BHTV 2.

0: A second attempt to create Siliconia in Indonesia 1
Budi Rahardjo School of Electrotechnics and Informatics Institut Teknologi Bandung Email: br@paume.itb.ac.id

Introduction
There is a myth that people who work in Information Technology (IT) are loners. Since all they need is just a computer and fast internet access, they can work anywhere in the world by themselves. The surrounding environment where they work is not that important. Richard Friedman enforces this view with is book, The World is Flat. India and China are used as examples of successful countries. The truth is that these people tend to live close to each other, forming a cluster. This fact is inline with Richard Florida’s claim that the “world is spiky” [Florida, 2005]. He argues that creative people, who are the driving force of knowledge economy, tend to cluster in certain cities or regions. Thus, if we look at the map of the world and plot the location where creative people are located, we will see spikes. The cluster theory is not new. There have been numerous studies around industrial clusters [Kuah, 2002]. The model of such clustered region for information technology is Silicon Valley. Thousands of IT companies are clustered in this region. A new type of economy, properly enough called new economy, is created in this region. Many cities, regions, and countries try to imitate this Silicon Valley environment, creating the terms “Siliconia.” The best examples of such Siliconia include Silicon Hills (Austin, Texas, USA), Kempele (Oulu, Finland), Silicon Alley (Manhattan, USA), Silicon Fen (Cambridge, England), Kista (Suburb of Stockholm), Multimedia Gulch (South of Market, San Francisco), Shinjuku (Japan), Silicon Bog (Ireland), Silicon Dominion (Virginia), Silicon Wadi (Israel), Cyber District (Summer and Congress Streets, Boston), Hoxton (Northwest, London), Silicon Forrest (Seattle vs. Portland), Silicon Island (Taiwan), Silicon Valley of the East (Dresden/Elbe River Valley, Germany), Sophia Antipolis (South of France), Silicon Glen (Glasgow to Edinburg), Digital Coast (Greater Los Angeles), Media Valley (Inchon, Korea), Silicon Plateau (Bangalore, India), Softopia (Gifu, Japan), Silicon City (Chicago), Telecom Valley (Minas Gerais, Brazil), and Czech Tech (Prague) [Wieners, 1998]. Indonesia, just like other countries in the world, wants a piece of the cake by deploying various initiatives. In Indonesia there have been attempts to create Siliconia in several places, such as Bandung (Bandung High Tech Valley), Bali (Bali Camp), Yogyakarta, Bogor, Toba (Toba Tech), Batam, Jakarta (Kemayoran Cyber City), Cimahi (Cimahi Cyber City), and perhaps more to come. Unfortunately, some of these initiatives are more directed towards physical property; land and buildings. They forgot that human resource is the most important component of Siliconia. In his opening keynote speech at Xtech Conference 2, Paul Graham wrote that the most important component of Silicon Valley is human resources, especially nerds and rich
1

Presented at International Seminar on Urban Culture. Arte-Polis: Creative Culture and the Making of Place, 21-22 July 2006, Institut Teknologi Bandung.
2

XTech 2006: “Building Web 2.0”, 16-19 May 2006. Amsterdam, The Netherlands. http://xtech06.usefulinc.com/

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people [Graham, 2006]. If these two types of people are not present in the region, it is difficult to create Silicon Valley-like environment. For example, there are many rich people in Miami, Florida, but there is little nerd’s community in the region. Similarly, there are many nerds in Pittsburgh – because of Carnegie Melon University – but not that many rich people who are interested in venturing technology. No Silicon Valley in Pittsburgh.

