PREPARATORY MEETING TOWARDS

WORLD CONFERENCE ON CREATIVE

ECONOMY 2018 REPORT

INSTITUTE OF ECONOMIC AND SOCIAL RESEARCH (LPEM)

FACULTY OF ECONOMICS AND BUSINESS (FEB)
UNIVERSITY OF INDONESIA
Table of Contents

I. INTRODUCTION .................................................................................................................................... 3
II. WORKING GROUP I— THE BUTTERFLY EFFECT: SOCIAL IMPACTS OF CREATIVE ECONOMY (SOCIAL
COHESION).................................................................................................................................................... 7
III. WORKING GROUP II—COMING UP WITH THE RIGHT CREATIVE REGULATIONS ............................. 10
IV. WORKING GROUP III—MAKING AN OFFER THE CREATIVE INDUSTRY CAN’T REFUSE ................... 11
V. WORKING GROUP IV—TAKING THE CREATIVE ECONOMY ECOSYSTEM AND ENTERPRISES TO A
NEW HEIGHT ............................................................................................................................................... 12
VI. WORKING GROUP V—OUTLINING THE FUTURE OF CREATIVE ECONOMY ..................................... 14
ANNEX CHAIR’S SUMMARY ....................................................................................................................... 16
I. The Butterfly Effect: Social Impacts of Creative Economy (Social Cohesion) ................................. 16
II. Coming up with the right creative regulations ............................................................................... 17
III. Making the Offer that Creative Industry Can not Refuse ............................................................... 18
IV. Taking the Creative Economy Ecosystem and Enterprises to New Height .................................... 18
V. Outlining the Future of Creative Economy .................................................................................... 19
VI. Closing session ............................................................................................................................... 20
 I. INTRODUCTION

The creative economy is a part of the greater shift in the global economy from production based to a
service-based economy. The information and communication technology (ICT), which basically was
started in 1970’s and has continuously shown magnificent progress in 2000’s and 2010’s, keeps revolving,
opening up huge opportunities for economic sectors to grow, especially for any economic sectors which
are connected to creativity. A knowledge-based economy which intensively utilized ICT has gone back-to-
back with the creative economy in general and creative industry in particular. Countries are moving from
goods-production-based economy to a knowledge economy which is based on information, ideas, and
innovation in which creativity plays a big role in. A post-industrial economy which is driven by creativity
has resulted in the concept of the creative economy which has been proven to revitalize several sectors
of the economy such as manufacturing, services, retail, and entertainment industries and also changes
people’s occupations and how people do their work. This shift that causes the emergence of the creative
economy is also due to the rising middle class which creates a shift in the consumption behavior—from
need-based to want-based, from necessity goods to leisure goods and also focuses on quality of life, such
as education and health. Moreover, as people move from rural area to urban area, the rise of needs for
intangible goods is inevitable. The creative economy could potentially become the game changer. There
is a possibility for developing countries to jump from industrial economy to the creative economy, using
Global Value Chains as the framework of production if the development of creative economy within a
country is handled well.

Among the experts, the definitions of the creative economy itself still a debatable topic. The most cited
definition is from UK Department of Culture, Media and Sport (DCMS) which defines the creative
economy as “those industries which have their origin in individual creativity, skill and talent and which
have a potential for wealth and job creation through the generation and exploitation of intellectual
property” (DCMS, 1998, p.3). Meanwhile, based on the definition from United Nations Conference on
Trade and Development (UNCTAD), the creative economy is an evolving concept based on creative assets
potentially generating economic growth and development (2008):

• 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 crosscutting

linkages at macro and micro levels to the overall economy.

• It is a feasible development option for innovation, multidisciplinary policy responses, and inter-
ministerial action.

• At the heart of the creative economy are the creative industries.

Despite the multitude definitions of the creative economy, it is undeniable that the contribution of the
creative economy is enormously significant that it attracts the interests of many stakeholders, especially
governments. Worldwide, based on data released by the United Nations Conference on Trade and
Development (UNCTAD) in 2012, the creative industry contributed USD 2.2 trillion or 230 percent more
than the value of oil exports by OPEC member countries. Furthermore, a report from the Ernst & Young
and CISAC found that in 2015, the cultural and creative industry (CCI) contributes US$ 2.25 billion and
absorbed around 29.5 million workers across the globe. As for Indonesia, the creative industry sector has
employed 15.9 million people and contributed 7.3 percent of the national GDP or equivalent to Rp 852
trillion based on the BPS data. Meanwhile, the United Kingdom as the first country to realize the
importance of creative economy as well as one of the Top 6 of Creative Product Exporter in 2015
(UNCTAD), had an average 3.3% growth of creative industry when other sectors only showed 0.8% on
average between 1981 to 2006 based on the study of EY in 2015. Not only in generating economic growth,
creative industry has absorbed more and more workers time to time in the UK from 7.1% in 2001 to 8.7%
in 2010. Similar to the UK, the creative economy also has significantly grown in the US with 6.3%annual
average growth per year of which much higher than that of other sectors in the US. Based on the
proportion of GDP, however, the largest creative economy contribution is from the Asia and Pacific. This
signifies that the continent has a huge potential for contributing to the creative economy, which includes
Indonesia, the country with largest economic size in Southeast Asia and third largest in term of a number
of the population after China and India.

The creative economy is not exclusive to companies with large capitals, which make it distinctive based
on the people’s accessibility towards the creative economy. The advancement of information technology,
especially internet enables talents to collaborate and work together across the world. The internet offers
a unique opportunity for people across nations to contribute in creating value-added in the global
production chain in accordance with their skills. A report on United Nations survey of the global creative
economy (2008) recognized that the rapid rate of growth of ‘creative and cultural industries’ was being
felt in every continent, North and South and it is far from being a particular phenomenon of advanced and
post-industrial nations in Europe and North America. It is also stated that “The interface between
creativity, culture, economics, and technology, as expressed in the ability to create and circulate
intellectual capital, has the potential to generate income, jobs, and exports while at the same time
promoting social inclusion, cultural diversity, and human development. This is what the emerging creative
economy has begun to do.”

