Jakarta, INTI - Indonesia’s artificial intelligence (AI)-powered data center industry is entering a new phase, driven by surging demand, substantial energy requirements, and government efforts to expand digital infrastructure beyond Java.
PT Telkom Indonesia (Persero) Tbk. has reported a significant increase in demand for AI data centers over the past six months. Meanwhile, the Ministry of Communication and Digital Affairs (Komdigi) is refining a draft presidential regulation covering data centers and submarine cables to promote more balanced national digital infrastructure development.
At the same time, the Danantara Investment Management Agency is targeting greater economic value from the data center industry ecosystem, including semiconductor technology and AI-based control systems.
Telkom Network Director Budi Satria Dharma Purba said relatively low electricity tariffs are among the factors attracting AI industry players to establish data centers in Indonesia.
According to Budi, demand for data center capacity has risen sharply over the past six months amid high electricity costs in the region. He noted that electricity tariffs in Indonesia are approximately one-third of those in Singapore.
“Most data centers are already occupied. There is enormous demand waiting in the queue,” Budi said at Bali Tech Week 2026 on Tuesday, October 20, 2026.
Nevertheless, electricity supply remains a significant challenge. Indonesia’s data center infrastructure is currently concentrated in several locations, including Batam, Jakarta, Surabaya, Cikarang, and Semarang.
To address electricity supply constraints in Java while taking advantage of potential surplus power outside the island, Telkom plans to locate new data centers closer to energy sources.
“Our strategy is to assess the situation, electricity availability, and other relevant factors. We are focusing on locations close to energy sources and building data centers in those areas to reduce costs and power consumption. That is our priority,” Budi said.
This approach also requires reliable connectivity infrastructure to ensure that data centers can support computing workloads and AI inference with low latency.
Komdigi Pushes for More Equitable Infrastructure Development in Eastern Indonesia
Komdigi Director General of Digital Infrastructure Wayan Toni Supriyanto said the draft presidential regulation on data centers and submarine cables had undergone public consultation.
The government is still gathering input from industry stakeholders, government institutions, and private companies before proceeding with the regulatory process.
Wayan emphasized that data center development should expand into eastern Indonesia rather than remain concentrated in Batam and Java.
Key considerations include electricity availability, access to water, land suitability, and network connectivity.
“We are also providing connectivity to national and international activity centers for data centers outside Java and Batam, ensuring that these facilities do not become isolated. This will enable us to provide alternative routes and build a resilient data center network across Indonesia,” he explained.
According to Wayan, scalable electricity supplies with lower emissions are essential to supporting the energy-intensive operations of AI data centers.
The government therefore needs to strengthen cross-sector coordination, including land allocation, energy provision, licensing, and backbone network development.
He added that digital infrastructure expansion could also reach other regions, including Sulawesi and Kupang, with development plans tailored to each area's characteristics and requirements.
Danantara Targets Up to US$7 Billion in Revenue from the Data Center Ecosystem
Beyond infrastructure distribution, data center development presents an opportunity to increase the economic value generated by Indonesia’s digital industry.
Danantara Chief Technology Officer Sigit Puji Santosa said Indonesia needs to develop a broader data center industry ecosystem rather than rely solely on land leasing.
This ecosystem should include semiconductor technologies and AI-based control systems.
According to Sigit, a business model focused exclusively on leasing land could generate substantially less revenue than one that incorporates technology development and supporting infrastructure.
“If we only lease land, the impact will be limited. An investment of US$3 billion to US$4 billion would generate only around US$100 million to US$150 million in revenue,” Sigit said at a press conference for the Danantara Technology and Innovation Forum (DTIFF) on Monday, October 19, 2026.
By contrast, developing a more comprehensive industrial ecosystem could potentially generate revenue ranging from US$1.5 billion to US$7 billion.
Danantara has also signed a cooperation contract with industry partners in the United Kingdom to develop six industrial sectors, including data centers and semiconductor technology.
Sigit believes technology-driven industrial development should prioritize the large-scale implementation and commercialization of innovation.
This approach would enable investments to strengthen not only digital infrastructure but also productivity, competitiveness, and the creation of high-quality jobs.
Danantara is scheduled to hold DTIFF 2026 on October 26–28, 2026, at Fairmont Jakarta.
The forum aims to bring together government representatives, state-owned enterprises, global investors, technology companies, and research institutions to establish strategic partnerships across six sectors, including energy, healthcare, semiconductors, and AI and digital infrastructure.
Conclusion
Indonesia is accelerating AI data center development through rising private-sector demand, government plans to expand infrastructure into eastern regions, and Danantara’s push to build a higher-value technology ecosystem. Addressing electricity availability, reliable connectivity, and regional infrastructure gaps will be crucial to supporting sustainable growth while strengthening Indonesia’s position in the regional digital economy.
Read more: Indonesia’s Coordinating Minister Bahlil Urges Investors to Bring Advanced Technology for Data Center Development