Draft Bill on Creative Economy: Certainty or Catastrophe for Creativity?

OVERVIEW
Due to technological advancement and rising awareness on environmental issues, Indonesia had
changed its economic focus from the extractive industry1 to the creative economy. This new line of
economic approach was formally introduced for the first time by former President Susilo Bambang
Yudhoyono at the opening of INACRAFT2 in 2005, when he delivered a speech highlighting the
fundamental role of creativity in realizing a competitive economy.3
To strengthen the creative economys position as one of the nations development programs, Mr.
Yudhoyono made a follow up by issuing Presidential Instruction No. 6 of 2009 on Development of the
Creative Economy (6/2009 Presidential Instruction). Following that, Mr. Yudhoyono established the
Ministry of Tourism and Creative Economy to better organize and manage the sector by issuing
Presidential Regulation No. 92 of 2011 on Second Amendment to Presidential Regulation No. 24 of 2010
on Positions, Responsibilities and Functions of State Ministries and Organizational Structure,
Responsibilities and Functions of Echelon I of State Ministries (92/2011 Presidential Regulation).4
Since then, the creative economy has become a new fundamental sector due to its large contribution to
Indonesias development. Not only did it create more jobs and opportunities, but this sector also
generated approximately IDR 642 trillion or seven percent of Indonesias gross domestic income in 2013.
On the same year, the average growth of the creative economy sector was 5.76 percent which was
higher than the entire nations economic growth sitting at 5.74 percent.5
Despite of publics optimism to develop this sector, there has not been a single regulation that provides
a comprehensive regulatory framework for Indonesias creative economy keeping in mind that legal
certainty is the foundation for the development of any sector, including the creative economy.6 Realizing
this urgency, the Regional Representatives Council (Dewan Perwakilan Daerah) has initiated a Draft Bill
on Creative Economy (Draft Bill)7 since the end of 2014 in hope that it will passed before the
commencement of ASEAN Economic Community (AEC).8
Currently, the Commission X at the House of Representatives (House) strives to incorporate the Draft Bill
under the 2016 National Legislation Program. To their concern, Indonesia is supposed to be the leader
of creative economy sector amongst other ASEAN countries due to its tremendous potentials on this
sector. However, data shows that Indonesia is still lacking behind Malaysia, Thailand and Singapore in
terms of export of creative economy products. Giving urgency to pass the Draft Bill to prevent negative
impacts with the commencement of the AEC, regardless that debates on the effectiveness of the Draft
Bills contents.9
1

For example: mining, forestry, as well as oil and gas industries.

INACRAFT is an annual exhibition to promote and facilitate Indonesian craft products commercially which has been held 17
times up to 2015, the upcoming INACRAFT will be hold on 8 to 12 April 2016. (See
http://www.inacraft.co.id/inacraft2015.html).
3
Page xvi of Ekonomi Kreatif: Kekuatan Baru Indonesia Menuju 2025 by Ministry of Tourism and Creative Economy
(Ekonomi Kreatif: Kekuatan Baru Indonesia Menuju 2025)
4
The 24/2010 Presidential Regulation had been amended eight times, most recently by Presidential Regulation No. 80 of 2014.
5
See Bangkitnya Ekonomi Kreatif Indonesia
6
See Crucial Aspect in Creative Economy Development Relies on Regulation
7
This Draft Bill has been briefly discussed under ILB No. 2800
8
See Komite III DPD Desak DPR Bahas RUU Ekonomi Kreatif
9
See RUU Ekonomi Kreatif Masuk Prolegnas and RUU Ekonomi Kreatif Dinilai Masih Punya Banyak Kelemahan
2