However, despite its importance, there are still issues and problems that should be addressed in the
development of the creative economy. The condition of the creative economy in an untapped market, for
example, is often worsened by the lack of awareness of the importance of intellectual property rights and
ignorance of ways to monetize that ownership to become an added value. Proper regulations and policies
that can accommodate the ever-changing nature of the development of creative industries oftentimes
unavailable. There are also needs for the provision of technology infrastructure, market expansion, and
capacity building, as well as a financing mechanism, are all required to provide a thriving creative economy
ecosystem. Quality human capital is essential and urgently required to support the creative economy.
Because the creative industries are both knowledge-intensive, requiring specific skills and high-level
qualifications, as well as labour intensive, the government needs to encourage innovation-based and
knowledge-based education and training system to create human resources that can answer to the needs
of the creative economy, as well as try to reduce possible mismatch of skills that exist in the future labor
market, especially related to the technological aspect of the creative economy. New Business Models also
need to be developed and used to open the market to provide equal opportunity for people all over the
world. Oxford predicted more than 40% of the job today will be gone in the future, therefore by advancing
creative economy, this potential loss of a job can be mitigated. Improving entrepreneurship can also help
in creating more jobs. To develop the creative economy, the government also should promote the full
utilization of information technology because it can reduce transaction cost, reduce the price, minimize
asymmetric information, create efficient financial inclusion and create market access as well as new
markets.

These issues especially important for the governments across the world. Essentially, there are two main
government roles in the creative economy, the first one is the role of government in providing appropriate
and sufficient protection, starting from the inception of the ideas up to the implementation of the
projects. This need is pointed out in the report of DCMS of UK. To address the protection issues,
government actions, such as providing services for determining the appropriate Intellectual Property
Rights (IPRs), are required. The second role of government is to create a supportive environment to
nurture creativity. This role is emphasized by Ministry of Trade of Indonesia in 2008. In the present time,
the creative economy is no longer seen as a single production system but multiple production networks,
starting from design to manufacturing networks, that require global government networks in form of joint
policy-making forum that can outline a possible solution for new problems in the creative economy.

The World Conference for Creative Economy 2018 will be the first conference in the world to bring the
stakeholders globally to discuss the issues and challenges on the creative economy. It is expected from
this conference, Indonesia along with the global community can discuss a new and coherent approach for
addressing root causes, increasing political diplomacy for conflict prevention and conflict resolution, and
increasing inclusivity among all stakeholder. This Preparatory Meeting was held to create a common
agenda that will serve as tools to create an inclusive creative economy. The issues discussed in this forum
will also be brought up in the world-level meeting forum such as World Economic Forum in Davos, January
2018. There were five topics discussed in this Preparatory Meeting: The Butterfly Effect: Social Impacts of
Creative Economy, Coming Up with the Right Creative Regulations, Making an offer the Creative Industry
Can't Refuse, Taking the Creative Economy Ecosystem and Enterprises to a New Height, and Outlining the
Future of Creative Economy. The Preparatory Meeting was held from 4-7 December 2017 in
Intercontinental Hotel, Bandung and was attended by more than 100 participants representing countries,
international organizations, academicians, and the private sector. The changes that the creative economy
brought are inevitable. Therefore, every stakeholder should prepare themselves to face the issues
emerging from the creative economy. The inclusive, open, comprehensive, multi-stakeholders
characteristics of the conference are hoped to open new and comprehensive global solutions to problems
related to the creative economy.
 Case Study of Creative Economy in Indonesia

In 2016, Badan Ekonomi Kreatif (BEKRAF) has taken the first step taken to formulate creative
economy in Indonesia by creating a definition which is acompleted with a survey to measure the
actual figure of the creative economy in Indonesia. The definition of creative economy by BEKRAF
is a bit different, especially in defining the subsectors. In the DCMS’s definition of creative economy
and creative industry, there are thirteen areas of activity: (1) advertising, (2) architecture, (3) arts
and antiques, (4) handicrafts, (5) design, (6) fashion, (7) cinema production, (8) leisure software,
(specifically, video games), (9) music, (10) the performing arts, (11) publishing, (12) software
engineering, and (13) radio and television. Meanwhile, BEKRAF define the creative economy to 16
sub-sectors (1) application and game, (2) architecture, (3) interior design, (4) visual communication,
(5) product design, (6) fashion, (7) movie, animation & video, (8) photography, (9) craft, (10)
culinary, (11) music, (12) publication, (13) advertisement, (14) show business, (15) arts dan (16)
radio and television.

By using this definition, BEKRAF also supported a field baseline survey conducted by the LPEM UI in
six big cities in Indonesia, including DKI Jakarta, West Java (Bandung), Yogyakarta (Jogya), Bali
(Denpasar), North Sulawesi (Manado) and North Sumatera (Medan). However, the survey focused
only on fashion, culinary, craft, movie, music, and application and game. The inclusion of culinary
subsector has resulted in the main contributors of creative economy in Indonesia to be dominated
by culinary and fashion (60%). It was also found out that the largest proportion in terms of number
of business was culinary (45%) followed by craft (31%) and fashion (16%) while music only 3.3%,
film 2% and application & game is 2.5%. In terms of type of business ownership, the largest was
owned by individual (89.76%) and majority did own design for their products (98%). In terms of
customer, the majority of customers was individuals (56.68%) while company type of customer only
in small portion (5.12%). This indicated that most creative economy in Indonesia were not part of
production networks but selling final product directly to final customer. This finding suggest that
Indonesia needs to pay attention to assist Indonesia’s creative economy players to attain and attach
both the national and importantly the global production networks. The LPEM study in 2016 found
some challenges that needed to be considered for the World Conference on Creative Economy.
Most basic challenges in running business are marketing & distribution (46.64%), access to finance
(33.08%) the followed by raw materials (20.47%) and availability of skilled worker (14.98%). Access
to finance is also low due to not interested to use bank access (56.65%). As for marketing and
distribution, this study finds interesting fact that mostly they do advertisement for their products
(66.73%) and utilize social media to promote their products (50.62%). Yet majority, the product was
distributed inside municipal/city (48.15%) or different municipal in the same province and very low
to export abroad (0.19%). The potential factor was low e-commerce utilization (5.78%). Given this
substitution from similar product was making competition really tough (73.12%). This can be
because the market is so limited to the local municipal/city which in fact social media has been
adopted but e-commerce utilization was so low. Government needs to campaign and support e-
commerce utilization for creative economy players and protecting their product from illegal copy
rights violation by providing appropriate and firm IPRs protection.
 II. WORKING GROUP I— THE BUTTERFLY EFFECT: SOCIAL IMPACTS OF
CREATIVE ECONOMY (SOCIAL COHESION)
The first working group addressed The Butterfly Effect: Social Impacts of Creative Economy. The speakers
for this session include Nicholas Buchoud from UN General Assembly of Partners, Ricky Joseph Pesik from
BEKRAF, Paul Smith from British Council, Marc Piton from France Embassy, Laura Anderson from
Melbourne Fashion Festival, Tita Larasati from Bandung Creative Economy Committee and Ridwan Hassan
from the Ministry of Foreign Affairs Republic of Indonesia.

