11 Dec Citramas, Sinar Mas team up for digital venture into Batam’s $14b economy
Property developer heavyweights Citramas and Sinar Mas Land are jointly developing on Batam Island a new digital hub marketed as a place for foreign start-ups, particularly those based in Singapore, to outsource their digital talent.
Sinar Mas Land said in a statement that the 62 hectare Nongsa D-Town, developed through joint venture Citra Sinar Global, in which Citra Mas Land and Citramas each own a 50 percent share, is expected to host some 5,000 digital talents by the time it completes the second phase of development in 2024.
Neither company has disclosed their investment in D-Town, except that they would contribute 5 hectares each for first phase of development, whereby the developer will focus on constructing office space before constructing retail businesses in the second phase.
“This is promising potential to be explored between the two countries; in which Singapore is the center of business and Batam provides the necessary talent and location,” said D-Town director Marco Bardelli in the press statement.
According to the Batam Indonesia Free Trade Zone Authority (BP Batam), the island’s economy will grow at an 8.78 percent compound annual growth rate to reach US$14 billion in 2023. The digital economy will contribute 4 percent to GDP. BP Batam also projects the island to receive $5 billion in investment and will have a population of 1.35 million people by that year.
D-Town’s developers focus on Singapore because, other than being a short 30-minute ferry ride from Batam, the island nation is also Southeast Asia’s start-up financial hub – attracting 65 percent of the $14.09 billion invested in the region last year – and in need of 87,000 digital talents, according to officials statistics.
“And right now, Singapore is looking for talent abroad because they are expensive [in Singapore] and because their numbers are few,” said Justine, a business development manager at headhunter start-up Glints, at a D-Town promotional event in Singapore on Nov. 28.
A case in point, an experienced data scientist in Indonesia gets paid a minimum Rp 200 million ($14,208) each year, which is a quarter that of a similar worker in Singapore at a minimum Sing$85,000 (US$62,388) each year, according to a survey by headhunter company Robert Walters.
However, Indonesia also has great demand for digital talent “but is far behind China and India in science, technology, engineering, and math (STEM) graduates,” says a 2018 report by business consultancy McKinsey & Company.
Even though Indonesia foresees a demographic bonus between 2020 and 2030, when its productive age population far outnumbers its dependent age population, the country’s students remain poor performers in math, reading and science tests, scoring well below the global average in all three subjects, in the latest 2018 Program for International Student Assessment (PISA).
In addressing the talent shortfall, Citramas and Sinar Mas Land have brought in various companies such as San Francisco-based tech giant Apple, Batam-based start-up breeder Base Incubator and Singapore-based Glints to establish free training centers in D-Town.
Base Incubator cofounder Arseto Pinontoan told The Jakarta Post that his company aimed to train a minimum of eight, pre-seed, start-ups per batch.
“We will, for 3.5 months, really teach start-ups everything, from technology to business to corporate culture. We already have a curriculum to implement,” he said.
Glints, which last raised $6.8 million in Series B funding, has been operating its namesake academy in Batam for around 1.5 years. The academy, which has trained an average of 15 students each batch, aims to train 30 individuals per batch starting next year, whereby even non-tech individuals may join.
“We want to shape [Indonesian] workers and we want to reduce unemployment in Indonesia. Hence, the Glints Academy,” said Justine.
Meanwhile, Apple has yet to formally launch its namesake academy in Batam but Industry Ministry officials told media outlets in October that it was expected for this year. The academy in Batam, along with the first in Greater Jakarta and second one in Surabaya, is part of Apple’s $44 million investment in Indonesia.
“There is an abundance of raw and diverse talent in Indonesia. Obviously it needs to be refined in education and experience, which Indonesia is not very advanced in, but we are able to take that raw talent and polish it,” said Citra Mas CEO Mike Wiluan.