Will the real ‘Silicon Valley of Indonesia’ please stand up?

Bukit Algoritma, an upcoming 888-hectare special economic zone, has grabbed headlines in recent months for its ambitions. Its developers have dubbed it Indonesia’s version of Silicon Valley.

But the project – whose name means “Algorithm Hill” in English – is not exactly a trailblazer. Rather, it is the latest on a list of initiatives that aim to emulate the US tech hub but have achieved mixed results.

Among Bukit Algoritma’s advantages are its political ties (even though it is a private sector project) and ability to secure initial funding. But critics say its goals are unrealistic, with its “middle of nowhere” location – 120 kilometers south of Jakarta – as the main stumbling block.

BSD City Digital Hub / Photo credit: Sinar Mas Land

Meanwhile, another candidate appears closer to becoming the country’s Silicon Valley. Equipped with tech connections and existing infrastructure, the Jakarta suburb of BSD City has succeeded in attracting two unicorns – online travel agent Traveloka and super app Grab – to open offices there.

Plans were also announced for a “Bandung Technopolis” six years ago, but Indonesia’s tech industry continues to be centered in Jakarta.

Lofty objectives

Indonesia’s dream of creating its own Silicon Valley was first expressed in 2015, and it has since led to several projects in various locations.

But it’s also important to note that as early as that year, companies like Tokopedia, Gojek, and Bukalapak were already on their way towards unicorn status. Even without a tangible Silicon Valley ecosystem, these companies were able to rely on support from elsewhere.

Pioneering VC firms focused on early-stage startups were helpful. Tokopedia, for instance, was East Ventures’ first check. Academic institutions and work experience at tech firms also came in handy. Bukalapak’s founders were classmates at the Bandung Institute of Technology while Gojek co-founder Nadiem Makarim was the managing director of Zalora, a fashion ecommerce platform established by startup accelerator Rocket Internet.

Still, having a physical cluster of tech companies could be beneficial in the long run. “What’s positive about these projects is that they could be catalysts to further grow our tech industry,” says Aldi Hartanto, vice president of investments at MDI Ventures.

While Bukit Algoritma isn’t the first aspiring Silicon Valley in Indonesia, it has gotten attention in recent months because of its lofty objectives.

“We’re projecting Bukit Algoritma to be the largest incubator and accelerator in Indonesia,” Budiman Sudjatmiko, the project’s CEO, tells Tech in Asia. The project would also focus on research areas other than digital technology, such as biotechnology, artificial intelligence, and semiconductors.

Bukit Algoritma’s location / Photo credit: Timmy Loen

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