Ministry of Industry is thus the main agent for SME promotion.⁴¹ Up to early 1994 most programs were formulated, monitored, and executed by the Directorate General of Small Industries. The directories in Jakarta handle policy formation, administration, and training of the provincial and regency offices of the ministry. These offices, attached to all Kabupaten (regencies) in the country, are responsible for the executing and monitoring of the programs. Many extension workers are experts in the field of small business development and are well aware of the specific constraints and prospects for local small enterprise, through frequently without the resources to deliver assistance in accord with their ideas. The combination of its being free to the client and the enormous size of the nationwide target group means that this technical (non financial) assistance must be provided at relatively low average cost. Some extension workers have also played successful intermediate role in linking small firms to larger business or the banking sector.⁴²

IV. Prospect for the Implementation of Trademark Law
in SME Business Activity in Indonesia

     If trademark protection is deemed important and if SME contributes valuable role in Indonesian economic, then why the two of them are quite difficult to come together? When we deal with this issue, focuses will be put on three problems: first, the number of SME registering their trademark. Second, there is suspicion that a certain number of SME tend to violate trademark law. Third, there is possible SME trademark violation by bigger enterprise. The three problems will be analyzed below.

A. Registration of Trademark by SME

     From the total business unit of 38,725,960 in 2003, only 46.947 filed application of trademark registration, 35.353 of them were registered, 3,527 were refused, and 83 were withdrawn. In general, therefore, only 0.12% of the total business unit submit their application for trademark registration and only 0.09% of the total business unit have their trademark actually registered.

     The small percentage of trademark registration might be traced back in the procedure of registration. As briefly above described, trademark registration cost not only sum of money but also length of period that can be considered as obstacle in gaining cheap, practical, and easy registration.

     For instance, based on assumption that the process of registration runs well, then the applicant will need to pay the application for registration of trademark + request for written notification concerning General List of trademark = Rp 450.000,00 + Rp 125.000,00 = Rp 575.000,00. This amount has not included fee for the proxy, whose service will be needed for those having no experience concerning trademark registration. DGIPR provides “IPR clinic” for SME. The main role of the “IPR clinic” is to serve consultancy for the applicant of trademark registration. The fee for IPR clinic for SME is Rp 600.000,00. Thus, the total amount for trademark registration will be no less than Rp 1.175.000,00. This number cannot be considered as cheap for SME, in particular when trademark registration has not been considered as necessary or important. The amount will increase due to the Government plan to issue Regulation on IPR Consultant, whose fee is at least five times more expensive than the fee for “IPR clinic”.⁴³

     The problem will be twice folded due to the new Government Regulation No. 2 of 2005 regarding IPR registration, which will be applied in the near future. The new regulation rules that the application of IPR (including trademark) shall be requested directly by the owner or IPR consultant. One of the requirements of IPR consultant is that he or she is not civil servant. This requirement will bring change in way that up to today, IPR clinic of the DG-IPR provides assistance for the registration. The 90% members of IPR clinic are civil servants. After the implementation of the new regulation, such assistance will be provided by private consultant, who usually charge more expensive fee for such service. For instance, IPR clinic only charge a fee of Rp 600,000,00, but private IPR consultant might charge various amount of fee, usually not less than Rp 3,000,000,00 (that is five times more expensive) for each application.

     Regarding the length of period of registration, in case the registration is without refusal and objection, the procedure from the filing date to the announcement of the application in the Official Gazette of Marks will take 310 days (or more then 10 months) at the latest, that is 30 days at the latest from the filing date for the examination up to 270 days (or 9 months) and 10 days at the latest for the announcement. The duration is considered as too long for the procedure, bearing in mind that in some cases there might emerge refusal and objection, which will take longer period.

