tri Dharma) of higher education comprising education, research, and community service. Large HEIs which are classified as Perguruan Tinggi Negeri Badan Hukum_have the authority to manage the allocation of research fund received from the government and other sources, select research proposals, and usually have own innovation units, such as STPs, to support downstream R&D development.
Science and technology parks. The development of STPs is one of the governments strategies for downstream R&D. An STP is a professionally managed organization to (i) serve as a platform for continuous R&D cooperation between tertiary institutions, R&D institutions, and industry; (ii) facilitate growth of innovation-based companies through incubation and/or spin off; and (iii) provide value added and quality learning services. Indonesia aims to (i) increase the STPs innovation capabilities, (ii) improve the STPs capacity as triple-helix nodes bringing together learning institutions, enterprises, and government agencies under common purposes of strengthening cooperation in R&D thus transforming research results into innovative commercial products; and (iii) increase national innovation products.
Impact
Competitiveness of Indonesias economy and sustained economic growth strengthened through research and development and innovation |
