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Excellent IT City Models

Excellent IT City Models. Yasuharu Tanaka Japan Desk Saudi Arabian General Investment Authority (SAGIA) March 17,2002. Agenda. 1. Most excellent model – Austin in USA 2. IT Parks in Asia (Singapore, HK, Taiwan, Malaysia, India and China) 3. First “ Science Park ” in Japan

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Excellent IT City Models

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  1. Excellent IT City Models Yasuharu Tanaka Japan Desk Saudi Arabian General Investment Authority (SAGIA) March 17,2002

  2. Agenda 1. Most excellent model – Austin in USA 2. IT Parks in Asia (Singapore, HK, Taiwan, Malaysia, India and China) 3. First “Science Park” in Japan 4. Common success factors & Presence or absence of each factor in Riyadh 5. Conclusion…

  3. Evaluation to Austin Magazine(y/m) Ranking Category Forbes (00/5) 1 Best City for Business Dun & Bradstreet/Business 1 The Top City for High- Startups Magazine (99/10) Tech Startup Money Magazine (99/10) 2 Best Place to Live Yahoo (99/2) 2 Most Wired City Inc. Magazine(99/12) 2 Best Small Metro for Startup Growing a Business Fortune (99/12) 3 Best City For Business Entrepreneur Magazine 5 Top City for Entrepreneur Activities

  4. Outline of Austin 1. 20 years ago, Austin was an university town – only State Government and UT 2. Today, Austin is called as “Silicon Hills ! (Others) Silicon Forest (Portland, Seattle) Silicon Mountain (Colorado) Silicon Alley (NY), Silicon Dominion (Washington D.C.) etc. Why? … IT Clustering

  5. High-tech industries in Austin • Category No. of companies No. of employee • Computer 680 40,000 (32%) Mfg 95 34,000 (27%) Sales/Services 585 6,000 (5%) Semiconductor 50 21,500 (17%) Other electronics 140 19,500 (16%) Software/Internet 750 27,500 (22%) Telecommunication 300 12,000 (10%) Mfg 60 3,500 (3%) Sales/Service 240 　8,500 (7%)　 Bio & Medical 80 4,500 (4%) TOTAL 2,000 125,000 (100%)

  6. High-tech industries in Austin 1. No. of High-tech companies  Approx. 2000 2. No. of employees in High-tech industry 125,000  20%of total employees in Austin 3. Prominent companies(No. of employees): Dell Computer (23,000) --- Mr.Michel Dell (UT) Motorola (10,500) Applied Materials (3,200) Samsung (1,000) etc.

  7. No. of Patent Pending in USA City Population No. of Patent Pending B/A in 1998Ain 1998B San Jose 1,639 3,571 2.2 Austin 1,100 1,740 1.6 Denver 2,369 1,369 0.6 Seattle 2,312 1,076 0.5 Portland 1,822 897 0.5 Salt Lake 1,272 503 0.4 It is noteworthy that Austin with relatively smaller population ranks No. 2 followed by San Jose in Silicon Valley.

  8. The 1970s Town of S.Gov. and Univ. “IC2 Institute” in 1976 by Dr.Kozmetsky (BS-UT) Objective : “Think and Do” tank  Combination of Technology and Entrepreneurship Driving force for regional development What is IC2 Institute at present ? a globally interactive organization that uses modern telecommunication and multimedia to link research universities,businesses, other institutional and individual resources in developed regions. History of Regional Development (1/3)

  9. The 1980s  Expansion stage by inviting institutes > Stimulated by Japan’s public-private consortium in Computer Ind. > US Comp. Ind. plans to establish MMC > Success to invite MMC by UT and GACC in 1982 ( Free building etc.) > Success to invite SEMATECH in 1988 > High reputation as Technology Center  Driving force to invite other high-tech companies Industrial diversification : Oil  High-tech “ Advantage Austin Project “ by GACC1989~ 1. Image-up campaign by a prominent PR company in NY 2. Target at IT companies in Silicon Valley (comparative marketing)  Success to invite AMD (Advanced Micro Devices), Applied Materials, Cypress Semiconductor etc. History of Regional Development (2/3)

  10. The 1990s  Vital venture businesses Many engineers were laid off under recession in the late 1980s. Need to keep them living in Austin  Business Incubator ATI (Austin Technology Incubator) by UT,GACC,City, Lawyers etc. in 1990 --- Under leadership of Dr.Kozmetsky (UT) TCN (The Capital Network) to link VB and VC in 1991 ASC (Austin S/W Council) in 1999 for networking In 1999  Over 200 venture businesses start-up Many IPOs and success stories History of Regional Development (3/3)

