Indonesia Loves Innovation Talk. So, Where’s the Innovation?
Indonesia ranks 55th in the 2025 Global Innovation Index. Why is a G20 country still stuck in the middle, and what’s holding it back?
Indonesia is simply too big to be this average. It is the fourth most populous country on Earth, a G20 economy, and home to universities that proudly plaster Times Higher Ed logos across every brochure as if accreditation alone could power a laboratory. With this kind of heft you’d expect a serious regional innovator, if not a global one.
Yet in the 2025 Global Innovation Index the country sits at 55th, sandwiched between nations with a fraction of its resources. Vietnam at 44th and the Philippines at 50th do more with far less.
To be fair, Indonesia has moved. From the 90s in the mid‑2010s to the mid‑50s today is genuine progress. But when the starting point was “not completely asleep at the wheel” it’s hard to truly celebrate.
The speeches remain grand:
Digital sovereignty,
Blue economy,
The data remain stubborn:
Business R&D at 0.02% of GDP,
Creative outputs at 58th,
Zero cities in the Top‑100 clusters.
To paraphrase a popular Indonesian saying: “Besar di kata, kecil di angka.” Big in talk, tiny in stats.”
Innovation Overachiever (Relative to Low Expectations)
Let’s talk about Indonesia’s favorite participation ribbon in the Global Innovation Index: “overperformance relative to income.” It’s not nothing, but let’s not start engraving trophies just yet. This is the innovation equivalent of being praised for showing up to work fully clothed.
WIPO defines this as doing better than expected for your GDP per capita. Indonesia is grouped here with the likes of Vietnam and the Philippines, two countries that arguably have fewer resources, but much more tenacity when it comes to converting economic hustle into measurable innovation output. Indonesia’s inclusion in this club does indicate progress, but it also reveals how low the global bar is for middle-income innovation systems.
Some of the underlying strengths are real:
Institutions (ranked 39th) benefit from policy stability and a relatively friendly business environment.
Market sophistication (50th) gets a boost from a massive consumer base and growing capital markets.
Entrepreneurship policy (10th globally) shows someone somewhere knows what a startup is.
But Indonesia is a G20 economy. It’s not a plucky underdog. It’s a continental-scale nation with hundreds of universities, a rapidly urbanizing population, and an internet penetration rate that should be the envy of a region. So why is it still being graded on a curve?
Overachieving at low expectations is still underachieving by actual potential. You don’t get global innovation cred just for showing up to the test on time with your name on the paper. Indonesia has the ingredients to lead.
Until then, tallest kindergartener it is.
The Bottlenecks That Everyone Sees But No One Seems to Fix
So why does Indonesia, still rank 55th in the Global Innovation Index? Because the machine is running on potential but powered by procrastination. The same bottlenecks that held it back a decade ago are still here, just older and more familiar.
❌ Human Capital & Research (92nd)
This should be the engine. Despite years of “Golden Generation” branding and dreams of a knowledge economy, Indonesia spends about as much of its GDP on education as a vending machine does on employee training. The result? Weak PISA scores, a short supply of researchers, and a leaky talent pipeline.
❌ Business Sophistication (83rd)
This is the place where innovation is supposed to leap from lab to market. Instead… Business-performed R&D is an anemic 0.02% of GDP. Everyone says they love collaboration, but the actual co-publications between universities and industry rank 117th.
❌ Infrastructure (71st)
Basic infrastructure should be invisible. In Indonesia, it’s a recurring character. Whether it’s rolling blackouts, digital access gaps, or roads that still can’t decide if they’re paved or not, the environment remains tough for innovators.
❌ Science & Tech Clusters (0 in Top-100)
This one hurts. Not a single Indonesian city appears in the global Top-100 innovation clusters. Vietnam made it. Malaysia made it. Indonesia? Still circling the roundabout, stuck somewhere between congestion and potential.
The excuses are running out. Everyone sees the bottlenecks. No one seems in a hurry to unscrew them.