Nicholas Buchoud pointed out that there is a rising of inequalities over the last 10 years which has been
driven by a creative economy which more often than not, take place to develop in cities all over the world
where all kinds of networks including digital connection are concentrated. The relationships between
creative economy and cities are actually more complex as the creativity is linked from one place to other
places in the world. The growing aspect of the creative economy is reflected in the urban continuum—
especially in metropolitan areas, which also caused by advancement of digital connectivity and GIS.
Following these changes caused by the development of the creative economy, new issues arising. These
issues oftentimes are quite unique for each city that there are no universal solutions to address them. The
rapid emergence of issues related to the creative economy has made think-tanks in cities such as
universities trying hard to reprocess and analyze these issues and known facts about them through
laboratories such as experimental lab, urban lab, thinking lab, design lab. Additionally, oftentimes, there
is a strong specialization of the cities such as industrial cities and zoning are actually the opposite of the
essence of the creative economy which is flexibility.

The creative economy is not just a system that can be replicated or an ideology that is reserved for only a
small group of elites, but for all people connected to the networks. In addressing creative economy which
is mostly concentrated in urban areas, it should be noted that there are interactions between different
parallel issues and it is important that stakeholders come up with solutions instead of just being fascinated
by these issues. In about 10-20 years the world will have networked societies which are projected to be
more complex. Mr. Buchoud also addressed the importance of the efficient level of social capital for the
future digital society. Issues such as smart city, scaling up the vision, knowledge, affordability will always
revolve around the creative economy. Agenda, policies, and projects regarding the creative economy need
to be implemented efficiently through collaboration between academia, entrepreneurship, government,
charities, business, SDGs. Therefore all the stakeholders must be present to align all the interests of the
stakeholders and create a realistic vision and agenda for innovation.

Meanwhile, Mr. Ricky Pesik stated the importance of equal opportunity in the creative economy as the
new paradigm to the economy. The many-to-many approach has substituted the previous one-to-many.
It means that individual providers and SMEs have substituted large companies in fulfilling the market
demand that has become more individualized. Therefore, in this present time, creative economy creates
greater opportunity for SMEs to gain better, more equal standing. The government, thus, must take action
to facilitate the creative economy development. Based on the Creative Economy Landscape data by BPS,
workers in the creative economy in Indonesia based on gender, 53.68% consists of female while the
general workforce composition in Indonesia only consists of 37.16% female. As for the workforce by age
in Indonesia, mostly (70%) of the total workforce is driven by the 25-59 age group or productive age group.
Almost 48.94% creative enterprise consists of 1-4 people while the 13.97% consists of 5-19 people while
the enterprise with more than 100 people is only 2.07%. It needs to remember that this data is made
based on the classification of sub-sectors made by BEKRAF which include culinary. The challenge for the
government of Indonesia in general economy as well as in the creative economy lies in the informality of
the companies which does not put this business as subjects in the legal taxation framework. Without the
tax revenue from this business, the government cannot support the creative economy optimally.

In Indonesia, innovation mostly happened in Visual Communication Design (78.26%), Television and
Radio(81.28%), and Application and Game (82.22%). In total, only 62.3% of creative industry owners have
made efforts to innovate. Nonetheless, compared to this percentage, there were only 11.05% of the
business which already have ownership of IPR and the other 88.95% are still without IPR despite being
included in the creative economy. So there is still a problem of the lack of Intellectual Property Rights
ownership in the Creative Economy in Indonesia. In addressing this, the government provided a service
where there was 1.200 IP registered for free. This facility is especially given to SMEs from the small cities.
The core of the creative economy is from monetizing IPR so that the program to access the IP rights for
business is crucial. Digital registration for IP shall be made possible in the future.

In the second session of the first Working Group, Mr. Paul Smith from the British Embassy conveyed his
opinion on the creative industries. The creative economy must be approached in a different way. An
understanding of the importance of creative economy which has changed the geopolitics over the last 20
years is needed to be able to discuss the creative economy properly. Cities become a major center that
induces creativity and often becomes the center of this transformation. Prosperity and security are among
the first concerns of any country that these factors may incentivize them to consider developing the
creative economy because, through the creative economy, a more inclusive prosperity and security can
be achieved. The creative economy actually contributes to the soft power of a country, however, this
phrase can mean that it is coercive. the British Council prefer to use terms such as international relations,
diplomacy, public diplomacy, cultural diplomacy, cultural relations because they directly signify that the
relationship is created through arts, culture, and others. Arts bring people from material to spiritual
through creativity and imagination. Needs-based economy and the material prosperity are now being
substituted to wants-based and preference for leisure.

