Jakarta, INTI - Indonesia is joining the race to expand data center capacity as it seeks to strengthen the foundation of its digital economy and national artificial intelligence (AI) development. The strategic push could generate additional economic value while attracting billions of dollars in investment.
The move is supported by Indonesia’s position as one of Southeast Asia’s largest digital markets. The country’s digital economy was estimated to approach US$100 billion in 2025, making it the largest in Southeast Asia.
However, a large digital market requires sufficient infrastructure to support it. As digital activity expands and AI adoption accelerates, demand for computing capacity is also expected to grow.
Coordinating Minister for Economic Affairs Airlangga Hartarto sees this relationship as part of Indonesia’s broader national economic growth agenda.
“Indonesia wants to grow by more than 8%, and one of the drivers is the digital economy. The key is AI, and AI can only develop when its infrastructure, particularly data centers, is strong,” Airlangga said in a recent statement.
Turning Data into Economic Value
Vice Minister of Communication and Digital Affairs Nezar Patria said strengthening AI infrastructure and computing capacity is essential if Indonesia wants to move beyond simply being a technology user.
“We do not want to be merely a market or a user. We want to secure a strategic position in the global AI industry value chain,” Nezar said.
Digital activities continue to generate enormous volumes of data through banking transactions, online shopping, digital services, and business operations. However, data does not automatically generate economic value. It needs to be processed, stored, and accessed through reliable computing infrastructure.
Data centers are therefore essential for supporting cloud services, fintech, e-commerce, AI, cybersecurity, digital government services, and a wide range of technology-driven businesses at scale.
The government has recorded additional investment interest of around 1.3 GW in data center capacity in Indonesia, with an estimated value of US15billiontoUS20 billion. Every additional 100 MW of capacity represents approximately US1.2billiontoUS1.5 billion in investment.
The economic impact extends beyond facility construction. Data center development creates demand for construction, energy, connectivity, technology, maintenance, and skilled workers, while also expanding economic activity and the potential tax base.
Chile provides an example of how data centers can generate broader economic benefits. The Chilean government estimates that AWS’s investment of more than US4billioninthreedatacenterscouldcontributearoundUS10 billion to GDP and support more than 7,000 full-time jobs annually.
This demonstrates that the value of data centers is not limited to computing capacity. Their broader impact depends on how effectively investments create employment, stimulate supply chains, and strengthen a country’s digital capabilities.
AI Drives Demand for Large-Scale Computing
Computing requirements are increasing rapidly alongside AI development. While the early phase of digitalization focused heavily on connectivity, the next phase requires large-scale computing, GPUs, cloud infrastructure, networks, electricity, and data centers.
Having a large digital market does not automatically make Indonesia a winner in the digital economy. A key factor will be the country’s ability to develop technology and transform data into higher-value products and services.
The competition to build computing capacity is also becoming increasingly visible across Southeast Asia. World Bank data for the first half of 2025 put Indonesia’s total data center capacity at around 1.17 GW, compared with 3.17 GW in Malaysia and 1.25 GW in Singapore. CSIS Indonesia estimates that Indonesia’s capacity could grow by 16.8% annually through 2029, reaching approximately 1.41 GW.
However, expanding data center infrastructure also requires serious attention to energy and water consumption. In addition to their substantial electricity requirements, data centers may require significant water supplies depending on the cooling technologies they use.
“Energy and artificial intelligence technology will become important pillars of development. AI itself requires a very large amount of energy to operate,” said ITB researcher Reini D. Wirahadikusumah.
Indonesia has strong foundations for developing an AI ecosystem, including a large digital market, rapidly growing demand for computing capacity, and significant energy resources. The key challenge is to manage these advantages efficiently and sustainably so that data center investment can generate greater value for the national economy.
Conclusion
Indonesia’s accelerating data center development presents an opportunity to attract investment, strengthen digital infrastructure, and support the growth of AI. However, sustainable management of energy, water, talent, and computing capacity will be essential to ensure these investments deliver long-term economic value.
Read more: Minister Meutya Hafid Says AI Data Center Development Must Not Disrupt Public Water and Energy Supplies