Presented by Budi Rahardjo PPAU MIKROELEKTRONIKA ITB BITE 2000

2 BACKGROUND  Indonesia’s economy is not in a good shape We must find ways to strengthen Indonesia’s economy New economy provides opportunity we cannot miss  Opportunities in the Global New Economy Various statistics have shown growth in Information Technology (IT) and Electronics Indonesia is not far behind in this field

3 ECONOMICAL BACKGROUND  Export is a viable means to support Indonesia’s economy  Indonesian export: Oil & Gas (2020 & 2040 will be gone) Wood (destroying our jungle) Textile (competition from China) Electronics (including IT)

4 ELECTRONICS  Defintion of “Electronics” according to DEPRINDAG includes Information Technology Modules and components Semiconductor Consumer Electronics Telecommunications Home Appliances Misc.

5 INDONESIA ELECTRONICS EXPORT In billion US$ source: Dept of Commerce, Indonesia Target 24% p.a. target US$ 30 billion Rescue Recovery Growth

6 DEPRINDAG  1996 Electronic Super Sites (ESS) Super Highway / 3 Jalur Kemudahan (Koridor Cilegon-Jakarta-Cikampek-Purwakarta- Padalarang-Bandung) Incentive, Taxtion, Training Domestic market – distribution Bandung High Tech Valley (BHTV) Technology Transfer Agency Software dan Engineering Support Development  1997 Crisis!

7 Jakarta Cikampek Purwakarta Padalarang Bogor Bandung Cilegon Cikande Rangkasbitung Pamanukan Koridor JKT-CKP Koridor JKT-CLG Rencana Koridor CIPULARANG R&D Centers Central Government Electricity & Hydro Serpong BHTV DEPARTEMEN PERINDUSTRIAN DAN PERDAGANGAN Source: DEPARTEMEN PERINDUSTRIAN DAN PERDAGANGAN

8 WHY BANDUNG  Bandung’s “goldmine” Science & Technology Top universities, research centers, tech-related corporations (crown corp./BUMN & private) Talented and intelligent human resources Top students study in Bandung. Universities in Bandung are attended by top Indonesian students Nice place to work and live (ecosystem)

9 Bandung SciTech community ITB Universities: UNPAD Parahiyangan IKIP, UNISBA Etc. Research Centers: PPAU RISTI LIPI MIDC B4T Etc. LEN INTI CMI TELNIC IPTN: aircraft industry PINDAD TELKOM BHTV Technology Infrastructure Software Hardware Houses source: Direktorat Industri Elektronika, Dirjen ILMEA, Deprindag PJKAPOS

10 ECONOMIC VALUE  High tech creates economic value If there are 500,000 hi-tech workers in Bandung and their salary is Rp1,000,000/month (paid by private companies, not by government), calculate the amount of money flowing Money will be spent in Bandung’s area Generate new economy Note:  High-tech worker’s salary is more than Rp 1,000,000  Companies provide work

11 LESSONS FROM OTHER COUNTRIES  Silicon Valley, USA (July 2000) The definite model 50 mil long 3.2 million people More than 7000 IT companies 11 companies started every week 1 company goes public every 5 days 20% of top IT companies in the world Market capitalization: US$ 450 billions 62 new millionaires/day

12 LESSONS FROM OTHER COUNTRIES  India The success of India in software industry proves that everybody can participate in the new economy In less than (5) years, India’s software export multiplied and became US$ 4 billion in Estimated US$50 billion in year 2008 NOT DOMESTIC MARKET! Political situation in India is not stable (Kashmir, change in government, etc.), yet business progresses English (language) is not a barrier Government commitment

13 LESSONS FROM OTHER COUNTRIES  China Progressing very rapidly! Techno parks are being created everywhere (near Beijing) Internet users grow exponentially Yet not a rich country Piracy is high, but Microsoft (and other high tech industries) open research centers in China! English is still a barrier Government commitment

14 LESSONS FROM OTHER COUNTRIES  Malaysia Multimedia Super Coridor (MSC), Cyberjaya, Putrajaya Provides incentives for high tech companies! Still struggling (but moving forward) Government commitment, Top down approach

15 CHALLENGES  Human Resources Crisis! The demand is greater than the supply India can generate 70,000 IT new professional/year. How about Indonesia? Various initiatives have been started in Indonesia  “Sekolah 2000” [school 2000 program]  SMK-TI [Sekolah Menengah Kejuruan bidang Teknologi Informasi]  IT training centers, certification, non-degree & competency learning centers  private initiatives (Bali Camp, Cybercity)

16 CHALLENGES  Indonesian Human Resources Quality Lack/poor of English capability Not known as high-tech workers Not efficient (slow workers) Low on working ethics

17 CHALLENGES  Government policy Unclear Too many hidden agendas from many groups Lack of incentives to private sectors  Infrastructure Poor to lack telecommunication infrastructure (difficult to get telephone lines) Monopoly & duopoly problems Small PC penetration (400,000 market share) But big in wireless (4 million cellphones)

18 CHALLENGES  Bandung’s problem No international airport Telecommunication infrastructure problem (problem between PT Telkom and Aria West) Poor (lack of) city development Lack of luxury homes (eg with swimming pool)