However, it is important to remember that rules, manifestos, and strategies are not the characteristics of
creative economies. When discussing the creative economy, the scope is very large—fashion, visual arts,
performing arts, cinemas, and it is hard to bring one regulation that can include every aspect of the
creative economy. The government needs to realize that creativity is about the people and not about
trying to organize everything and create a manifesto, but more in developing the people’s capacity in the
creative area. Freedom of individuals, flexibility, spirituality, arts, are the characteristics of the creative
economy. Therefore, interference of government on the creative economy should be limited. The creative
economy is more of people-to-people rather than business to people. Globalization is a way to play
diversity using the local tradition, with its own language, its own arts, and culture. Promotion of creative
industries has been proven to generate prosperity and security worldwide. Nations need to move from
public diplomacy to people-to-people relationship to improve the cooperation in the creative economy.
If the individuals are liberated then the creative economy has a way to improve.

Following Mr. Paul Smith, there was Mr. Marc Piton from France Embassy. France as a creative country
has been supported by the existence of creative industry. Tourism activities in France, for example, are
boosted by the existence of movies such as Amelie which let people see France. France Institute also has
been talking about economic issues growth, how to finance projects, and how to gain an access to
financing—it is very important to improve the creative economy that the young people need to
understand the world by experiencing it. There are a lot of tenants in Indonesia. The tenants need to be
paid attention to. At the end of his session, he concluded that tenants, technology, and cooperation
between countries are three main things that need to be prioritized in developing creative economy.
Learning in another country has become one of the ways to learn and understand the culture to improve
collaboration across countries.

The third session of the first working group discusses social cohesion, in particular on how creative
economy works from both supply side and distribution. This does not only talk about market aspect but
also government role as social cohesion in the creative economy needs both roles. From the market
perspective, first speaker Mrs. Laura Anderson clearly mentioned that creative economy needs 3Cs which
are Creativity, Collaboration, and Commerce. The last two factors are part of the social cohesion as it
involves cooperation. This is the main reason why creative economy need network covering both social
and economic network. Another speaker, Mrs. Tita Larasati also explained about the 3Cs with a different
perspective on the first C. If Mrs. Anderson proposed Creativity, Mrs. Larasati proposed Connectivity.
These two concepts are basically related to creativity will be more productive through social sharing and
connection. For some reasons, competition makes creativity more challenging as long as property rights
are legally guaranteed. Otherwise, competition tends to stimulate imitation and at the end, vanish the
creativity. Panelists also explained that creative economy needs collaboration as any creative product
both goods and services cannot be produced by one single producer. Naturally, production needs
collaboration. Both panelists agreed upon commercial aspect as at the end of the day creative economy
does not only about how to produce but how to sell. Again, distribution and marketing need a network.
This has to aim both local and global market. Both panelists agreed that creative product which locally
produced has to achieve global market.

Mr. Ridwan Hassan, Special Advisor to the Minister of Foreign Affairs Republic of Indonesia, also explained
that production and commerce need network and aim global market. This absolutely requires not an only
market network but also government role. Government diplomacy in the economy is needed to help
global market works properly. It needs collaboration within government worldwide and the most practical
and appropriate forms are bilateral and multilateral. The diplomacy in the global economy has to aware
that the network has to be equipped with the non-discriminative principle of equality in global market
access for all nations. Mr. Ridwan Hassan both Madrid Protocol and Trade Facilitation Agreement (TFA) of
the WTO guarantees all countries to be fairly involved in the global economic network. This needs
government diplomacy at the global level. This section sees that ‘butterfly effect’ of social cohesion goes
hand in hand with ‘spider web effect’ of economic network and these requires both market and
government role.

III. WORKING GROUP II—COMING UP WITH THE RIGHT CREATIVE

REGULATIONS
The second working group was divided into three sessions. The speakers for this second working group
include all deputies of BEKRAF, Candra Darusman from WIPO-Singapore Office, Chiam Lu Lin from
Intellectual Property Office of Singapore, Samirah Muzaffar from Intellectual Property Corporation of
Malaysia, Ari Juliano Gema from BEKRAF and Lis Sutjiati from Ministry of Communication and Information
Republic of Indonesia.

From the session with the deputies of BEKRAF, there are several issues that need to be highlighted. The
first issue is that oftentimes the support from the central government is not linked to the regional
government, therefore, creating difficulties for creative actors who are often concentrated in major cities
in Indonesia because the local government does not give them the support that they need. Collaboration
with think-tanks, such as universities, also requires further attention from government and also creative
actors, to be able to create a conducive environment for the creative economy. Secondly, the creative city
is deemed to be an important element in creating a conducive creative environment and thus, needs to
be addressed through actions such as creative ecosystem mapping, city problems, and potentials
identification, best practice formulations. Thirdly, provision of infrastructure especially physical
infrastructure for creative industry needs such as logistics and ICT infrastructure to interlink consumers,
creative actors, the private sector, government, and universities, is urgently required to support the
thriving creative network system. Fourthly, law enforcement to combat piracy is crucial in establishing the
function of intellectual property rights. Without adequate enforcement, creative industries will not be
incentivized to develop further. Lastly, it was stated that IP is the future currency for creative industries,
especially in Indonesia. Most of the creative subsectors will have IP, although not all 16 subsectors need
to have IPs. Creators (Creative contents makers) are expected to create lines of cooperation with
Manufacturer/Producers to create value-added products which then be distributed to the end users. This
simple line has not happened yet and this needs to be addressed through government policies.
Regulations to enforce the inclusion of IP within the production process need to be realized soon.

Continuing the concern from Working Group 1, intellectual property is again considered an important
element for the creative economy, and therefore its development should be supported by creative
policies and regulations. Facing the fact that only 11% of the business unit in the creative economy has
registered IP (with the prolonged process as one of the constraints), there should be, an alternative to
protect the IP. In the regions, the SMEs (including poor artisans) need technical and financial assistance
to deal with IP issue.

