The planned research and technology center, which seeks to emulate Silicon Valley in California, the United States, will be developed through a partnership involving Kiniku Bintang Raya. Rp 18 trillion (US$1.23 billion) has been invested for its first phase of development, which is expected to take three years.

In addition to the small and rocky roads, the 888 hectare plot on which the complex will be built is more than a two hour drive from Jakarta, the nation's business and finance hub. Solving this problem of connectivity hinges on the development of the second section of the 53.6 kilometer Bogor-Ciawi-Sukabumi (Bocimi) toll road.

“We will address all challenges,” Budiman Sudjatmiko, who initiated the Bukit Algoritma project, told The Jakarta Post on April 22. He said there were plans to develop 7 km of road to link the toll road to the complex. “We have anticipated everything, including the toll road, which is expected to be finished in August.”

Budiman, a politician from the ruling Indonesian Democratic Party of Struggle (PDI-P), is working with oil palm businessman Dhanny Handoko on the project. He recently formed a partnership with state-owned construction company PT Amarta Karya to help with the infrastructure.

The development of Bukit Algoritma, which began in 2018, comes as the COVID-19 pandemic speeds up the adoption of technology and consumers' move to digital platforms, including in the healthcare and education sectors, as a result of mobility restrictions.

Read also: Indonesia’s internet economy to grow more slowly but remain region’s biggest: Report

As a result of this shift, the gross merchandise value (GMV) of the online economy in Southeast Asia grew by 11 percent to $44 billion last year, and investments in the sector doubled to $2.8 billion in the first half of 2020, according to the e-Conomy SEA 2020 Report by Google, Temasek and Bain & Company.

But Cikidang district, nestled among the mountains and valleys of West Java, has generally poor internet connectivity, especially on mobile broadband. This poses another challenge for the project. Some providers can barely pick up a telephone signal, let alone an internet connection.

Budiman said he had spoken with state-owned telecommunication company PT Telekomunikasi Selular (Telkomsel) to bring a 4G broadband cellular network to the area by May and perform a trial for 5G later on.

A reliable internet connection matters because Bukit Algoritma’s developers want it to become a center of research in neuroscience, nanotechnology, quantum technology, solar cell technology, agriculture, health care, aerial technology and space exploration.

Researchers

Budiman said some young researchers had committed to joining Bukit Algoritma from both Indonesia and abroad. Some, he said, were members of Inovator 4.0, a group of scientists and technology developers that the politician founded in 2018.

The developers hope to attract researchers by offering them a place to innovate at home and by helping bring their innovations to market, including through a partnership with businesses renting space in the complex.

“There will be a link-and-match arrangement with the industries,” said Budiman, who was a member of the House of Representatives for 10 years. “We want industries and researchers to gather in one place so they can speak directly, meet and follow developments in research.”

But finding researchers may not be easy. The per capita number of researchers in the country has remained constant at around 215 per 1 million, according to 2017 and 2018 data from the United Nations Educational, Scientific and Cultural Organization (UNESCO).

Investment

Budiman said a Canadian investor had supplied Rp 18 trillion for the first phase of infrastructure development. He added that a foreign state-owned firm had also expressed interest but declined to name the company.

While Budiman expects the current funds to cover the first three years of development, he has not ruled out the possibility of needing additional investment.

“We are going to meet an investor that will be a venture capitalist for businesses, youth, villages and cooperatives to innovate in technology,” Budiman said, referring to an investor from the United States.

A recently issued presidential regulation, a derivative of the Job Creation Law, exempts foreign investment in start-ups located in special economic zones (SEZs) from the minimum investment of more than Rp 10 billion that applies to other sectors.

Read also: Indonesia to relax foreign investment rules for local start-ups

Land use in SEZs

Bukit Algoritma is part of the proposed 1,000 ha Sukabumi SEZ, which consists of the plot in Cikidang and some 200 ha of land in neighboring Cibadak. It was proposed in 2018 and is set to focus on both technological development and tourism.

The development of the entire Sukabumi SEZ is expected to cost Rp 38.5 trillion, about double the current Bukit Algoritma investment, according to Dhanny, the president director of PT Bintang Raya Lokalestari, which owns both plots of land.

A palm oil plantation, a resort and 120 deserted houses sit on the plot for Bukit Algoritma. Of the total area, 40 percent has been designated for green space.

Renovations will begin on some rooms in the resort and the deserted houses in May. They are to be occupied by the stakeholders of Bukit Algoritma. An existing multipurpose building in the middle of the resort and the plantation are to be turned into a center for neuroscience research.

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Dhanny also granted Padjajaran University, Bogor Agricultural University (IPB) and the Bandung Institute of Technology (ITB) 25 ha of land each in an effort to bring academics into the project. Padjajaran University and ITB are to use land in Cibadak, while IPB will use 20 ha of land in Cikidang and another five ha in Cibadak.

“As the governor said, the ecosystem cannot consist of mere start-ups. We have made grants to public universities,” Dhanny told the Post on April 21. “The partnership with private universities will come. The technology and start-ups are from Budiman. We need the industries, and they require the toll road.”

However, the National SEZ Council has not approved the Sukabumi SEZ, as it has not met all of the requirements of the administrative evaluation, according to Enoh Pranoto, the council’s secretary. Pending requirements include land rights in the name of the proposing company, proof of capacity to finance the project and an environmental permit in line with the business plan.

After meeting the administrative requirements, the Sukabumi SEZ will have to go through a business and ecosystem review process.

“If the administrative requirements and the business and ecosystem review are completed, it will then be proposed for review by the National SEZ Council’s assembly,” Enoh told the Post on April 22.

Talent pool and supporting regulations

Nailul Huda, a researcher at the Institute for Development of Economics and Finance (Indef), said that in addition to the lack of researchers, the project faced other challenges, such as the talent gap and the lack of a regulatory framework to incentivize research and development.

Read also: RI pushes to tackle digital skill gap

Bukit Algoritma will also need support from venture capitalists and stronger partnerships with universities to succeed in research and development in advanced, high-tech fields.

“The demand [for high-tech products and services] is also important,” Nailul told the Post last week. “I think the supply side needs to be fixed first, then the demand can follow.”