What is BHTV
Bandung High-Tech Valley (BHTV) is a term coined by the Indonesian Ministry of Industry and Trade (MITI). It originally came from a study done by McKinsey (1996) for MITI. Essentially the study says that Indonesia should focus on its electronics exports. The definition of electronics includes information technology, electronic modules and components, semiconductor, consumer electronics, telecommunications, and home appliances. At the time of the writing, export in electronics was around US$3.9 billion/year. It was projected that the number should rise to US$ 30 billion by 2010. (See Figure 1. Targeted Indonesian Electronic Exports)

Target US$ 30 billion

30
Target 24% p.a.

13 3.9 6

1996

1997

1988

1999

2000

2003

2006

2010

Rescue

Recovery

Growth

Figure 1. Targeted Indonesian Electronic Exports [Source: MITI]

Various initiatives were suggested to achieve this goal, such as: • • • • • • • Electronic Super Sites (ESS); Development of Cilegon – Jakarta – Cikampek – Purwakarta – Padalarang – Bandung highway corridor (which was completed in 2005); Incentives, taxation, and training program; Domestic market – distribution scheme; Bandung High Tech Valley (BHTV); Technology transfer agency; And Software and Engineering Support Development. 2/7

Bandung High Tech Valley is just one of the suggested initiatives, and the focus of this paper. Unfortunately, Indonesia was hit by economic crisis in 1997. The study was ignored. Around 1999 we took this study further and explore its possibilities. Bandung High Tech Valley seems to be the most promising initiative. BHTV is a region starting from Cilegon to Jakarta then downward to Bandung, through several cities. Jakarta is the place where business is carried out. Heavy industries are located between Jakarta and Cilegon. Other industries are located in the Jakarta – Cikampek – Bandung region. Bandung is the place where research and development (R&D) is carried out. A possible business scenario is as follow. An investor from abroad would go to Jakarta to have a business meeting. Then, she could visit the production site which is located somewhere along Jakarta – Cikampek – Bandung region. If she wants to have a discussion with researchers or inventors, she could visit the R&D site in Bandung. All of this is reachable within two or three hours travelling time. By accident, this region mimics Silicon Valley, which is started from San Francisco and moves downward to San Jose passing through several cities and suburbs. It takes around two to three hours from San Francisco to San Jose.

Figure 2. BHTV area

BHTV originally was not an orchestrated movement, just like the origin of Silicon Valley in which Prof. Frederick Terman of Stanford University is believed to have starting the transformation. He suggested his students – William Hewlett and David Packard – to start a company. The birth of Hewlett-Packard (HP) is believed to ignite the development of Silicon Valley. Unfortunately progress in BHTV has been slow. We decided to make the movement a formal one by creating a formal foundation, the BHTV Foundation. Thus, BHTV 2.0 was born.

Why Bandung
It was early in the morning. Actually, it was not too early since it was already 6 AM. A bunch of guys were sleeping on the carpeted floor in my parent’s living room.

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We worked late last night. We had this job of creating a multimedia demo. At that time the term multimedia did not include streaming videos, high-fidelity music, or breath taking animation. It was pale compared to today’s standard. But still, we were thrill with the graphical capabilities of our Apple ][ computers. Ginting was still up and looking at a glaring green screen. The Apple ][ computer stood silently waiting for his commands. We – Ginting, I, and the guys who were still sleeping – were classmates. We were the class of 81 of Electrical Engineering of Institut Teknologi Bandung (ITB). ITB is one of the most prestigious universities in Indonesia. The “class of 81” signifies the year we went to the university. Ginting was our ultimate computer nerd. He would stay up late and confronted the computer as if he is playing a long chess match. At one time, he wrote an Indonesian BASIC language interpreter. I didn’t know whether he just translated words by words or he actually wrote the interpreter from scratch. At that time, I didn’t know anything about parser or compiler construction and though Ginting did a pretty good job. The year was early 1980s. I could not remember exactly. I think it was 1982 or 1983. But, it doesn’t matter. Today, 20 years later, you can still find similar groups of students working from their rented rooms, pavilions, or university labs in Bandung. They work on computer, Internet, or other technology projects. There are many new “Gintings.” This is the spirit of Bandung High Tech Valley. The spirit lives on … (Quoted from “A Story of Bandung High-Tech Valley.” [Rahardjo, 2002]) When we look at different initiatives in Indonesia, Bandung has a different view and approach. IT initiatives in Yogyakarta, for example, are focused on the use of IT in education or small industries. In other words, they are more focused on the social use (or sometimes more towards charity). Initiatives in Bandung is more focused on innovation and R&D. Researchers and inventors in Bandung think how to build a GPSbased tracking device, create a quantum-based encryption, or something innovative along that line. They are more focused on the creative aspect of technology. However, the weak aspect of people in Bandung is that they tend to ignore the business aspect of it. This is the focus of people in Jakarta. Bandung has the right ecosystem for a Siliconia, since it has two major “goldmines.” These goldmines are the best human resources in Indonesia and the existence of science & technology entities (universities, research centers, and technology-based companies). Even government offices that are related to technology are located in Bandung. Examples of these are shown in the table below. Universities Research Centers Tech Companies Government Office