Another concern from this panel is the balance between protecting the IP and the risk of slowing down
the industry, for example, due to the difficult verification process. The policies should involve all IP
stakeholders such as IP Manpower (IP strategists, IP lawyers, IP brokers, etc), applied research entities,
government agencies, financiers, technology foresight, serial entrepreneurs. IP strategies are beyond
simple filing and registration, and it should be connected with business strategy.

Furthermore, IP owners should be facilitated in building the network and collecting the royalty. This is
again underlining the crucial role of law enforcement in combating piracy. Besides that, policies should be
directed on overcoming obstacles on the financial side, for example, poor understanding of IP as an asset
class, difficulty in putting a value to IP rights, there are limited qualified valuers and credible valuations,
lack of legal structure for IP as collateral.

Meanwhile, an engaging international institution such as WIPO and United Nations Commission on
International Trade Law (UNCITRAL) for the recognition of the intellectual property rights is considered
very important in achieving economic and social benefit. UNCITRAL that has Working Group VI project
aimed at providing guidance to States on the establishment and operation of security rights registries that
includes practical guidance on detailed legal rules and regulations.

The panel also underlines that creative economy and financial technology should go hand in hand to
develop a stronger and more advanced national economy. The approach in the policymaking process
should be directed into fulfilling the rights (intellectual property, of the consumers, etc) so that
contestation of sectoral authorities could be prevented. Harmonization of regulations, especially between
IP Laws (stipulating that Copyright and Patent can be collateralized as Fiduciary) and Banking regulations
(that do not stipulate clearly about IP as a collateral) is a very crucial issue in the policy-making process.

IV. WORKING GROUP III—MAKING AN OFFER THE CREATIVE INDUSTRY

CAN’T REFUSE

The third session is about Making an Offer the Creative Industry Can’t Refuse and mainly discussed on
how to explore the untapped market. The speakers for this session include Ken Salaets from Global Policy
Initiatives, Yunita Rusanti from BPS, and Adam Pushkin from British Council, Devi Attamimi from
Hakuhodo and Ahmad Djuhara from IAI. In this session, Mr. Ken Salaets stressed the importance of
business community to step up in advancing the creative industry working together with the government.
Since the process of innovation moves very fast, the private sector cannot passively wait for government
assistance. Policies live in business strategy and private sectors need to inform and suggest government
in formulating proper policies. If the private sector could create this momentum, the advancement of the
creative sector in creating the untapped market could go further.

Mrs. Yunita Rusanti explained about the process of data collecting on creative economy in Indonesia. BPS
Indonesia conducts a specialized survey for creative economy in 2016. Official statistics from the survey,
unfortunately, cannot capture the rapid change of technology, still, have unsolved classification problems,
and failed to capture the full extent of the business activities. In the future, data regarding creative
economy needs to be improved by perfecting the method of data capturing and standardization of
measurement. Better quality data will support the creative industry in exploring the untapped market.

Mr. Adam Pushkin explains the process of cooperation among many stakeholders in Manchester city in
promoting their city brand and eventually create a diverse of untapped markets. This is in contrast to
Birmingham city that has many potentials but unable to promote their creative economy like Manchester
city. Mr. Adam Pushkin stressed that we need to be true to ourselves (to our unique culture, rich diversity,
etc) and join forces with all parties that have a common interest in creating ‘the brand’. This process will
enhance the possibility for a region or city to broaden the untapped markets.

Mrs. Devi Attamimi explained the process of creating the perfect branding and marketing strategy for the
creative industry. Since the market and economies are dynamic and always moving, the strategy needs to
have flexibility and is based on detailed market research. A company needs to know their core audience
in selling their products. She also stressed the importance of educating our audience to change their
behavior and to be more loyal to our branding. In formulating a marketing strategy, creative actors and
the private sector need to be authentically honest, since shopping now is all about the experience. We
need to make stories of origin, define our identity and interest, and show the uniqueness of our product.
Proper branding and marketing strategy along with innovation and creativity will help firms in the creative
industry in exploring the untapped market.

Mr. Ahmad Djuhara stressed the importance of exploring our unique culture in making our product. He
also showed that the role of local government leader in Indonesia to promote creativity is crucial. Optimal
support from the government will help firms in the creative industry in exploring the untapped market.
He also promoted the importance of creating international professional network related to creative
industry (such as artists, designer, architect, etc) to share knowledge and opportunity in exploring the
untapped market.

V. WORKING GROUP IV—TAKING THE CREATIVE ECONOMY ECOSYSTEM

AND ENTERPRISES TO A NEW HEIGHT
The fourth working group addressed how to take the creative economy ecosystem and enterprises to a
new height. The speakers for this working group include Ferryandi from iDEa, Hira Laksamana from
Mandiri Capital Kyunghee Hannah Choi from KOFICE, Kahfiati Kadar from Kriya ITB and Lea Avilliani Aziz
from HDII and Irfan Wahid from KEIN.

The first presentation was from Mr. Ferryandi addressed the issue of e-commerce. It needs to be realized
that, at this present time, there are 57 million of SMEs in Indonesia of which need to be synchronized with
e-commerce trend, although there would be some SMEs which might not be suitable for the e-commerce
platform. E-commerce also oftentimes only limited for certain population which means that traditional
(physical) market is still needed to reach other population that cannot use the e-commerce platform. The
estimated investment is $200 billion by 2025 and by 2020 the sum of investment for e-commerce is $130
billion. The opportunities and threats from overseas market appear. The roadmap of e-commerce has
been set by president Jokowi—Digital Energy of Asia. The e-commerce that can support creative sector is
growing but the challenge for Indonesia still lies in the logistics as the company has trouble reaching the
eastern part of Indonesia because sending the product to Thailand is cheaper compared to the Papua.