     The combination of high cost and long duration of process results in complicated procedure, so that it is reasonable that it cost hesitation for SME.⁴⁴ The hesitation to register trademark has hampered the development of the business as witnessed in SME development in West Java. This is the case of Majalaya textile, Majalengka soy sauce, and Cibaduyut shoes. This case illustrates another function of trademark; that is to reflect the commitment to deal in particular business sector in a long term. The lack of awareness on the selling value of a trademark has not only slow down the business, but even resulted in the loss of image when it has to compete with stronger trademark registered. Majalaya textile has started the business far before a well known trademark of traditional product: “Jamu Nyonya Meneer” in 1928 but also never registers the mark. The business has sunk, instead of the stronger image build by Nyonya Meneer from the mark it has registered. 310 Majalengka SME producing soy sauce have claimed their products as number 1 product, but never registered the marks. The business opportunity was taken thereafter by bigger enterprises. There is no trademark violation, but the well known image in the past was taken over by more firm and strong image registered. Nowadays, soy sauce Majalengka only wins the market of traditional meatloaf in Indramayu, Cirebon, and Majalengka region. Cibaduyut as small industry centre for shoes sector has began the business since 1956 and up to 1975, it won the image of quality. Most of the marks of the SME within Cibaduyut center are never registered and after 1975 it began to focus on meeting market demand and neglecting the quality. Up to 1900 only 11 trademarks were registered.⁴⁵

     Another case is the registration of trademarks belongs to traditional SME by foreigners. This is the case of Toraja coffee originated from Toraja, South Sulawesi. The trademark was registered lately by Key Coffee from Japan. The case results in the obligation for Indonesian to export Toraja coffee to Japan through Key Coffee.⁴⁶

     The main problems for SME to register their trademark are the combination of two or more elements as followed: first, the less awareness of the importance of trademark protection or the assumption that trademark protection is irrelevant or even puts barrier in dealing business. Business dealing requires short, cheap, and practical administrative procedures. In case where the procedure becomes high cost, then the benefit will be reduced. This is not interested in particular for those who are not supported with strong capital to bear the cost. It is not too surprising therefore to reach conclusion that trademark is considered as equal to high cost and complicated.

     Second, there is only limited access to get proper information concerning trademark law. This problem arises due to the lack of understanding on the real problem, instead of giving information, which having been known by the target group. Such dissemination of information does not touch the essential function of giving information; that is bringing awareness on the part of SME. Accordingly, a proper research to understand what is needed to be understood by SME with regard to the importance of trademark protection will be deemed necessary.

     Third, the more general yet worse problem is the distrust to national legal system in general and in particular to IPR legal system, that legal protection is equal to big money and big enterprise. There is no guarantee that after fulfilling all the requirements for legal protection, they will be actually protected. The issue of unfair court seems to bring impact the wider scope of law enforcement.

     Fourth, in certain level, the behaviour pattern of business actor who less respect invention or the right of inventor of a mark affects the way of thinking on whether such protection is necessary. The problem dealing with here has more closed connection with culture. To acquire proper solution on this matter, it requires careful study on business culture in Indonesia.

41. See the Programs of Ministry of Industry and Trade in Departemen Perindustrian dan Perdagangan RI, Rencana Induk Pengembangan Industri Kecil dan Menegnah 2002-2004, Buku I, kebijakan dan Strategi Umum Pengembangan Indsutri Kecil Menengah, 2002.

42. Albert Berry, Edgard Rodriguez, and Henry Sandee, loc.cit.

43. Bisnis Indonesia, “Pendaftaran HAKI Milik UKM Diperkirakan Turun”, 2 February 2005.

44. The same problem emerges in case of registration and licensing of SME. Only 20% SME registered and having formal license as reported by Frida Rustiani, “Perizinan Usaha Kecil di Indoesia (Licensing in the Decentralizing Era)”, Policy Paper, Partnership for Economic Growth, the Republic of Indonesia Ministry of Industry and Trade, August 20, 2001.

45. http://www.pikiran-rakyat.com/cetak/0604/04/06a03.htm

46. http://www.haki.lipi.go.id/utama.cgi?artikel&1082616815&3 See also http://wartaekonomi.com/detail.asp?aid=2086&cid=24