Institut Teknologi Bandung (ITB), STT Telkom, Institut Teknologi Nasional (ITENAS), Unpad, Unpar, UPI

Microelectronics Center (Pusat Mikroelektronika), RISTI, LIPI, MIDC, Eyckman Center, BATAN (nuclear)

Omedata, LEN, INTI, CMI, Harif Tunggal Daya Engineering, Quasar, Tritech Consult, Dirgantara Indonesia

PT Telkom, PT POS, PT Kereta Api Indonesia (KAI), PT PLN, PINDAD, Geology Directorate, PT Dahana

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University is a major component in producing nerds, as suggested by Paul Graham. Thus, to become a successful Siliconia a region must have a top notch university. Silicon Valley is blessed with Stanford University, UC Berkeley and Caltech, to name a few. These universities not only produce human resources but also involve in starting up companies. The role of Stanford University in Silicon Valley is documented by James Gibbons [Gibbons, 2000]. Bandung has universities that generate top notch human resources in Indonesia. They are even able to compete globally. The high standard of admission to these universities creates a filtering mechanism. Only bright students are admitted to the universities. This situation attracts more (talented) students. Institut Teknologi Bandung (ITB) is one of such universities. While the contribution in producing human resources is well known, ITB contribution in starting companies is not well documented. Outside universities there are also polytechnics and vocational schools (Sekolah Menengah Kejuruan) that focus on information technology. They will provide a lowertech IT workers in a larger scale. Bandung has several research centers located on and off-campus. Within ITB campus there are several research groups, focusing on microelectronics, biotechnology, nanotechnology, energy, and so on. There are research centers through out the city, for example RISTI (a telecommunication research center owned by PT Telkom), LEN (Lembaga Elektronika Nasional – National Electronics Agency), LIPI (Lembaga Ilmu Pengetahuan Indonesia – Indonesian Institute of Sciences), and BATAN (Badan Tenaga Nuklir Nasional – National Nuclear Energy Agency). In the seventies, several ITB lecturers started a company called Radio Frequency Communication (RFC) [Barker, 2005]. It was possible one of the earliest start-up company in Indonesia. Unfortunately the company no longer exists. However, several telecommunications companies have spanned out from RFC, just like several semiconductor companies were spanned out of Fairchild in Silicon Valley. Bandung is still a preferred place for technology companies. Current companies in Bandung include CMI (telecommunication), Harif (telecommunication), INTI (telecommunication), LEN (electronics), Omedata (semiconductor), Quasar (telecommunication, ISP), Tritech Consult (telecommunication), and Dirgantara Indonesia (aircraft). Those are mid size companies. There are smaller companies, run by five to twenty persons, that focus on electronics (GPS devices, tracking devices) and software development. It is also interesting to see that the headquarters of Government offices or state-owned companies are also located in Bandung. Examples of this include PT Kereta Api Indonesia (train), PT PLN (Electrical company), PT POS (post office), PT Telkom (telecommunication), and PINDAD (military equipment). This condition is not an accident. During the Dutch occupation, Bandung was designed to host many government supporting institutions. [Kunto, 2000] In a sense, Bandung is like the Florence in Italy during its Renaissance days.

