Quarterly Report - Kadin Indonesia

case, the Indonesian Association of Textile Producers (API) has a crucial role to playin helping capacity building in T&C companies. The role can be in various ways, suchas marketing research and acts as the information centre for T&C businesses onmarketing potential, tendency in changes in competition in the global market and newtechnologies and inputs.3) The government should give specific incentive to encourage foreign direct investment(FDI) to form subcontracting linkages with local/domestic T&C companies and toupgrade their technological capabilities. The specific incentive can be in variousforms; e.g. taxes (levies) or special tax-rebate schemes.4) The links between firms and R&D institutions and universities should be promoted.From the R&D institutions and universities side, by: (i) changing their missionstatements and philosophies from supply towards demand driven; (ii) removing allbureaucratic constraints; (iii) adopting a more progressive approach to selling theirdeveloped technologies or innovations and to disseminate information to the privatesector; and (iv) providing incentives: e.g. opening access to funding for R&Dactivities or providing direct subsidies to R&D institutions and universities, grantingthese institutions greater managerial autonomy, securing an affective legal system(including the observance of intellectual property rights); giving awards for the mostactive universities or R&D institutions in conducting R&D activities anddissemination of their findings to the private sector (or T&C companies in particular),or as a requirement for universities or R&D institutions to winning governmentfundedresearch projects. From the private sector side, by: (i) allowing accelerateddepreciation; (ii) lowering import tariffs; (iii) giving incentives in terms of e.g. taxincentives (tax credits); and (iv) providing special low interest paid credit scheme forlong-term investment to T&C firms that have linkages with domestic R&D institutionsor universities.5) For the purpose in point 4, R&D capabilities of R&D institutions and universitiesshould be improved by increasing government budget for science and technology,Quarterly Report - January 2006 53 Kadin Indonesia – www.kadinindonesia.or.id