PURPOSE
The discussion of this weeks Indonesian Law Digest (ILD) will mainly cover the topic of creative
economy, which has actually been discussed under ILD No. 408 in May of 2015. To avoid redundancy,
this ILD will focus to the content of the Draft Bill, covering:
a. Definition of creative economy;
b. Involved parties in the creative economy sector, including human resources and authorized
institutions that regulate and monitor the sector; and
c. Measures to develop the creative economy, including infrastructures and facilities.
DEFINITION OF CREATIVE ECONOMY
Aiming to set out Indonesias first legal framework to its creative economy, the Draft Bill outlines more
than 80 Articles to provide certainty in organizing this sector. This includes the incorporation of creative
economy definition which clarifies the foundation for any discussion regarding this sector.
Pursuant to the Draft Bill, creative economy is a line of economy that relies on additional value to an
idea or concept deriving from human creativity and intelligence which encompass the followings:10
Aspect
Scope
Cultural heritage
a. Traditional cultures, including festivals and ceremonies
b. Traditional sites, including museums, art galleries and libraries
Art
a. Fine art, including painting, sculpture and ceramic art
b. Performing art, including theater, dances, opera, circus, puppetry
c. Music
d. Photography
Media
a. Print media and news, including books and other types of publication
b. Audiovisual media, including films, television and radio
Functional creations
a. Design, including interior design, fashion, or design for other products
b. New media, including software, games, and creative digital contents
c. Creative services, including advertising, creative research and
development
d. Creative products relating to culinary, agricultural, and/or maritime
sectors
The Draft Bill also defines the term creative industry as an industry that covers cultural industry and
other activities of creating goods or services with artistic and creative elements within. The cultural
industry itself refers to an industry that combines creation, production and commercialization of
creative products deriving from development of customs or any cultural element.11
These definitions are important as the three have been perceived as the same. By having these
definitions, it is now clear that creative industry is only a part of creative economy.
The same understanding was previously shared by the Ministry of Tourism and Creative Economy. This
institution defined creative economy as the creation of added-value based on ideas of peoples
creativity and knowledge, including cultural heritage and technology.12 To their concern, creative
10

Art. 1 (1) and Art. 6 and its elucidation, Draft Bill

Art. 1 (3) and (4), Draft Bill
12
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11

economy is an ecosystem comprised of creative value chains, a nurturing environment for creative
endeavors, as well as a market and archiving system for creative products. On the other hand, the
creative industry is part of the ecosystem that functions as an engine to create economic value within
the creative economy. Therefore, creative economy has wider scope than creative industry.13
Furthermore, the Ministry of Tourism and Creative Economy had once listed 15 subsectors of creative
industry as expanded from the subsectors regulated under the 6/2009 Presidential Regulation, namely:14
a. Architecture;
b. Design;
c. Film, video, and photography;
d. Culinary;
e. Craft;
f. Fashion;
g. Music;
h. Publishing;
i. Interactive games;
j. Advertising;
k. Research and development;
l. Fine art;
m. Performing arts;
n. Information technology; and
o. Television and radio.
Unfortunately, these subsectors are not specified under the Draft Bill. There is no provision that requires
these matters to be regulated further under an implementing regulation, although the Draft Bill
guarantees that the four creativity objects mentioned above will be treated as intellectual property,
hence protected by applicable laws and regulations on intellectual property rights,15 including:
a. Law No. 28 of 2014 on Copyright;
b. Law No. 15 of 2001 on Trademark;16
c. Government Regulation No. 51 of 2007 on Geographical Indications;17
d. Law No. 14 of 2001 on Patent;18
e. Law No. 32 of 2000 on Integrated Circuit Design;
f. Law No. 31 of 2000 on Industrial Design; and
g. Law No. 30 of 2000 on Trade Secret.
PARTIES INVOLVED IN THE CREATIVE ECONOMY SECTOR
One of the objectives of the Draft Bill is to optimize all related aspects of the creative economy,
including human resources and innovation, which are the bread and butter of this sector.19 In this
regard, the Draft Bill tries to set clear definitions on parties in the creative economy, including:20
13

