To develop tech-based economy, Indonesia needs more ‘technopolises’ | Harcourts Purba Bali

To develop tech-based economy, Indonesia needs more ‘technopolises’

Deep in concentration, (left to right) Anindya Bakrie, Pandu Sjahrir, Elon Musk, Rosan Roeslani and Luhut Pandjaitan meet to discuss investment in Indonesia, in Texas, the United States, on April 27, 2022. (Instagram of Anindya Bakrie/.)

Ari Margiono (The Jakarta Post)
Jakarta ● Sat, April 30, 2022

Indonesian Coordinating Maritime and Investment Minister Luhut Binsar Pandjaitan recently met with United States entrepreneur Elon Musk at Tesla headquarters in Austin, Texas to discuss the company’s potential investment in Indonesia.

Social media was flooded with pictures of the minister and his entourage shaking hands with Musk who wore a black T-shirt. The Jakarta Post (April 27, 2022) reported that the visit aimed at exploring Tesla’s partnership in the electric vehicle (EV) battery value chain in Indonesia.

In the last few years, Indonesia has been approaching several major global technology players to jumpstart the digital transformation in Indonesia. A few technology companies have started to take part in these initiatives.

In fact, several initiatives by the government and industry to establish industrial clusters is beginning to kick off the development of a technology-based economy in Indonesia.

While this is good progress toward the digitalization of Indonesia, inviting them to invest and come to Indonesia is not sufficient. There is a lot of homework that Indonesia needs to do.

One important issue is related to how are we going to geographically design our technology clusters so that they grow organically and sustainably? Are the government and the industry the only drivers for the technologization of Indonesia?

To appropriately design sustainable technology and entrepreneurial clusters, we need to learn from the US and other countries in developing these city clusters, more popularly known as a “technopolis” (Smilor et al., 1989).

A technopolis is an intensive alliance and collaboration between academic, business and government sectors in a particular geographic location to enhance and ensure technology-based economic development.

Technopolises in the US have different historical paths. First, there is the industry-driven technopolis. Silicon Valley in California is an example where the development of the cluster was initiated by the emergence of microprocessor industries back in the 1960s.

Second, the university-driven technopolis. Universities in Boston, Massachusetts have played major roles in leading the creation of spin-offs from their incubators. The focus on technology education and the creation of spin-offs fosters the mushrooming of new technology companies in the city.

Third, the culture/community-driven technopolis. New York is an example where a technopolis for new start-ups emerged simply because the city had a unique culture and was attractive to entrepreneurs.

Fourth, the government-driven technopolis. Cities like Austin have benefited from extensive government planning to develop vibrant technology clusters as we see today.

This shows that there is no single path toward the development of a technopolis.

Indonesia should look beyond the government and industry in developing technopolises. For example, the excitement around the international non-fungible token (NFT) and crypto communities in Bali could potentially develop the paradise island into a cluster of DeFi (Decentralized Finance) and blockchain technology in the future. Many of these entrepreneurs like to stay in Bali because of the culture, the weather and the environment. They set up start-ups and enhance their networks while they stay in Bali. The potential of a Bali technopolis is akin to the attractiveness of the New York technopolis in the US.

Moreover, cities with vibrant technology universities such as Malang, Bandung and Yogyakarta can play a role in facilitating the development of university-driven technopolises. Universities can play important roles in the upstream (entrepreneurial technology education) as well as in the downstream (incubation and spin-off) processes that are required in a technopolis.

Many universities in Indonesia can follow their counterparts in Boston, Massachusetts, to facilitate this process, especially in developing the downstream processes and developing a complete chain of custody from technology education to spin-offs.

This indicates that in addition to the current government-driven initiatives, communities and universities can play an important role in leading the development of the technology-based economy.

Therefore, the government should foster the potential of the development of these technopolises according to their contextual uniqueness. Further, these technopolises can be linked; and a mega-cluster can be created to increase Indonesia’s global technological competitiveness. The government, therefore, needs to provide appropriate technology infrastructure in these potential technopolises, as well as the appropriate policies required for new ventures to emerge.

At the same time, universities need to start paying attention to the downstream aspect of technology education. Many technology universities need to level up the “preincubation” education and start thinking about how to foster new venture spin-offs from the prototypes that students have developed. This requires universities in Indonesia to step up and get into the complex areas of technology start-up venturing.

All in all, the government should be aware that technopolises can be developed from different fronts. And this means that fostering the embryos of community and university-driven technopolises is as important as developing the existing government-driven ones.


The writer is deputy campus director of Institutional Development and Collaboration at Binus @ Malang and assistant professor at Binus Business School, Binus University, Jakarta. The views expressed are his own.


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