Indonesia’s New Omnibus Law and the New Patent System: An Economic Game Changer?

By Eng. Daham Shyamalee (Asian Novelty)

Indonesia’s recent enactment of the Omnibus Law 2023 has brought sweeping changes across sectors, with intellectual property (IP) standing out as a focus. The country, home to one of the world’s largest populations and a rising economic force, is positioning itself for increased innovation and international competitiveness. With notable amendments to its patent law, particularly in simplifying the patent system, the new legislation is expected to significantly impact economic growth and local innovation. Here, we delve into the implications of Indonesia’s Omnibus Law on patents, particularly simple patents, and explore how these changes might stimulate Indonesia’s economy.

Background of the Omnibus Law in Indonesia

The Omnibus Law 2023, officially known as Law No. 6 of 2023 on Job Creation, emerged as an ambitious legislative reform aimed at job creation, investment attraction, and economic streamlining across Indonesia. This law follows the annulment of its predecessor, the Job Creation Law (Law No. 11 of 2020), by the Constitutional Court of Indonesia, which had ruled it unconstitutional due to procedural issues in the legislative process. Overcoming considerable public opposition, the revised Omnibus Law 2023 was passed in March, broadening regulatory changes in various sectors, including the environment, labor, and intellectual property.

Changes in Patent Regulations: An Emphasis on Simple Patents

The Omnibus Law has modified Law No. 13 of 2016 on Patents in a few critical ways. Among these, the concept of a “simple patent” has taken a prominent role. Unlike standard patents, simple patents are granted for inventions that may not meet rigorous standards of innovation but still exhibit industrial applicability and practical value. The law defines simple patents as inventions related to simple products, processes, or methods, effectively lowering the threshold for obtaining IP protection. This shift encourages domestic inventors and small-scale businesses to register innovations, potentially fostering a culture of entrepreneurship and local ingenuity.

Key changes include:

1. Reduced Requirements for Local Working: The Omnibus Law has relaxed the mandatory “local working” requirements, which previously obliged patent holders to implement their patented inventions in Indonesia to encourage technology transfer and local job creation. Now, patent holders are only required to manufacture, import, or license their patented products.
2. Streamlined Patent Process: The procedural requirements for simple patents have been simplified. Applicants for simple patents can receive decisions from the Ministry of Law and Human Rights within six months, down from the prior timeline of up to a year, accelerating IP protection for small-scale inventors.
3. New Patent Examination Process: Applicants are no longer constrained by a six-month window to request a substantive examination, giving more flexibility in the application process.

The Economic Impact of the Omnibus Law’s Simple Patent Reforms

The introduction of simplified patent procedures and the promotion of simple patents are expected to boost Indonesia’s innovation and, consequently, its economic growth. Here’s how these changes may impact the economy:

1. Lowering Barriers to Innovation

By recognizing simpler innovations and reducing procedural bottlenecks, the Omnibus Law makes the patenting process more accessible to a broader range of inventors. This shift is especially beneficial for small- and medium-sized enterprises (SMEs), which may not have the resources to develop complex, inventive patents but can still contribute meaningfully to the economy through simple, practical solutions.

2. Increased Domestic Patent Filings

Indonesia’s patent landscape has long been dominated by foreign applicants, with domestic applicants historically filing only 20% of patents. By easing the patent eligibility criteria and requirements, the Omnibus Law could incentivize local inventors, academia, and industries to file patents domestically. Such an increase would not only bolster Indonesia’s IP portfolio but also drive local job creation and innovation within various sectors.

3. Attracting Foreign Investment

The Omnibus Law’s changes make Indonesia more attractive for international businesses and investors. By aligning patent regulations more closely with the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, Indonesia aims to reassure foreign investors of its commitment to international IP standards. Reducing the local working requirement simplifies the obligations of foreign entities holding patents in Indonesia, making it easier for them to operate without the burden of onshore production or technology transfer.

4. Encouraging Technological Advancement and Knowledge Transfer

Though the Omnibus Law removes the local working requirements, it could still indirectly promote technology transfer by making it easier for domestic businesses to license and manufacture patented products. If supported by additional policy measures, such licensing activities can introduce advanced technology and knowledge to local markets, catalyzing sectoral growth and enhancing Indonesia’s competitive edge in technology-driven industries.

5. Shortening Patent Application Timelines

The expedited patent processing for simple patents may encourage faster commercialization of new products and technologies. For instance, in the pharmaceutical, agricultural, or small-tech sectors, quicker patent processing can mean faster time-to-market for new products, potentially translating to economic gains. It also allows innovators to react more swiftly to market demands, a crucial advantage in dynamic industries.

Looking Ahead: A New Patent Landscape for Indonesia

As Indonesia moves forward with its ambitious patent reform, the economic potential of these changes will depend heavily on the government’s ability to create an enabling environment for innovation. An emphasis on simple patents is a powerful tool for promoting localized and accessible innovations, especially in sectors like agriculture, manufacturing, and small-scale technology solutions.

For businesses, IP professionals, and inventors in Indonesia and abroad, staying informed of the evolving patent landscape is critical. While the Omnibus Law opens new doors, the true extent of its economic impact will unfold as Indonesia continues to navigate its journey towards becoming a global innovation hub.

IAM (2024). Indonesia: Omnibus Law’s patent regime overhaul raises questions about practical implementation. [online] Iam-media.com. Available at: https://www.iam-media.com/review/the-patent-prosecution-review/2025/article/indonesia-omnibus-laws-patent-regime-overhaul-raises-questions-about-practical-implementation [Accessed 29 Oct. 2024].

International Trade Administration (2022). Indonesia – Protecting Intellectual Property. [online] www.trade.gov. Available at: https://www.trade.gov/country-commercial-guides/indonesia-protecting-intellectual-property.

PWC (2021). New Regulation Under Omnibus Law Overhauls Indonesian Foreign Investment Rules. [online] Available at: https://www.pwc.com/id/en/publications/omnibus/omnibus-flash-2021-08.pdf.