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Page vii and xx, Ekonomi Kreatif: Kekuatan Baru Indoensia Menuju 2025
15
Art. 7, Draft Bill
16
A revision to this law is in the pipeline and as the Ministry of Law and Human Rights has proposed a Draft Bill on Trademarks
to the House and it is currently listed under the 2015 National Legislation Program. For more information, see ILD No. 434
17
For more information on this regulation, see ILB No. 675
18
There has also been a discourse to revise this law with the Draft Bill on Patent that is also listed under the 2015 National
Legislation Program. For more information, see ILD No. 400
19
Art. 4 letter a and Art. 3 letter d, Draft Bill
20
Art. 1 (5) and (6), Draft Bill
14

a. Creative economy practitioners, referring to individuals or group of people that organize a

business or empowerment of products in the creative economy sector;
b. Creative economy business, referring to individuals or group of people that conduct creative and
innovative activities deriving from their intelligence.
Surprisingly, the Draft Bill also mandates the establishment of a ministry to organize the whole conduct
of creative economy21 although the Ministry of Tourism and Creative Economy was recently
restructured into the Ministry of Tourism, after the creative economy sector was supervision was
delegated to the Creative Economy Agency (Badan Ekonomi Kreatif) that was established during
President Joko Widodos administration through the issuance of Presidential Regulation No. 6 of 2015
on Creative Economy Agency (6/2015 Presidential Regulation)
Further explanations related to the involved parties will be elaborated below.
Creative Economy Practitioners and Business
Other than defining the involved parties, another highlight of the Draft Bill is the incorporation of rights
and obligations of creative economy practitioners and businesses, as follows:22
Subject
Rights
Obligations
Practitioner a. Create and innovate;
a. Possess certain competency in the
b. Gain equal opportunity to develop his/her
creative economy sector;
creative activities;
b. Complies with relevant norms in
c. Secure legal protection; and
carrying their creative activities.
d. Obtain supports and facilities from the
government.
Business

a. Acquire legal protection on their creative

economy business;
b. Rehabilitation of good name if the products
(goods and/or services) they sold are not
proven to have caused losses or damages
as alleged in a case;
c. Acquire equal treatment;
d. Obtain information transparently from the
government in regard to creative economy
development; and
e. Secure other rights set under applicable
laws and regulations.

The obligations of creative economy

business are similar to creative
economy practitioners above, with
addition that the creative economy
businesses must now conclude an
agreement for their cooperation with
any party and honor such agreement
in carrying their businesses.

The Draft Bill may not clearly specify the criteria of creative economy practitioner or business. However,
the aforementioned explanation shows that these parties are required to have competency in their field
which may be achieved through the following measures: education, certification and guidance. These
measures will be elaborated further below, along with the facilities that may be acquired by creative
economy practitioners and businesses.

21

Art. 71 and 72, Draft Bill

22

Art. 8 to Art. 11, Draft Bill

Authorized Institution
As said earlier, the Draft Bill mandates for the establishment of a new ministry to organize the entire
creative economy. Once established, this ministry will have the authority to regulate necessary policies
and coordinate with other ministries to develop the sector. This ministry can also delegate its authority
to regional governments.23
This ministry must be established within two years should the Draft Bill be passed. In the meantime, the
aforementioned authority is still at the Creative Economy Agencys hand.24
Currently, the Creative Economy Agency is responsible for assisting the President in formulating,
determining, coordinating, and synchronizing policies for the creative economy. These responsibilities
are implemented through the following functions:25
a. Formulate, determine, and enforce policies for the creative economy;
b. Draft and enforce creative economy programs;
c. Coordinate and synchronize the planning and enforcement of creative economy policies and
programs;
d. Provide guidance and support to all creative economy stakeholders;
e. Communicate and cooperate with other government and non-government institutions,
including ministerial and regional institutions, and other relevant parties; and
f. Other functions as mandated by the President in regard to creative economy.
The Creative Economy Board must perform its responsibilities and functions in accordance with other
policies and programs determined by other ministers and institutions. However, such policies and
programs may be deviated if required, provided that such deviation complies with applicable laws and
regulations.26
MEASURES TO DEVELOP THE CREATIVE ECONOMY
To realize the objective of optimizing development of Indonesias creative economy, the Draft Bill also
sets a number of provisions on measures to be taken by the government and stakeholders.
Education, Certification and Guidance
Realizing the importance of improving the quality and quantity of Indonesias human resources in
developing this sector, the Draft Bill encourages the government to establish an integrated creative
economy education system that will be implemented nationally from elementary to graduate level.27
The curriculum will have orientations towards creativity, innovation and management on the creative
economy and provides not only theories but also practical knowledge, in which must also set out
educational materials on entrepreneurship.28
This kind of curriculum will be prepared by the central and regional governments in cooperation with
the following parties:29
a. Creative economy practitioners and businesses; and
23

