The Indonesian government has put particular emphasis on its creative economy over the past several years – and, with the country’s recent deregulation package, that area now appears ready for its close-up. There is huge opportunity and potential.
The U.S. Chamber of Commerce welcomed Indonesia’s Feb. 11 deregulation package, under which the country plans to open 35 previously-closed industry sectors to 100% foreign investment. A few days after the package was announced, Indonesian Trade Minister Thomas Lembong told a U.S. Chamber roundtable in San Francisco that this was the largest opening to foreign investors in a decade. The package was welcomed not only because of its liberalizing direction – in sharp contrast to much of Indonesia’s trade and investment policy in recent years – but also for its recognition that foreign participation in key industries can help drive the country’s growth.
Once implemented, the deregulation package will open up the Indonesian movie industry to 100% foreign investment, a move welcomed not only by the U.S. Chamber but by the Association of Indonesian Film Producers. The group’s president, Sheila Timothy, called the change "a milestone for the Indonesian film industry." The group had been pushing for the government to lift a ban on foreign investment in film production, distribution and cinemas.
"Most Indonesian film production companies are small and medium enterprises," often lacking the financial means to fund film creation and reap better profits in a capital-intensive industry, Timothy said in interviews. "The opening of the market will break a vicious cycle."
According to Indonesian data, there are only slightly over 1,100 film screens available in the entire country, which has a population of 250 million people. One-third of those cinemas are in Jakarta. A broader distribution of film screens across Indonesia would benefit both production and attendance, making local productions more accessible in rural areas.
Indonesian creative talent is only just beginning to make itself felt outside the country. In October 2015, the U.S. Chamber of Commerce hosted a dinner in honor of Indonesian President Joko Widodo during his first visit to Washington as president. The dinner featured performances by two extraordinary Indonesian talents.
Joey Alexander is a 12-year old piano prodigy who released his first album at age 11, was nominated for two Grammys, got a standing ovation at the 58th Grammys, and has been featured on "60 Minutes." Raisa is an Indonesian pop star who was selected by Disney to sing “A Dream is a Wish Your Heart Makes,” the anthem from its 2015 remake of Cinderella for the film’s Indonesian language release. Both are famous in Indonesia but not well known to American audiences. That may soon be changing.
With a large but young, tech-savvy population, Indonesia’s creative economy potential is tremendous. Supportive policy measures in addition to foreign investment liberalization will of course be important, including the development of an e-commerce framework to facilitate the legal distribution of creative content, and strong intellectual property protection.
In their report Taking Stock: US-Indonesia Investment 2015, the U.S. Chamber of Commerce and Amcham Indonesia pointed out that, as a knowledge- and human capital-intensive industry, the creative sector needs appropriate incentives to develop and nurture the necessary talent for the sector to grow. Opening up the film sector is a very important step in nurturing this potential and will help propel Indonesian creative talent onto the world stage.