Jakarta, INTI - Indonesia is increasingly seen as a strong contender to become a data center hub in Southeast Asia, as capacity constraints in other countries, particularly Singapore, limit further digital infrastructure expansion. This situation presents a significant opportunity for Indonesia to strengthen its position as a regional data center destination.
Krishna Worotikan, Chief Financial Officer of Digital Realty Bersama, noted that the regional shift in the data center industry is driven by resource limitations in several countries alongside surging digital demand across Southeast Asia.
According to him, Singapore has begun restricting new data center developments due to constraints in electricity and water supply. As a result, operators and investors are increasingly turning their attention to Indonesia as an alternative location.
“Singapore is no longer allowing additional data center development due to energy and water limitations. Meanwhile, Indonesia still holds advantages in terms of land availability, power supply, and water resources,” Krishna explained.
He added that this combination of factors positions Indonesia as a strategic location for data center expansion, both for domestic needs and regional operations.
A few years ago, many Indonesian companies still hosted their data overseas, primarily in Singapore. However, this trend is now shifting as local data center capacity continues to grow.
“Two to three years ago, many Indonesian companies stored their data in Singapore. But now, due to space limitations there, we are seeing a gradual shift toward Indonesia,” he said.
This transition is not limited to local firms. Global companies are also beginning to establish Indonesia as a base for their data center operations to support broader activities across Asia and the ASEAN region.
With its growing capacity, Indonesia is no longer just a large digital market but is increasingly positioned as a regional hub capable of serving wider demand.
“This is not just about Indonesia as a market. With available land, energy, and water, the country is becoming a highly strategic location for regional and global data center operations,” Krishna emphasized.
From Indonesia, companies can serve digital needs across Asia and ASEAN more efficiently, especially as demand for data center services continues to rise alongside digital transformation.
Regulatory Support Driving Data Center Demand
Andha Yudha Permana, Director of Business & Commercial at Digital Realty Bersama, highlighted that regulatory support is also fueling the growth of the data center industry.
He pointed out that sectors such as banking and financial services are required to store data domestically, in line with regulations from authorities like Otoritas Jasa Keuangan and the central bank.
Compliance with these regulations has become a key driver behind the increasing demand for local data center services.
Beyond regulation, Andha emphasized the importance of reliable infrastructure to support the digital economy, particularly for industries that demand high speed, security, and service availability.
He noted that one of the data center facilities currently operated holds a strategic advantage, as it hosts one of the largest exchanges in Indonesia, handling massive volumes of data traffic.
“This facility is the only data center hosting one of the country’s largest exchanges, making it a key strategic location,” he said.
According to Andha, current data center infrastructure is well-prepared to handle growing pressure from digital transactions, including traffic volumes reaching tens of terabytes per second.
The presence of global cloud service providers within Indonesia has also strengthened the country’s data center ecosystem, enabling companies to serve customers more efficiently from within the country.
“With a more mature ecosystem, Indonesia is no longer just a digital market, it is becoming a strategic hub for regional data center operations,” Andha concluded.
Conclusion
Indonesia is rapidly emerging as a strategic data center hub in Southeast Asia, driven by resource advantages, growing domestic capacity, and supportive regulations. As constraints in markets like Singapore persist, Indonesia is well-positioned to capture both regional and global demand. With a strengthening ecosystem and increasing presence of global players, the country is transitioning from a digital consumer market into a critical infrastructure backbone for Asia’s digital economy.
Read more: The Data Center Industry in Indonesia is Projected to Grow Along with Increasing AI Utilization