Art. 71 to Art. 74, Draft Bill

Art. 83 and Art. 84, Draft Bill
25
Art. 2 and Art. 3, 6/2015 Presidential Regulation.
26
Art. 37, 6/2015 Presidential Regulation.
27
Art. 12 (1), Art. 14 and Art. 15, Draft Bill
28
Art. 13 (1), (3) and (4), Draft Bill
29
Art. 13 (2), Draft Bill
24

b. Relevant institutions and customary law societies that carry out activities in relation to the
creative economy sector.
The Draft Bill also sets that education will be implemented using both formal and non-formal
approaches. Under the non-formal approach, the government must organize and/or facilitate trainings
to improve competencies of practitioners in the creative economy.30
As explained earlier, one of the obligations of every creative practitioner or business is to possess
certain competency. The competency standard is required by relevant creative economy sector.31
Referring to Law No. 3 of 2014 on Industrial Affairs (Industrial Affairs Law),32 any industrial human
resource is required to possess competency in accordance with relevant national work competency
standards (standar kompetensi kerja nasional Indonesia SKNNI)33 and there have been several
SKNNIs for the creative economy sector, such as:
a. Minister of Employment No. 194 of 2015 on Stipulation of SKNNI on Individual Service for
Modern Bride Make-Up;
b. Minister of Employment No. 355 of 2014 on Stipulation of SKNNI on Professional and Scientific
Services for Photography;
c. Minister of Employment No. 420 of 2014 on Stipulation of SKNNI on Art, Entertainment and
Recreation Category for Dance; and
d. Minister of Employment No. 419 of 2014 on Stipulation of SKNNI on Information and
Communication Category for Production of Motion Picture, Video and Television Program,
Sound Recording and Music Production during Film Editing.
Note that the competencies will be a certification assessment by professional organization, certification
institution and/or universities.34
In regard to competency, the Draft Bill highlights that every creative economy practitioner and business
to have entrepreneurial mentality. For this purpose, regional and central governments are required to
support entrepreneurs of the creative economy sector, especially novice entrepreneurs.35 Usually, these
entrepreneurs may start up their businesses by engaging in partnerships with practitioners and/or
businesses in the creative economy sector under the following schemes:36
a. Creation-partnership to create creative and innovative goods and/or services; or
b. Production-partnership to produce creative and innovative goods and/or services in which this
partnership scheme may include the following processes: planning, controlling, production
and/or monitoring (quality control).
Following that, regional government must also encourage creative economy businesses to provide
internship opportunity for creative practitioners, especially beginners. For this purpose, regional
government will function as intermediary party which approach the creative business entities, identify
the internship opportunity from such businesses and locate the relevant interns.37
30

Art. 14 (3) and Art. 17, Draft Bill

Art. 18, Draft Bill
32
For more information on this regulation, see ILB No. 2309 and ILD No. 340
33
Art. 18 (1), Industrial Affairs Law
34
Art. 19, Draft Bill
35
Art. 39 (1) and (2) and Art. 40 (1), Draft Bill
36
Art. 40 (2) to Art. 42, Draft Bill
37
Art. 43 and Art. 44, Draft Bill
31