  11. What made Austin developed? 1. Success to invite prominent institutes, MCC and SEMATECH  Clustering 2. Presence of MCC and SEMATECH  Higher reputation of Austin as Techno-region  Many IT companies moved from Silicon Valley 3. Many engineers and/or researchers became techno-seeds of venture businesses, and established many venture business in the 1990s. 4. Very strong leadership of Univ. of Texas

  12. Other factors for success 1. Low living cost - No income tax of the state and city - Low housing cost (60% of Silicon Valley) - Low electricity cost and gas etc. 2. High educational level % of students going on higher education in Austin 34% (Ref) San Nose 25%, NY 23%, Boston 30%, Portland 26% 3. Moderate climate and good nature 4. Low population density and short commuting time - Austin 2,260/mile2, San Nose 4,678, NY 23,621, - Austin 19.1 minutes for one way, San Nose 25.5 m.

  13. Most importantly (1/3)… 1. What did Austin do first ? > They (IC2) made comprehensive case studies on Silicon Valley and Japan’s technology management. > They made extremely attractive offer to invite high-tech institutes for IT clustering.

  14. Most importantly (2/3)… 2. How did Austin succeed to have IT clusters relocatefrom Silicon Valley ? > They created the best circumstance to attract high-tech human resources. > Then, they established high reputation as a high-tech region. > They targeted at Silicon Valley clusters.

  15. What is “Creating a Techno-region” ? It is, how ARTIFICIALLY you create “High-Tech Clustering” regionally. Most importantly (3/3)…

  16. Excellent IT Parks in Asia (1/2) Singapore “Science Park” > IT related R&D Strategy since the 1990s > Over 200 multinational IT institutes > Vital promotion for techno-entrepreneurship Hong Kong “Cyber Port” > Joint project with PCCW and HK Special Adm. Gov. > Multi-media oriented > Planning to invite the world’s cut-edging IT companies Taiwan “Green Silicon Island” > The world’s 4th largest producer of semiconductors > Over 270 IT-related companies > Entrepreneurship

  17. Excellent IT Parks in Asia (2/2) Malaysia “Multimedia Super Corridor” > National big project in line with “Vision 2020” > Multi-media clustering by inviting international IT companies > Excellent planning as an integrated package India “Bangalore” > the World 2nd largest supplier of soft-wares > Historical background in industry-university collaboration > Abundant human resources in IT field China “Zhongguancun Science Park” > National project to innovate to “China’s Silicon Valley” > Abundant science & technology human resources > Strategic plan to invite multinational IT companies

  18. Strategy > R&D oriented since early the 1990s as a national strategy > National Science and Technology Bureau (NSTB) in 1991 for R&D > US$ 6 billion invested for R&D promotion since 1991 R&D Infrastructure : 13 institutes established Technopreneur program : US$ 1 bil. Fund to support in 1999 Subsidies : US$1.36 bil. To R&D project in private sector HR : HR development program to Singaporean Recruitment of scientists from overseas Economic effects 1990  1999 R&D investment (P&P) US$ 570 mil US$ 2,800 mil R&D persons 4,300 13,600 High-tech product ratio NA 65.3% Singapore “Science Park” (1/2)

  19. How did Singapore succeed in raising awareness of entrepreneurship ? > NSTB (1991)  Over 500 techno-venture businesses in 1999 ( only 88 in 1996) > Kent Ridge Digital Laboratory (KRDL) in 1998 Objective : Cut-edging IT technology and its VB R&D staff : 319 (250 are from 25 foreign countries) Spun-off VB : 18 VBs since 1998 Media Ring. (IPO) What can we learn from Singapore’s R&D strategy ? > Setting-up & Implementation of Clear R&D Strategy two times of 5-year Plan in 1991 and 1996 > Practical use of HR from overseas Singapore “Science Park” (2/2)

  20. Hong Kong “Cyber Port” • Joint Project led by Public/Private Sectors(PCCW) • Started 2000 Summer - Completion 2007 • Total investment cost US$ 2,000 million • Bldg. Cyber Port: Intelligent Office(93,000 ㎡）　etc. Housing: skyrocketing flat bldg. (375,000 ㎡ • Tenant: Plan mid to large IT companies - 30 small business - 100 • Target: International and/or cut-edging IT companies (e-Learning, e-Trading, soft-wares, multimedia) • Anchor tenant: IBM, Microsoft,Oracle, HP, Cisco, etc.