Vietnam, Philippines, and Indonesia’s Missing Mojo
It would be easier to forgive Indonesia’s middling innovation rank if the rest of Southeast Asia were in the same boat. But they’re not. While Indonesia continues to pitch narratives about transformation, its neighbors are quietly converting effort into measurable gains.
Vietnam, now ranked 44th, has managed to punch well above its economic weight. It exports high-tech goods at a rate that puts richer countries to shame, and it’s steadily building a real science capacity. The Philippines, ranked 50th, has climbed from near the bottom by leveraging its digital services sector and unexpectedly excelling in creative outputs like design and media. Both countries have done more with less. Fewer people, less money, and smaller markets.
Indonesia, by contrast, seems caught in a cycle of bureaucratic optimism. It has all the pieces: a massive market, a startup scene, a G20 seat, and a government with no shortage of national “visions.” And yet, none of these have translated into the kind of output that moves the innovation needle.
Other countries are funding labs. Indonesia is forming task forces. Others are increasing publication output. Indonesia is tweaking slide deck templates. It’s not a matter of lacking the tools, but of misusing them or never getting past the announcement phase.
There is no shortage of strategy, only a shortage of execution. Innovation requires systems that reward experimentation and tolerate failure. It needs coordination, not just slogans. Indonesia has shown it can move forward. The problem is, others are moving faster.
Vietnam and the Philippines are rising because they’re doing the work. Indonesia is still watching the race from the sidelines.
Innovation by Press Release: A National Pastime
If Indonesia could build an innovation economy with ribbon cuttings, and mission statements, it would already be among the world’s top performers. No country produces quite as many visions, master plans, or soundbites with so little policy execution per word spoken.
We’ve had:
Making Indonesia 4.0.
Golden Indonesia 2045.
Digital Economy worth $315 billion.
There is likely a department somewhere dedicated to naming the next catchphrase. And yet, when the Global Innovation Index knocks on the door and politely asks to see actual metrics like researcher density, firm R&D spending, patent filings; the country finds itself unprepared. Not unwilling. Just... surprised.
In the Indonesian system, announcement is execution. Strategy documents are written, press conferences are held, and targets are set. Then, nothing. The follow-through dies quietly in a filing cabinet, somewhere between a ministry reshuffle and a budget reallocation.
The fixes aren’t rocket science. Ironically, Indonesia has a space agency that launches satellites but can’t get basic R&D investment over 0.3 percent of GDP. A few targeted reforms like funding real researchers, incentivizing firm-level innovation, and getting university-industry collaborations to produce something beyond an MoU, would go a long way.
But the current model rewards performance art. Ministries focus on visibility. Agencies chase KPIs that measure activity, not outcomes. Startups are praised for user numbers, not breakthroughs. And universities are still judged more on ranking badges than on what they contribute to science or society.
Until the system starts valuing outputs over optics, Indonesia will keep slipping on its own headlines. The potential is there. The execution is not. It’s not a lack of ambition. It’s a chronic addiction to press releases as a substitute for progress.
Indonesia has improved. It’s climbed the innovation ranks, strengthened a few core systems, and shed the label of passive laggard. But let’s not confuse upward movement with actual arrival. The bar was low. The steps have been small. And the climb? It’s starting to stall.
Ranked 55th, Indonesia sits comfortably in the global middle, but this is not a middle-sized country. This is a regional heavyweight, a G20 economy, and a digital giant with 275 million people and a tech-savvy population. Being “average” in innovation is a policy choice, not a technical limitation.
“Overperforming relative to income” is fine for the brochures. But Indonesia should be aiming higher. Overperformance relative to capability is the real goal. And right now, we’re not close.
The roadmap exists. The obstacles are well known. The excuses are getting tired. Innovation success doesn’t come from talking about 2045. It comes from acting in 2025.
At StratEx - Indonesia Business Advisory we help investors and operators understand where Indonesia can still win. Contact us to bring structure, funding, and local insight to innovation efforts.