Opportunities for step change innovation requires capital, which MSMEs often deprioritize due to perceived sizable costs. For MSMEs to effectively create or improve their products, services, business models or processes, they need to link with universities and research organizations that can help them to carry out research activities and facilitate the adoption and application of the innovations. However, opportunities for MSMEs to collaborate with external experts, access specialists and tap into research and scientific expertise in Jakarta are currently limited.
Research and innovation activities at the provincial level is not new in DKI Jakarta. The Regional Research Council (DRD) of DKI Jakarta was established as an independent non-structural institution based on Governor Regulation No. 131 of 2014 as a replacement for Governor Regulation No. 101 of 2005 concerning the establishment of Regional Research Council, which is the implementation of Law Number 18 of 2002 on the National Research System and the Application of Science and Technology. DRD has been actively involved in advising the Provincial Government of DKI Jakarta on a wide variety of regional issues such as water needs, access to health facilities, transportation and housing1.
However, newly issued regulations, such as the Job Creation Law No. 11 of 2020 and the Presidential Regulation No. 78 of 2021 on the National and Research Innovation Agency (BRIN) (PR 78/2021), put into law the possible creation of a Regional Research and Innovation Agency (BRIDA) for each region. BRIDA is tasked to carry out the research, development, assessment and application, as well as invention and innovation that are integrated in the region. While similar in principle to DRD, BRIDA is designed to be closely connected to BRIN and will have access to resources, such as mentorship, coaching, and coordination by BRIN2. BRIDA can also play a more significant role in coordinating research and development activities at the regional level compared to DRD3.
Furthermore, to assist MSMEs in their research and innovation activities, the Government Regulation No. 7 of 2021 on the Ease, Protection and Empowerment of Cooperatives and MSMEs stipulates that the regional government will provide support in research and development to micro and small enterprises4. However, the regulation currently offers limited information about the format that this support will take.
Building a vibrant and innovative entrepreneurship ecosystem in DKI Jakarta requires the involvement of research-intensive institutions to help MSMEs in the region innovate and grow. By enabling ideas to come from the outside, MSMEs can focus on their core business without expending a significant amount of resources to seek fresh knowledge. Transitioning DRD to BRIDA will allow the Provincial Government of DKI Jakarta to cultivate closer relationships with academics and higher education institutions across the region. Furthermore, open innovation programs funded by the regional government and administered by BRIDA can help MSMEs benefit from enterprise-led research and innovation. One example of such support is in the form of grants or innovation vouchers, a scheme that offers MSMEs the opportunity to work with research institutions to help their business innovate by developing new processes or introducing new products.
For many entrepreneurs, the decision to turn into innovations depends on the ease to adopt technology, trained workforces, and multiple sources of finance. Yet, navigating the complex regulation is a major challenge for most lay business people. To expedite the economic recovery post-pandemic recession, the stakeholders in the ecosystem are urged to formulate the right policy to simplify such challenges.