The Role of Business Incubators as Creative Policy Intermediaries in Indonesia


Creative industries and cultural policy discourses have spread around the world, not only to first world countries but also to some developing countries, including Indonesia.  Since the term creative industries is more prominent in Indonesia than cultural industries to distinguish contemporary and popular culture from traditional arts and culture, I will use the term creative policy rather than cultural policy for this essay to avoid confusion.

Unfortunately, contemporary culture audiences in Indonesia is not as plenty and appreciated as traditional culture audiences. Doing contemporary culture is often seen as an act of neglecting local cultures and a movement to uphold Western culture more than Indonesian culture which is not entirely true. For that reason, the dissemination of this idea must be supported by intermediaries. This essay will highlight two types of business incubators as creative policy intermediaries in Indonesia.

This essay is structured as following. Firstly, I will describe the creative industries discourse and model in Indonesia and how intermediaries are able to aid the development of the creative industries. Secondly, the term creative intermediaries will be explained thoroughly. To make this essay more specific, I narrowed down the many types of intermediaries and chose to address Business Incubators (BI) and further explain the roles of BI. Then thirdly, I will undertake a critical review of the implementation of BI in my home country, Indonesia, endowed with real world examples, two particular types of BI, how it is interrelated to promote the model and discourse, and suggestion for improvement.

Indonesia recovered from the severe Asian economic crisis in 1998 which marked the transition between New Order economic period to Reform economic period (Jones, 2007). At this rough time, numerous big corporations went bankrupt. On the contrary, Small Medium Enterprises (SME) stood still and saved Indonesian economic system. Therefore, since that period Indonesian government has been striving to intensify the growth of entrepreneurs. Within just 17 years’ period until 2003, there were 64 new institutions, ranging from governmental bodies, banking services, and private companies, initiated 594 diverse programs related to SME empowerment. These programs include coaching, funding, and award granting (Tambunan, 2007).

Moreover, with the abundance of Indonesian citizen as well as a limited job opportunity, the notion of self-employment is highly compatible to be implemented. The widespread of the creative economy term also influences the number of SME which operates within creative economy categories such as fashion, craft, design, and interactive leisure software. In line with Reform’s vision of ‘greater freedom of expression in the press and cultural practices’ (Jones, 2007, p.449), the overall circumstances of Indonesia in this economic period is indeed far more conducive for creative workers than the oppressive New Order period. We can see the determination of Indonesian government to nourish creative entrepreneurs in its long-term development plan to
embody competitive and dynamic creative entrepreneurship: (1) increase quantity and quality of creative entrepreneur (amount, even distribution, enhancement of skill-knowledge-attitude) and (2) increase collaboration, networking, and partnership at local, national, and global stage (Indonesia Ministry of Tourism and Creative Economy, 2014, p.292).

In other words, the delivery of creative economy discourse in Indonesia is emphasised on creative entrepreneurship or SME development. My undergraduate research also shows that the alumni from art and design faculty have a hard time finding suitable jobs related to their degree because the creative economy ecosystem in Indonesia is not supportive enough. The implication is some alumni chose to work in non-creative industries (Wiradarmo, 2014). This is why entrepreneurial spirit must be implanted for them so they can invent new job opportunities independently.

This leads the government to apply cultural occupation theory by Grodach (2013) as a creative economy model. The focus of this model is to maximise the power of human capital in the sense that government must prepare all needs of creative workers to help them thrive. Intermediaries are needed as a bridge to ensure that all of their necessities are affordable whether in terms of cost or access. This theory is backed by Markusen and Schrock (2005) who popularised the artistic dividend theory, an approach to highlight how precious it is to foster artists and creative workers as an investment that can improve the extensive economic landscape.

