The Indonesian data center landscape is undergoing a tremendous sea change, from its legal and regulatory structure to the existing physical facilities. This trend is likely to continue into the foreseeable future.
The Indonesian government has made available several incentives to attract foreign investment in data centers, including tax and land concessions. Data centers can be built on an area of up to 20 hectares (200,000 square meters) with a 50% tax exemption for ten years.
Indonesia Data Center Landscape Overview
Indonesia’s data center market has grown significantly over the past ten years but is still in its early stages. Many organizations are outsourcing their data centers to multi-tenant data center in Indonesia. The government recognizes the benefits that data centers can bring to the country. Over the past few years, the government has worked with local data center associations to create a favorable environment for data centers.
Our research found 13 data centers in Jakarta, Bandung, Surabaya, and Medan, spread across two land locations: West Java and North Sumatra, which include both emerging cities with large populations and secondary cities with high economic growth potentials.
Currently, Indonesia’s total data center capacity is predicted to have reached 250 MW and will reach 250 MW in the coming 2024.
Indonesia’s green data center market does not only come from local users but also from other countries. Like multinational companies that need cheaper disaster recovery center services, they fulfill collocations in multi-tenant data centers in Indonesia.
Currently, most data centers in Indonesia are in Jakarta, then in Bekasi and Bandung. Meanwhile, other cities such as Surabaya, Medan, Batam, and Bali are also starting to develop.
Indonesia is the most critical region in Asia/Pacific for a data center.
Indonesia is a country that has experienced significant economic growth in the past decade. It is projected to see a growth rate of approximately 5% over the next decade. By 2025, Indonesia is predicted to overtake Japan as the fourth-largest economy in the region. In addition to its vibrant economy, Indonesia has an enormous population of more than 250 million people (4th largest in Asia).
Indonesia’s telecommunications infrastructure is growing. Undersea fiber optic cables have been stretched throughout Indonesia. Indosat, one of the telecommunications providers in Indonesia, is also in the process of establishing a direct fiber connection to the United States.
There are many workers in Indonesia for the data center and cloud fields. This condition is in contrast to Singapore, which is experiencing a crisis in the availability of workers in the digital industry.
In addition, the construction of a power plant from renewable energy is quite long. It will take 150 months or more than ten years to build a solar power plant with a capacity of 100 MW. Meanwhile, Indonesia has energy sources such as LNG, Geothermal, and Nuclear, which are considered cleaner than coal and fuel.
These factors have made Indonesia the most attractive location to establish a large-scale eco-friendly data center that can serve Southeast Asia’s needs.
Indonesia data center market is desirable to investors
The Indonesian data center market has experienced significant growth over the past few years, driven by some factors, including:
- The rising demand for cloud infrastructure as organizations embraces the cloud as a service delivery model.
- The increasing availability of low-cost, high-speed internet connectivity in Indonesia.
- The emergence of Indonesia as a regional cloud hub due to its strategic location and proximity to other regional markets.
Several foreign players have also entered the market, creating opportunities for partnerships with local companies and more investment into the country’s data center infrastructure.
Indonesia’s data center landscape is expected to grow in the following years.
Indonesia has the third largest internet user population in Southeast Asia, with more than 205 million internet users. This country is one of the most attractive markets for data center operators due to its growing economy, abundant natural resources, and young population. The government and private sector are actively supporting the development of the data center market in Indonesia.
With these developments, the construction of green data centers in Indonesia is being done a lot. One that has been completed and is operational is the Atria Data Center (formerly Space DC). However, according to our intelligence source, the green data center Atria has also been ‘fully-booked.’
In Q1 2023, the construction of another data center (still in Jakarta, too) will begin. With an initial capacity of 12 MW, Greenex Data Center will start operating in early 2024.
This phenomenon occurs because of the extensive digital penetration in Indonesia. Such marketplace, ride-hailing, e-learning, and e-health, have dramatically increased the need for data centers in Indonesia.
Fortunately, the Indonesian government has committed to yesterday’s G-20 to prioritize sustainability. Through one of the state electricity subsidiaries, the Indonesian government has committed to delivering cleaner energy, such as LNG and Geothermal, to the industry.
Currently, the Amazon data center is building a solar plant in Indonesia with a capacity of 120 MW.
The infrastructure in Indonesia is improving and will create a better environment.
Expanding the country’s power grid, including constructing numerous renewable energy plants, will supply additional capacity to support continued growth. In addition, the government has begun implementing several programs to improve the national infrastructure, including a plan to open up Indonesia’s first toll road, which will help bridge the gap between East and West Java and offer access to Batam Island.
Indonesia’s infrastructure is improving, making it a more competitive location for data centers. The country has four international airports, three of which are in the capital city of Jakarta. Indonesia relies on its infrastructure to efficiently distribute goods to its citizens and businesses.
President Joko Widodo (Jokowi) has committed to investing $130 billion in infrastructure projects, including air, land, and maritime transportation. The government also plans to invest in broadband infrastructure as part of its “Digital Indonesia” program.
After understanding the Indonesian data center landscape, investors should be quick to decide to fund green data center projects in Indonesia. Because the longer you make a decision, the momentum will decrease.
By investing in a green data center, you have completed your moral obligation and support Indonesia’s greener data center landscape.