Critical Success Factors
Why is it so difficult to imitate Silicon Valley? If all it takes is just an internet access, then all these Siliconias should work. Wieners and Hillner in their Wired magazine article suggested four critical success factors, such as (1) the ability of the area’s university and 5/7

research facilities to train skilled workers or develop new technologies; (2) the presence of established multinational companies as anchors to provide economic stability; (3) the population’s entrepreneurial drive; and (4) the availability of financial support in form of venture capitals [Wieners, 1998]. For the description in previous section, Bandung has 3 out of 4 Wired’s critical success factors. Universities and research facilities in Bandung are among the best in Indonesia. The drive to become entrepreneurs exists in Bandung. Venture capital exists in Bandung. Unfortunately, they are not interested in information technology. Some of them even act like banks. So, this is a problem that needs to be fixed. One factor that is still missing is the presence of established multinational companies. There are multinational companies in Indonesia, but they are located in Jakarta. They are also just marketing arms of their companies. There is no research or technology development related to these companies. BHTV has been actively encouraging multinational companies to open their research centers in Bandung. Recently, Microsoft has just opened an innovation center at ITB. We hope other IT-related companies will follow them. Other Siliconias in Indonesia tend to ignore the four critical success factors discussed in the previous paragraph. Balicamp, an initiative by Sigma Cipta Caraka – a software company – to create a Siliconia in Bali, failed to succeed because the lack of local support. There is no university around the area, no research facilities, no entrepreneurs, and no multinational companies. It is practically just an off-site branch of the company. Granted, the place was beautiful, but it failed in all critical success factors. Other Siliconias will have the same fate if they ignore these success factors.

Concluding Remarks
It is still unclear whether our BHTV initiative will succeed or fail. We already have the main ingredients to become a successful Siliconia. We just have to wait for a chef to start the transformation. It takes 15 years – from Terman’s initiative at Stanford University in the 60s to Apple computer explosion in 1975 – for Silicon Valley to take shape. It probably takes the same time for Bandung to become a true high tech valley. We hope to see you in the future.

Bibliography
BARKER, J. (DECEMBER 2005). Engineers and Political Dreams: Indonesia in the Satellite Age. Current Anthropology, Volume 46, Number 5. FLORIDA, R. (OCTOBER 2005). The World Is Spiky. The Atlantic Monthly. Available online at http://www.creativeclass.org/acrobat/TheWorldIsSpiky.pdf. FRIEDMAN, T. (2005). The World is Flat. Farrar, Straus and Giroux. GIBBONS, J. T. (2000). The Role of Stanford University: A Dean’s Reflections . In Chong-Moon Lee (eds.), The Silicon Valley Edge: A Habitat for Innovation and Entrepreneurship. Stanford University Press, 2000. GRAHAM, P. (2006). How to be Silicon Valley. (Derived from his keynote at Xtech.) http://paulgraham.com/siliconvalley.html. Visited 27 May 2006. KUAH, A. T. H. (2002). Cluster Theory and Practice: Advantage for the Small Business Locating in a Vibrant cluster. Journal of Research in Marketing and Entrepreneurship, Volume Four, Issue 3.

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KUNTO, H. (2000). Nasib Bangunan Bersejarah di Kota Bandung. (The Fate of Historical Buildings in Bandung.) Granesia, Bandung. RAHARDJO, B. (2002). A Story of Bandung High Tech Valley . A paper presented at the National Seminar on telecommunications and Information Technology-based Industries, 11 May 2002. Bandung: Institut Teknologi Bandung. WIENERS, B. and HILLNER, J. (SEPTEMBER 1998). Silicon Envy. Wired Magazine 6.09.

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