  21. Taiwan : Green Silicon Island “ Hsinchu Science-based Industrial Park” Mfg. 15 % of Compaq’s desktop computer 40 % of IBM’s 60 % of Dell Computer’s Mfg. In products wise 91 % of scanner 68 % of key boards 66 % of LAN cards 58 % of monitor etc.

  22. High-tech oriented strategy initiated by Government  Started in the 1980s 1986  1995 R & D Investment US$ 800 Mil. US$ 4,600 Mil. - Ratio to GDP 1.0 % 1.8% Ratio of High-tech in Industrial Production 24 % 37.5 % No. of Researcher >B.S. 22,000 45,000 R&D Academic Report 26th 11th Ranking in the world Taiwan : Techno-development

  23. Outline of “Hsinchu Science Industrial Park” Foundation : 1980 Location : Hsinchu City - 70km from Taipei Area : 580 ha No. of companies : Approx. 300 No. of employees : 72,000 Total sales : US$ 13,700 Mil Cumulative amount : US$ 15,300 Mil For investment by the companies

  24. Taiwan : Strategic IT Planning • Infra : Hsinchu Science Industrial Park started in 1980 • Promotion for R&D : - Science & Technology Institute (1973) • HR Development : - University-Industry Collaboration - Entrepreneur supporting programs - Relocation of Taiwanese brains from overseas • Incentive to High-tech companies : - Free Income Tax for 5 years - Low cost infrastructures (office etc.) - Private VCs with incentives in taxation

  25. Malaysia “Multimedia Super Corridor”(1/3) Phase I (1996 ~ 2003 ) > To attract a core group of world-class companies (50 companies) > To launch seven Flagship Application > To put in place a world-leading framework of cyberlaws > To establish CYBERJAYA and PUTRAJAYA

  26. Malaysia “Multimedia Super Corridor”(2/3) Phase II (2004 ~ 2010) > To link MSC to other cybercities in the world > To establish a second cluster of world-class companies (250 companies) > To set global standards in flagship applications > To champion cyberlaws with global society

  27. Malaysia “Multimedia Super Corridor”(3/3) Phase III (2011 ~ 2020) > Malaysia will be transformed into a knowledge- based society – being a global test bed for new multimedia and IT applications > To establish a third cluster of world-class companies (500 companies) > To achieve a luster of intelligent cities (12 cities) linked to the global information super highway > To become the platform for the international Cybercourt of Justice

  28. Malaysia : Outline of MSC • Length of “corridor” – 15 km wide & 50 km long from KLCC to KLIA • Total area - 750 k㎡ * Ref. Singapore 650 k㎡ • Perfect Global Multimedia Climate • Fibre-optic backbone with 2.5-10 gigabits per second capacity to support virtual boardrooms, remote CAD/CAM operation, live multimedia internet broadcasting etc. • Linking the new MSC cities of Putrajaya and Cyberjaya with KL and KLIA

  29. “Cyberjaya” > Intelligent city with multimedia industries > Area 2,820 ha (Phase I – 1,460 ha, Phase II – 1,360 ha) > Planned population 240,000 > R&D centers, Multimedia Univ. HQT of MDC etc, “Putrajaya” > New seat of gov. and administrative capital > e-Government > planned population 250,000 > By 2005, all ministries will move World’s First Smart Cities in MSC

  30. “Multimedia Development” Flagship Applications • Multi-Purpose Card • Smart Schools • Electronic Government • Telemedicine • R&D Cluster • Worldwide Manufacturing Webs • Borderless Marketing

  31. India “Bangalore” • Historical background: Accumulation of defense industries and academic institutes - National Aerospace Laboratories, Indian Space Research etc. - Indian Institute of Science (IISc) 1909 by TATA - other science & technology universities (26) • Historical process for IT clustering: - TI for R&D of software(SW) in 1986 - Then, Motorola, IBM, Intel, HP, Siemens through the 1990s - Infosys Technologies in 1981  NASDAQ 1993 - International Technology Park in 1994 w/ Singapore - National Task Force on IT and SW Development - At present, SW R&D related persons  over 130,000