All in all, the Draft Bill ensures that creative economy practitioners and business may continuously have
proper access to obtain guidance from the government, universities, research institution and even
businesses in creative economy sector.38 In line with this matter, the Draft Bill mandates regional
governments to build creative houses in their region that functions as center for creative economy
activities, including: 39
a. Trainings to improve creative economy practitioners and businesses skills and creativity;
b. Networking amongst creative economy practitioners and businesses; and
c. Center for information and consultation on relevant matters, including protection on intellectual
property, documentation on creative economy products and development of business model for
creative economy businesses.
This house may take place at working areas of regional/municipal government, governmental
institution, universities, research institutions, or a creative economy business.40 Before building the
house in every region, the government must firstly map out creative economy resources throughout
Indonesia, as a prerequisite the infrastructure need of every region to determine whether to build
infrastructure and facilities from scratch or use existing one.41
One of the facilities required for a creative house is fast wireless internet connection. This connection is
provided by the government in cooperation with internet provider companies, in which the provider
must treat this internet connection service as their corporate social responsibility measure.42
Financial Facilities and Incentives
Other than having qualified human resources, financial facilities and incentives also plays an important
role in boosting any sector including the creative economy sector, resulting to the Draft Bill clarifying
types of facilities and incentives that may be obtained by creative economy practitioners and
businesses. One of the forms of these facilities is tax facility, namely income tax facility and regional tax
facility.
The income tax facility is provided to start-up and existing investors in creative economy sector. This
facility will be granted based on stipulation from the Minister of Finance - issued with due consideration
to recommendations from relevant institution in creative economy sector. Further provisions on
applying for this facility will be regulated under a governmental regulation.43
In regard to investment, the Draft Bill requires the government to cooperate with relevant institutions to
set investment policies on creative economy to boost investment in this sector. The government must
also provide better investment access for domestic and foreign investors.44 Currently, the creative
economy is open to foreign investment unless specified otherwise by the negative investment list which

38

Art. 22, Draft Bill

Art. 26 (1) and Art. 25, Draft Bill
40
Art. 25 (2), Draft Bill
41
Art. 27 and Art. 28, Draft Bill
42
Art. 29 and Art. 30, Draft Bill | For more information on corporate social responsibility, see ILB titled CSR Regulation Finally
Issued dated 27 April 2012.
43
Art. 31 to Art.33, Draft Bill
44
Art. 64 and Art.65, Draft Bill
39

at present is regulated by Presidential Regulation No. 39 of 2014 on List of Business Fields that are
Closed and Conditionally Open for Investment.45
Meanwhile, regional tax facility covers any tax imposed by regional government, including
entertainment tax, advertisement tax and other tax that may be imposed against creative economy
goods and/or services. This means this facility is granted at the discretion of the regional government
and subject to policies and priorities of the region in question.46
Other than tax facility, the Draft Bill also enables creative economy practitioners and businesses to
obtain incentive from the government (central and/or regional). The incentive may take form as
financing facility, intellectual property registration facility, award and/or aid that will be provided via
banks or non-bank financial institutions in accordance with regional governments budget, as regulated
further under governor regulation or regent/mayor regulation.47
In regard to financing, the Draft Bill regulates that government may provide grant (hibah) or assistance
for creative economy practitioners or businesses to obtain international aid or other financing facilities.
The government may also boost financing for the sector by undertaking the following measures:48
a. Expansion of credit sources (banks and non-bank financial institutions);
b. Establishment of more venture companies;
c. Formalization of factoring transactions (transaksi anjak piutang);
d. Improvement of cooperation amongst creative economy practitioners and business through the
establishment of relevant cooperatives (koperasi);
e. Development of other financing possibilities.
Other than government financing, financing facilities may also be obtained from state-owned
enterprises and/or national or foreign corporations. One of the proposed schemes under the Draft Bill is
secured-loan in which creative economy products may be used as collateral especially the products
copyright that can be used as collateral under the fiduciary guarantee scheme.49
In addition to financial incentives, the government may also provide incentives in other forms such as:50
a. Convenience in securing necessary licenses;
b. Tariff reduction in utilizing relevant facilities and/or infrastructures;
c. Other types of incentives that may be provided for small-to-medium businesses.
Promotion and Protection of Creative Economy Products
Another important aspect from the development of any sector is the product itself. In this regard the
government is responsible for ensuring that creative economy businesses meet the global standards in
carrying their businesses. By complying with global standards, it is expected that the products will have a
competitive edge in the global market.51
45