In addition, Indonesia also highlighted the importance of ‘design-led innovation’ from Potts and Cunningham’s (2008, p.237) growth model as a competitive value for creative industries which is able to boost not only creative industries revenue, but also has wider implication to catalyse the prosperity of other non-creative fields like tourism, technology, or service industries that will evoke higher Gross Domestic Product (GDP). In this model, creative industries is classified as a specialised subject. It is positioned above other industries and overarched them. For Indonesian case, this may explain the transformation of Ministry of Tourism and Creative Economy (KEMENPAREKRAF) to a more independent Creative Economy Council (BEKRAF) in 2015 because its programs require inter-ministry collaboration (Creative Economy Council, 2015).

The term ‘cultural intermediaries’ was coined by Bourdieu (1984, p.356) in reference to critics about how cultural products were chosen to be consumed by the masses. However, currently, the term is slightly shifted. Intermediaries are defined by Perry et al. (2015) as institutions which connect creative goods from producer to consumer and vice versa, then frame it in order to gain a greater monetary advantage. Another definition by Jakob and Heur (2014, p.357) add another significant policy-related role of intermediaries to ‘shape, regulate, organise, and govern’. For them, some intermediaries have contributed to informing stakeholders about what kind of policy is needed by the masses, while at the same time other kinds of intermediaries invoke policy to the masses.

There are several types of intermediaries ranging from ‘creative hubs, business support services, […] national agencies with specific policy framings, to […] policy think tanks’ (Selfe, 2016). Nevertheless, the most interesting one for me is business support services or in this case, business incubators (BI) because it intersects with Indonesian’s creative economy agenda to cultivate the people. BI is defined as
a […] combination of business development processes, infrastructure and people, designed to nurture and grow new and small business by supporting them through the early stages of development and change (UKBI, 2007 cited in Bruneel et al., 2012, p.111).
In my perspectives, BI as intermediaries will fortify the application of the two theories which are implemented in Indonesia, the occupational and growth model.

More or less creative economy development in Indonesia is based on the UK model which was first socialised by British Council. It even invited Charles Landry, a prominent creative economy consultant from the UK to Bandung, a pilot project for the creative city in Indonesia (Temenos and McCann, 2012) so the citizen can learn directly from the source. Until nowadays Indonesia still does policy benchmarking to other developed countries and then adapted it in Indonesia with some adjustment. Consequently, it is better to learn how BI concept is executed in developed countries.

Sheffield Cultural Industries Quarter

There are many BI across the UK itself, namely Sheffield’s Cultural Industries Quarter, Birmingham’s The Custard Factory, London’s The Chocolate Factory, Cardiff’s Chapter Workshops, and Glasgow’s Creative Clyde. Physically it almost looks like conventional office space, but there are other additional facilities like front office, meeting room, print and photocopy, cafeteria or studio workshop for a more advanced type which can be utilised by all tenants. Basically, the tenants will save operational cost because they are grouped with other renters to get common facilities with cheaper shared price. The environment also provokes collaboration or inter-trade with other businesses.

Apart from cheaper total rent cost than typical office space, consultancy service is incubators core value proposition. Since most of the prospective tenants are new in entrepreneurship field, they are eager to learn practical things. There are workshop coaching and private mentoring with hope to help these start-ups overcome critical early phase of business until they are mature and ready to leverage their business to the next phase. Tenants do not have to pay the supplementary cost for this service since it is included in their rents (Bergek and Norrman, 2008).

Most BI are owned by private corporations thus their revenue relies upon rent payment. In order to gain additional payment, they often rent common rooms for events such as seminars, gathering, or craft workshops. There are also ancillary activities like a coffee shop, library, or gift shop which can also act as a showcase for the tenants’ products. BI with bigger spaces tend to include gallery or performance stage thus they can attract general visitors beside the existing tenants (Montgomery, 2007). In principle, they always find a way to make the space lively and attractive for prospective tenants.

After analyzing Indonesian BI models and compare it with literature, generally I find 2 main roles of BI in Indonesia: the first one is (1) business-based output to increase nascent creative entrepreneurs, especially for youth, with new business or start-up as output; and the second one is (2) product-based output to help extant SME to develop new creative product or re-branding process in order to fit better into creative industries criteria such as novelty and well-designed products.