  32. Software Technology Parks of India (STPI) > 7 parks over India > Telecommunication infra to foreign IT companies > Incubators to local VBs > Incentives International Technology Park > Intelligent buildings for foreign IT R&D > 20 minutes by car from Bangalore City > High-level living infra for foreign residents > Developer : ITPL (JV with TATA, State of Karnataka, S’pore) India – S/W Clustering Policy

  33. “IT Super Power” National Policy to 2008 Currency : USD1999 2008 200/1999 HW Production 6,100 mil 10,000 mil 1.6 times SW Production 5,300 mil 87,000 mil 16 SW Export 3,700 mil 50,000 mil 14 India - IT Ind. Development Target

  34. China “Zhongguancun Science Park” • Abundant scientists&engineers - Tsinghua Univ. (40,000 students) - Peking Univ. (30,000 students) - 66 other universities - 230 Governmental R&D institutes - No. of scientists > 300,000 ( Japan Approx. 200,000 ) • No. of IT related companies > 4,500

  35. China: Historical Background • Historically academic center • Electronics/electrical parts shopping center since the 1980s • Designated by Gov. as “High-tech Region” in 1988 • Since 1999, IT infrastructure in progress • Gov. goal 　 50 R&D institutes of multinational firms by 2005 Total sales of high-tech US$78 billion by 2010

  36. First “Science Park” in Japan • Name - Kanagawa Science Park (KSP) • Foundation - 1989 • Total Investment Amount – Approx. US$ 650 mil • Initiators - Kanagawa Pref.& Kawasaki City • Cooperators - Government & Private Sec. • No. of companies - 122 (as of Jan.2001) • No. of Scientists & Engineers - Approx. 4,000 • Area - 5.6 ha (Intelligent Buildings) Total floor area 14.5 ha

  37. Japan : Outline of KSP Kanagawa Academy of Science Technology (KAST) Supply of R&D NeedsR&D Reports Techno-seeds & Inf. Kanagawa Science Park Company Limited SME technologySupply of Corporate Needs Laboratory service Kanagawa High Technology Foundation (KTF)

  38. Coordinator of KSP Kanagawa Science Park Company Ltd. Capital : US$ 45 mil Municipality US$ 10 mil Development Bank US$ 5 mil Private companies US$ 30 mil Function : Coordination of KSP Business incubator for start-up business Linking VB with VC etc. Occupancy : Tenant Bldg and Incubation Bldg  Both full Job creation by KSP : 4,000 as a whole of KSP Fostering of venture business : 146 graduated (max. 7 y)

  39. Japan-US Comparison on Venture Businesses Generally speaking… In USA… Approx. 800,000 start-up annually. Approx. 700,000 discontinue annually. As 100,000 companies survives, jobs opportunities have been increasing. In Japan… Approx. 140,000 start-up annually. Approx. 170,000 discontinue annually. As 30,000 companies decrease annually, job opportunities have been decreasing.

  40. Common Success Factors 1/3(Riyadh?) • Strong leadership & Competitive Strategy Yes. But, strong financial supports are essential. In addition, strategic planning for Cyber Riyadh City in cooperation with Riyadh State, authorities concerned, academic institutes etc. are essential. • Excellent IT infrastructure Unknown. Intensive IT infrastructure is required urgently to attract multinational IT companies. More importantly, attractive information service at low cost is must.

  41. Common Success Factors 2/3 (Riyadh?) • Incentives to IT clusters Not yet. Special incentives, among all, to multi- national IT institutes are must to invite. For example, free intelligent office, free corporate tax, free duty on IT hardware, excellent living compound,government/municipality sponsored R&D, • IT Human Resources for R&D Unclear. IT university or R&D institutes might be necessary to foster Saudi IT clusters for economic development. Strategic alliances with overseas institute/universities with incentives are essential.

  42. Common Success Factors 3/3(Riyadh?) • Venture Business Promotion In progress, but not enough. Not only VC but also intensive services such as marketing supports, financial consultation, management advises/consultation, networking with institutional investors/angels in KSA and overseas etc. are essential. • University - Industry Collaboration Unclear in Riyadh.

  43. Conclusion… • Excellent IT City in Riyadh can be created artificially through IT clustering. • Excellent IT City in Riyadh should be ORIGINAL, not be the same models of others. Nothing ventured, nothing gained !!!

  44. Thank you very much. Yasuharu Tanaka Japan Desk Saudi Arabian General Investment Authority

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