For more information on this regulation, see ILB No. 2396 and ILD No. 357
Art. 34 and Art. 35, Draft Bill
47
Art. 37 (2) and (3) and Art. 38, Draft Bill
48
Art. 58 (1) and (2) and Art. 61, Draft Bill
49
Art. 58 (3) and (4), Art. 59 and Art. 60 Draft Bill | The fiduciary guarantee scheme is regulated under Law No. 42 of 1999, as
discussed under ILD No. 303 and ILD titled The Truth about Security Interest: Movable Property. As for the guarantee, the
House has recently passed Bill on Guarantee, as discussed under ILB No. 2787 and ILD No. 436
50
Art. 58 (5), Draft Bill
51
For more information on standardization, see ILB No. 2471 and ILD No. 378
46

To increase recognition, the government must also support creative economy products from the
promotional aspects by:
a. Improving coordination amongst creative economy practitioners that are competent in
promotional field;52
b. Facilitating activities that relates to promotions of creative economy products (e.g. providing
simpler procedures to secure license in organizing events in promoting products);53
c. Mandating any media company (printed or digital) to regularly promote domestic creative
economy products in their programs, with requirements that the promotional space takes at
least 5% of the whole programs slot;54 and
d. Ensuring that each creative economy practitioner and business have equal opportunity in
promoting their products at national or international level, provided that any international-level
promotional activity held in Indonesia must allocate 5% of its entire duration to showcase
Indonesias creative economy products.55
One thing to note is that any creative economy product must still show Indonesian characteristic.
Therefore, every creative economy practitioner or business must affix a label stating Creation of
Indonesia (kreasi Indonesia) on their products.56
Another thing to note is that creative economy products is the object of intellectual property protection.
This protection is secured after the right has been registered, unless it is a copyright that automatically
protected by law after the creation was made. For this matter, the government may assist creative
economy practitioners and businesses to register their intellectual property rights for their products in
accordance with applicable laws and regulations, as discussed previously (e.g. copyright law, trademark
law, patent law).57
This intellectual property right registration is also important in relation to the ability of the right owner
to license his/her right to other party. In this regard, the Draft Bill regulates that any licensing of rights to
utilize creative economy products must be conducted based on a written licensing agreement.
This agreement must not be concluded for a longer period than the validity period of the respective
intellectual property right or include any provisions that may harm Indonesias economy, applicable laws
and regulations, or the licensors right towards his/her intellectual property. Furthermore, the licensing
must obligate payment of certain royalty to the licensor, unless agreed otherwise. The royalty amount
will be agreed between the parties in accordance with common practices.58
Dispute Settlement
After securing all other aspects in carrying creative economy activities, the Draft Bill also tries to outline
measures to settle disputes that arise in creative economy sector through court proceedings or

52

Art. 51, Draft Bill

Art. 54 (1) and Art. 55, Draft Bill
54
Art. 52, Draft Bill
55
Art. 50, Draft Bill
56
Art. 49, Draft Bill | Also see ILB No. 2756 on Mandatory Indonesian-Language Product Labeling
57
Art. 77, Draft Bill
58
Art. 79 and Art. 80, Draft Bill
53

alternative dispute resolutions.59 However, the Draft Bill seems to focus on the procedures used in court
of which any damaged party may file a lawsuit to the court for indemnity in the following forms:60
a. Payment of claimants losses, which must be paid within 6 months (maximum) after the court
decision is rendered and binding;
b. Transfer of profit (partly or entirely) gained from the illegal utilization of claimants creative
economy products; or
c. Seizure of claimants products that are utilized illegally or termination of defenders illegal
activities towards the claimants products.
CONCLUSION
@SP: to be given later, in revision process
CD

59
60

For more information on these matters, see ILD No. 325, No. 336, and No. 337
Art. 81 and Art. 82, Draft Bill