The second presentation from Mandiri Capital was about financial technology start-up. In financing sector,
FinTech is important to boost the creative economy because based on the data only 13.1% of Indonesians
have access to formal credit. Formal credits require credit scoring data, however, the Fintech companies
can provide an alternative with deep assessment and collaboration. Moreover, they can also give business
expertise, help in terms of networking, management and also the ecosystem. This occurs as Fintech
revolved from Fintech 1.0 where only direct confrontation which only creates a limited impact to Fintech
2.0 that give more significant impact. The GDP of one country simply by increasing the financial inclusion
and increasing the fintech market. The pipeline for startups is also needed to facilitate the information
from the incubator, investing and scaling up—which ended with group synergy. For the
recommendations, there should be collaboration among stakeholders. As for investment climate, license
for startups and VCs are required, determination of taxes should also take account of the current situation
for investors. As for the regulatory environment, timing, coordination, and sovereignty are crucial. The
roadmap is also important in terms of deciding the focus of R&D, government Fund Grant on a specific
industry, AI, AR, or Fintech based on the demographic.

Mrs. Kahfiati Kadar stated that collaboration is crucially needed because creativity cannot stand by itself.
The value added from creative aspect is also high—a rug can turn from $1 to $40 just from the design. It
signifies large opportunities that can be accessed by the producers. However, there must be a
collaboration between the designer and the craftsmanship as well as scientists. The government shall
need to act as regulator or facilitator for collaboration, while university shall be placed for innovative
product/experiment, and craftsmanship shall be the producers of prototypes. It is also stated that people
often do not realize the positive impact of creative industry, such as incorporation of sustainable thinking
by using waste fabric, can improve the standard of living of people other than the consumers or the
producers. In the future, a scientist can collaborate with an artist to create bio-design textile (bacteria is
used to change the color) which is safer compared to the chemical colorant. Mentorship is required to
share and discuss the future path of young designers. Project collaboration should be encouraged to
produce something new and innovative.

Meanwhile, Mrs. Kyunghee Hannah Choi stated that through facilitation by the government, cultural
education and professional training give people (who are not familiar with the cultural scene) more
opportunities to experience cultural products. Moreover, capacity building focus on the less privileged.
She also mentioned that Korean wave is actually a success without design. It is thanks to the digital
network. Actually, in the 1990s the Korean government applied more obstacles in form of regulations
such as censorship. After removing the censorship, the competitiveness has been developing faster and
opened the market. The government cannot do many things but only to regulate the intellectual property.

Then there was Mrs. Lea Avilliani Aziz who stated that Indonesia is actually one of the biggest design
centers in China, Japan, and Korea. However, the problem in Indonesia is actually about the appreciation
of human capital ability value. Due to Indonesia still has lower standard and lower incentives compared
to global standard, many designers work overseas. The creativity is in the process and not the design. The
design process is a multidisciplined integration (Architecture, ME, Structure, IT and Lighting). In this
regards, the government can help in establishing certification for designers in Indonesia, because access
to ASEAN and the Asia Pacific can be opened as the certification applies to these regions.What people do
not realize the design process is actually a detailed process which requires a lot of resources. However,
the process is not appreciated too highly in Indonesia. The Indonesian system compared to Malaysia is
very discouraging for the designers because people always ask for the lowest fee. This makes things
difficult for Indonesian architects.

Lastly, for this session, Irfan Wahid from KEIN discussed the obstacles in creative industries. One is the
human resource. 93.3% workers in the creative industry are high school or lower. The creative industries
sector still needs additional support. Graduates of Vocational High School tops the biggest unemployment
contribution in 2016. Instead of becoming the solution, Vocational High School becomes a greater
problem for Indonesia. 83.33% SMEs are still included in the informal sector. Most of the financial
institutions still consider the IP-based business as an insecure business. Most of the creative business do
not have assets. Business Licensing is still the greatest problem. Lack of tax incentive for new business is
a problem for Indonesia compared to India government that gives 3 years of the tax holiday. Moreover,
the regulations regarding SME empowerment are still scattered. Many businesses have no knowledge of
marketing, branding, etc.

The creative economy should not be separated from the gotong-royong value. Gotong Royong or
collaboration can create more for the creative industry, tourism industry, and rural industry. These
industries need creativity to be able to develop while creative industries need a bigger market to grow.
Tourism industry currently contributes 13.568 billion dollars to Indonesia. The second reason is that
tourism is the priority sector in 2017 and in 2018. The third point of Nawacita, is to strengthening
Indonesia from regions and village with unitary perspective. Indonesia needs to find its creative industry
DNA and make it pull factor. Through this pull factor, Tourism Industry, Creative Industry, and Rural
Industry can be pulled forward. The best example of this transformation is in South Korea, Hallyu. The
Korean wave evolved form regional development. Korean Wave is the South Korean pull factor. There is
the cultural richness of Indonesia. The government is very serious about this industry. The budget for
village also increased for next year so out of the 75.000 villages, about a hundred of villages are included
as tourism villages. Apart from that, the government also working with others, especially communities.
Tourism villages are abundant, and there is already result. In Jogja, the poverty rate reaches 0% because
people in that village collaborate and contribute to the tourism village. Ministry of Tourism does not have
rights to the object of tourism because they officially belong to other stakeholders. Therefore, a
collaboration is a must.