As for the way BI choose tenant, Bergek and Norrman (2008, p.23) divided into two approaches, namely (1) ‘idea-focused’ where innovative ideas and business models are the primary consideration and (2) ‘entrepreneur focused’ which put aside ideas but emphasizes on character and quality of the person or the team. The first approach believes that entrepreneurial spirit can be nurtured upon training or coaching, while the second approach argues that realistically not everyone can be entrepreneur so they must select the right individual from the beginning of the program. The differences in these two approaches are in parallel with the two types that I previously mention.

Clearly, these two types can be seen in real world practice. For this essay, I chose four BI programs from three different governmental bodies as an example. Most of the programs are recently launched thus there is still much room for evaluation and improvement.  The reason to choose state-owned bodies is to understand how the key stakeholders interpret and lead creative industries development. Besides, these programs may become a significant precedent for other private BI.

The first category includes BEKRAF for Pre-Start-up (BEKUP) program from Creative Economy Council and Bali Creative industries Center Business Incubators (BCIC-BI) from Ministry of Industry. In 2016 BEKUP aspire to select 100 teams which consist of 1200 participants from all over Indonesia to join 8 coaching clinics in Jakarta, the capital city of Indonesia, for several weeks. The mentors are experts from diverse backgrounds who teach everything participants need to know to build a start-up.  The mentors are selectively approached by the government and they even had their own pre-training. This program divided the coaching material into 4 stages, namely talent development, founder preparation, program preparation, and mapping (Palupi, 2016).

Competition in Bali Creative Industry Center

BCIC-BI is pretty much the same, but it has longer incubation period for 6 months. It is held in Bali Creative industries Center building in Bali which is occupied with workshop. It takes time because the participants are organised to fabricate product prototypes for their business by themselves and later collaborate with local craftsmen for the actual products. BCIC also organises design competitions and the tenants are allowed to join (Bali Creative industries Center, 2015).

The second category comprises of Nusantara Innovative and Creative Collaboration (IKKON) from Creative Economy Council and Designer Dispatch Service (DDS) from Ministry of Trade. IKKON offers a combination of creative entrepreneurship and cultural empowerment program. For the first year, it selects 5 teams which consist of designers, photographers, and anthropologists to live in selected rural areas, with minimum exposure potential, to develop new product or system for several weeks. The aim of this program is to empower local talents outside big cities of Indonesia to be involved more in creative industries discourse. The teams will reconstruct traditional crafts and designed them in a more sophisticated way. The first program was held in Sawahlunto, Lampung, Brebes, Rembang, and Flores, all areas with the eminent culture of batik and weaving (Zulaikha, 2016).

Product from Designer Dispatch Service Program

The other program, DDS, also facilitate designers to work together with local SME from 11 export-intensive cities, such as Yogyakarta, Kupang, Medan, Palangkaraya, and Solo. Two businesses from each city are curated and then assigned with one designer to help them design a new product which best fit current global market trend. Later the designs will be mass-produced by the SME. DDS is the eldest program of all the BI cases in this essay. It was first initiated in 2011 and since then has contributed to improving export product diversification (Indonesia Design Development Center, 2016).

The most apparent distinction from UK BI model is Indonesian BI are free of charge. The BI and all programs related to them are fully sponsored by the government. As far as I comprehend, the uttermost objective is to promote that creative economy is not exclusive, but inclusive, hence they have to reach audiences as broad as possible, even the less fortunate one. Payment may overcast the audiences’ excitement for this program, especially because these programs mainly target youth. The bottom line is Indonesian BI must encourage that everyone is invited to participate in this promising industry, learn, and grow together.