VI. WORKING GROUP V—OUTLINING THE FUTURE OF CREATIVE

ECONOMY
During the final session, the participants welcomed the recommendations produced by all working
groups. The recommendations serve as an outline for the forthcoming WCCE 2018 and the focus of the
future development of the creative economy.
Creative economy offers a new era of inclusive business that provides equal opportunity to all
stakeholders. It also bridges communication and understanding between countries and cultures. With the
growth of technology and increasing incomes from emerging economies, it is apparent that the creative
economy will become the future of the global economy. However, the development of creative economy
requires an appropriate mindset of the creative actors, hard and soft infrastructure, active participation
of all stakeholders, support from governments and civil society organizations, and closer cooperation at
global level.
Hence BEKRAF, as the host of the meeting, represented by the Vice-Chairman Mr. Ricky Joseph Pesik,
drafted the way forward for creative economy and the key points arising from the meeting. The
participants shared their views to formulate the way forward as follows:
a) Considering the high value of creative economy in the global economy, the participants agreed to
promote WCCE 2018 and the outcome of the Bandung preparatory meeting together with
governments, civil society, the private sector, academia, international organizations, and media.
b) Identified the main challenges of creative economy development including, but not limited to, labor
quality, regulations fostering creative economy, access to finance, infrastructure, research and
development, and stakeholders’ synergy.
c) Stronger international political commitments are required to address the identified challenges and to
seize the opportunities of the creative economy for the implementation of the Sustainable
Development Goals (SDGs) and Agenda 2030.
d) Relevant international organizations including but not limited to UN, WIPO, WTO, World Bank, OIC,
and regional organizations (ASEAN, APEC, EU, African Union, etc.) shall be involved to tackle the
challenges of the creative economy and to be part of the advancement of creative economy at the
global stage.
e) Stronger collaboration at bilateral, regional and multilateral levels are a pivotal instrument to advance
the creative economy.
f) Participation of global networks, initiatives, and partnerships such as the World Economic Forum, the
Global Compact, the General Assembly of Partners, G-20, C-40, United Cities and Local Governments
(UCLG), MIKTA, ASEM, are pivotal to enhance the creative economy at all levels.
g) Inclusivity and partnerships are key to further developing the creative economy. Hence, the
government should ensure the full part participation of the private sectors in all aspects of the
planning and implementation of the creative economy. Public-private partnerships will be an essential
ingredient in achieving the full social value and benefits of the creative economy.
However, the participants suggested that the abovementioned way forward for the creative economy
should be further elaborated through subsequent meetings towards the WCCE 2018. The participants
aspire that the WCCE 2008 brings about the outcome that is implementable for the stakeholders,
particularly the policymakers. In addition, the participants also suggest that the abovementioned way
forward for the creative economy should be the guidance for the global creative economy development
beyond WCCE 2018.
ANNEX CHAIR’S SUMMARY

In Bandung, Indonesia, December 5th to 7th 2017, over 100 representatives from the government, civil
society, the private sector, think-tanks and academia, international organization as well as a number of
media have responded to the invitation of BEKRAF, the Indonesian Agency for Creative Economy, to join
the Preparatory Meeting for the World Conference on Creative Economy (WCCE). Through five panels,
the participants and experts discussed the theme “Inclusively Creative” and the way forward to WCCE in
Bali, 4-6 May 2018.

The topic “Inclusively Creative” reflects the current changes that the creative economy brings into the
world economy as a driver for inclusive and equal opportunities. In times of environmental, social,
demographic and urban transitions, the creative economy is a bridge for communication and
understanding between countries and cultures. It connects urban, metropolitan and rural ecosystems.
With the development of technology that provides increased revenue streams from emerging economies,
creative economy belongs to the future of the global economy.

Indonesia values the reinforcement of IP protection for creative economy, sourced from the management
and reinvention of cultural heritage, connected with science and technology. The development of the 16
creative industry sub-sectors of the Indonesian Agency of Creative Economy (Bekraf) is based on the
combination of technology, innovation, media, art and culture.

I. The Butterfly Effect: Social Impacts of Creative Economy (Social Cohesion)

This panel discussed how creative economy can provide equal opportunities for all, how cross-
cultural exchanges through creative economy reinforce social cohesion that unite people, and
how the internet of things (IoT), among contemporary digital changes, can help tear down barriers
for entrepreneurship.

The key points arising from this panel discussion are as follows:

a. Governments are called to create more enabling and facilitating environments for creative
economy, starting with SMEs and to support long-term growth. From a market perspective,
creative economy is based upon 3 pillars, the 3Cs of Connect, Collaborate and Commerce, which
include creation, production, marketing and distribution. Distribution and marketing need
support to reach out to both local and global markets.

b. Creative economy has proven efficient to address issues such as gender inequality, age gaps,
intolerance, uneven income distribution and unemployment. However, there are challenges
connected with the development of creative economy, that arise especially in globalized
metropolitan contexts. This calls for more integrated and multi-stakeholder policies ensuring
that investments in innovation also target and support the development of key services and
infrastructures; such as education, affordable housing, or easy access to mobility systems.

c. Creative economy is a transformative driver for urban lifestyles. It nurtures shifts in consumption
and production patterns from commodities to other goods and services. Positive outcomes at
 combined micro and macro-economic levels might be leverage for the whole economy
promoting recycling and the reduction of cities and industry ecological footprints.

d. With the internet as digital media of the global marketplace and the development of a global
workspace, creative economy provides a vast array of opportunities to create new
collaborations among public, private, academic, media and culture and environment
stakeholders at global and local levels. In cities, metropolitan areas and mega-regions, creative
economy is a driver for community development and a critical dimensions, complementary to
smart city investments. It is also a connector between the formal and the informal sectors in
the economy.

e. Creative economy has a critical role to play for achieving the Sustainable Development Goals
(SDGs). We need to be visionary to enable growth that supports economic and social cultural
welfare, empower communities and promote sustainability at all scales. Creative economy is
necessary to turn smart cities into more efficient cities for people.

f. The development of creative economy should address common challenges such as labor quality,
regulations, access to banking and finance, infrastructure, research and development capacity,
and synergy among stakeholders.

g. There is no one single approach in developing creative economy, as different region requires
different approach. Knowledge, science and cultural diversity should be the main resources for
creativity to be monetized.

h. Creative economy should be directed in drawing up solutions on challenges as well as creating

opportunities for the purpose of prosperity and peace. Creative economy is an important but
underestimated element in international relations, especially as a soft power tool in connecting
people, cultures and nations through diplomacy.

i. Public space and urban investments as well as efforts of social cohesion should take into
consideration the long-term added value of creative economy in line with the triple-helix
approach.