Because tenants do not have to pay, there are some limitations for Indonesian BI. For instance, there is a short time limit for them to be engaged in the program. This is not happened in developed countries’ BI because they can stay as long as they pay the rent or at least for a long period of 3 years (Bruneel et al., 2012). When the program is over, tenants are released without any formal bond or contract. To illustrate, a BI could have been set a strict target for all tenants to launched their business a month after incubation process ends or to hit breakeven point one year after the business is launched. Quite the contrary, there is still no data regarding how the BI evaluate these tenants afterwards, hence there is no solid evidence to prove that this system or tenants’ businesses to be succeeded or failed. Possibly the evaluation will be accomplished for upcoming years’ program. I recommend cost-benefit analysis to assure that the governments’ huge investment for this programs is right on target and gap analysis to compare and contrast with best practices programs as suitable policy evaluation methods.

Another distinctive feature from Indonesian BI is the shape of the BI. In developed countries, BI is a tangible place or real brick and mortar buildings, while in Indonesia BI is adapted as an event or incidental program which can be held in several places based on the sponsors. Here, incubators are perceived as a system. There is also an adaptation for BI as actual places, which often called co-working space in Indonesia, but this space is open for any kind of businesses, certainly without special training or mentoring services as offered by conventional BI.

Despite these different adaptations, pointedly for business-based output BI, they should acknowledge that initiating a business is not as hard as sustaining it. Regardless of how brilliant the product, branding, and marketing strategy which are the core coaching material for most BI (Mustafa, 2016), business needs a stable operational system and constant profit to keep on going forward. These non-creative management tasks may sound less appealing to learn and can be delegated to outsourced workers, but it is essential for business owners to understand the basic knowledge. Based on my observation, I suggest BI to invite professional accountant to teach tenants in composing major financial statements such as income and expenditure report, balance sheet, and cash flow. Above all, these start-ups need access to capital. A sponsorship guidance related to business model presentation, pitching, and how to approach angel investor is of the utmost importance.

On the other hand, my suggestion for product-based output BI type is to include training related to intellectual property rights. As an Indonesian product design student, from my experience, there are many SME, which mostly produce furniture and craft, with exquisite craftsmanship skills but the products’ designs are copied from existing products or even from the internet without proper acknowledgements. This is caused by their poor understanding of design and copyright. They do not know that this simple act can be considered as an illegal practice, especially if they want to expand their market overseas because it is better to showcase goods with true Indonesian identity. Furthermore, it will attract bad publication for Indonesia to be known as a copycat country. Therefore, the presence of BI is necessary to educate the value of design and inspire them to hire designers for the upcoming production process. Bridging talented designers and emerging SME through intermediaries is a good step to overcoming this perennial problem.

Considering this fact, in my opinion, the product-based output approach is more viable for Indonesia because the output is directly visible and more measurable. There is no worry regarding the mechanism of production because it is professionally handled by experienced industries, thus the BI can go straight to manage the export system. For instance, what international exhibition should the products be displayed at so the industries can acquire more international customers? By the same token, the risk of program failure is smaller since in assumption, working with nascent entrepreneurs in idea-based output BI model without precise talent assessment is open to the possibility of irresponsible tenants who do not reap the intention of the coaching.

All in all, the role of governmental business incubators is paramount to achieve Indonesian vision for 2025 to accelerate creative entrepreneurship growth. Even though there are three disparate governmental bodies with their own flagship creative industries support programs, we should see them as complementing rather than overlapping one another. Eventually, they are all playing active roles to achieve the long-term development plan.

Most of these programs are recently established in the past two years. In such circumstance, it is pleasant to notice that Indonesian government’s put such determination to flourish creative industries. I believe in the upcoming years more creative entrepreneurship-related programs will be established and in the end, I am optimistic that Indonesia will reach its creative economy long term development plan in 2025.

This is an essay for CICP Assignment for Creative Industries and Cultural Policy Course at the University of Glasgow. Please provide proper citation if you use this as reference.

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*Translated by me from Indonesian language.

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