II. Coming up with the right creative regulations

The second panel focused on regulatory frameworks dedicated to creating an enabling
environment for creative economy, and on protection and promotion of intellectual property and
supporting financing system. Key points arising from this panel discussion are as follows:

a. Regulations to support creative economy need to be established in an enabling ecosystem

involving governments and other stakeholders such as universities, the private sector, civil
society and media. Further research and benchmarking will be needed to provide more evidence
for future policies and regulations. In addition, a more comprehensive mapping of creative
ecosystems is required at all scales.
 b. Governments should prioritize the establishment of regulations to promote the development of
effective IP system. The effective IP system should be part of the right regulatory framework as
it fosters creative economy’s growth.

c. Governments should raise the awareness of IP importance and its role in the creative economy
value chain.

d. Governments should support IP financing to utilize the value of IP in gaining access to finance.
The right regulations and legislation as well as government intervention will address challenges
in implementing the IP financing.

e. The governments have the responsibility to facilitate IP commercialization as it provides added

value and optimizes the economic benefit of creative works.

f. As an important source of creative economy, traditional culture expressions should be

acknowledged under appropriate system including IP systems for new expressions.

g. Governments should be aware of the importance of ethical responsibility to mitigate the

unintended consequences of creative economy development.

h. Governments should help relevant stakeholders to further understand the regulatory framework
and IP system related to creative economy.

III. Making the Offer that Creative Industry Can not Refuse
The panel discussed the potential of untapped markets and effective marketing strategies. The
key points arising from this panel discussion are as follows:

a. As creative economy mainly consists of micro, small and medium enterprises (SMEs), clustering
will help micro and SMEs to share support services and technical resources, and foster a more
comprehensive workforce participation in the economy.

b. International partnership platform that connects entrepreneurs in the creative economy

between countries would stimulate more creativity and talents.

c. Active engagement between private sector and governments to develop the right branding
strategy is required to capture untapped markets and create a multiplier effect. Effective
marketing strategy should include market identification and education of core audience.

d. To foster innovation, regulations should be adaptive to the rapid changes and disruptive
business models of creative economy.

IV. Taking the Creative Economy Ecosystem and Enterprises to New Height
The panel discussed the role of small and medium enterprises, including startups, in the
development of creative economy. It identified their values, their constraints and the need to
 create enabling environment (such as through creative cities) and provide necessary support for
the talents through trainings and capacity building. The key points arising from this panel
discussion are as follows:

a. Creative economy is a people-oriented sector that relies heavily on human talents. Therefore, it
requires a stream of supply of skillful and/or educated human capital. In this regard, there is a
need for good quality education that stimulates creativity. Besides, existing gaps for the access of
start ups to capital should be addressed.

b. FinTech offers solutions to replace or complement the banking system and could contribute to
financial inclusion. It can deliver core needs of banking such as loans/credits, savings, remittance
and money transfer. The solutions vary from peer-to-peer lending, crowdfunding, e-wallets, and
online payment gateways.

c. The financial regulators need to recognize the importance of FinTech and to accommodate its
growth within the context of creative economy.

d. Governments should develop policy to facilitate e-commerce transformation especially to

accommodate growing local markets and local brands.

e. In creative economy, product development through public collaboration and/or involvement is

important. Producer-consumer collaboration is a unique feature in creative economy.

f. It is important to appreciate not only the end product but also the process of production, which
would have the consequence to provide standardization and accreditation of professions that are
globally valid.

g. Academia can contribute to creative economy by continuously experimenting, creating new

experiences and innovation, coming up with new models of co-production among diverse cultures
and disciplines.

h. Governments should accommodate the needs of creative talents with no access to formal
education in the creative industry.

i. Mapping creative ecosystems, understanding urban problems and potentials, formulating best
practices as well as identifying local leaders or agents of change are significant for the
development of creative cities.

j. In order to accelerate the welfare impact of creative economy, integration with rural development
and tourism is required. Such integration will address challenges on human resources, access to
capital, regulation and marketing.

V. Outlining the Future of Creative Economy

Creative economy has brought a new era of inclusive business that provides equal opportunity to
all stakeholders. It also bridges communication and understanding between countries and
 cultures. With the growth of technology and increasing incomes from emerging economies, it is
apparent that the creative economy will become the future of the global economy.

The meeting discussed the way forward for creative economy and the key points arising from this
panel discussion are as follows:

a. All participants at the preparatory meeting of WCCE held in Bandung, 5-7 December 2017
recognize the high value of creative economy in the global economy. They agree to promote
WCCE in Bali 4-6 May, 2018 and to share the outcome of the preparatory meeting of WCCE held
in Bandung, 5-7 December 2017 together with governments, civil society, the private sector,
academia, international organizations and media.

b. All participants agree that WCCE should address the challenges of creative economy development
and especially labor quality, regulations fostering creative economy, access to finance,
infrastructure, research and development, and stakeholders’ synergy.

c. All participants call for stronger international political commitments to address the challenges and
to seize the opportunities of the creative economy for the implementation of the Sustainable
Development Goals (SDGs) and Agenda 2030.

d. All participants call for relevant international organizations including but not limited to UN, WIPO,
WTO, World Bank, OIC, and regional organizations (ASEAN, APEC, EU, African Union, etc) to tackle
the challenges of creative economy and to be part of the advancement of creative economy at
the global stage.

e. All participants call for stronger collaboration at bilateral, regional and multilateral levels as an
instrument to advance the creative economy.

f. All participants call for constructive participation of global networks, initiatives and partnerships
such as the World Economic Forum, the Global Compact, the General Assembly of Partners, G-20,
C-40, United Cities and Local Governments (UCLG), MIKTA, ASEM, and towards enhancing the
creative economy at all levels.

g. All participants agree that inclusivity and partnerships are key to further developing the creative
economy.

h. Government should ensure the full part participation of the private sectors in all aspects of the
planning and implementation of creative economy. Public-private partnerships will be an
essential ingredient in achieving the full social value and benefits of the creative economy.

VI. Closing session

The participants of the Preparatory meeting of the World Conference on Creative Economy held in
Bandung 5-7 December 2017 underline the richness and quality of the exchanges and of the work during
all sessions. They welcome the outcomes of the sessions, to be submitted for further discussion and
considerations at the forthcoming World Conference on Creative Economy in Bali, May 4-6 2018. They
renew their commitment to advance the creative economy, by sharing and building on the outcomes of
WCCE.