Jakarta, INTI - Coordinating Minister for Economic Affairs Airlangga Hartarto has encouraged Grab Holdings to establish a data center in Indonesia to meet data localization requirements. He noted that Indonesia accounts for around 40% of Grab’s operations, making it reasonable for data to be hosted domestically.
In addition, Airlangga emphasized Indonesia’s competitive advantages, particularly in terms of lower land and electricity costs compared to other countries where Grab operates. “Indonesia is the most competitive. That is something I can guarantee,” he said during the Grab X event on Wednesday, April 8, 2026.
He also referred to a World Economic Forum report, which projects that 22% of jobs will undergo transformation in the coming years. According to him, addressing this shift requires a strong pipeline of adaptive digital talent and continuous innovation.
In line with this, the government is strengthening national readiness through various strategic initiatives. One of them includes collaboration with Arm Holdings to build technological capabilities, with a target of training 15,000 AI talents this year. At the regional level, Indonesia is also initiating the ASEAN Digital Economy Framework Agreement (DEFA) to reinforce the region’s digital economy, with expectations for signing in 2026 under the Philippines’ chairmanship.
Airlangga added that if the agreement materializes, the global digital economy could grow from US$1 trillion to US$2 trillion, or approximately Rp34,000 trillion, by 2030. “This represents another growth opportunity for Grab over the next five years,” he said.
Opportunities and Challenges for Data Centers in Indonesia
Meanwhile, Chairman of AI, IoT & Big Data at Masyarakat Telematika Indonesia (Mastel), Teguh Prasetya, outlined both the opportunities and challenges of developing data centers in Indonesia.
He pointed out that Indonesia offers a strong domestic market, supported by a population of around 280 million, over 200 million internet users, and a GDP of approximately US$1.4 trillion growing at around 5% annually. “These are fundamental advantages that Singapore and Malaysia do not have,” he said.
Teguh added that Indonesia’s hyperscale data center market is projected to grow from US$3.49 billion in 2025 to US$7.96 billion by 2031, reflecting a CAGR of 14.71%.
Indonesia also stands out in terms of land availability, water resources for cooling systems, and the ease of building power plants. This contrasts with countries like Singapore, which face severe land constraints and a data center vacancy rate of just 1.4%, the lowest in the Asia-Pacific region.
Furthermore, Indonesia offers diverse location options, ranging from Jakarta and Batam to emerging hubs such as Surabaya, Medan, and the new capital Nusantara.
From a policy perspective, fiscal incentives are also considered competitive. Special Economic Zones (SEZs) such as Cikarang and Batam offer 0% VAT on imported equipment, reducing initial capital expenditure by around 11%. In addition, the Online Single Submission (OSS) system has shortened licensing processes from 24 weeks to approximately 10 weeks for eligible projects.
As the world’s largest archipelagic nation, Indonesia also serves as a natural landing point for submarine cables, creating organic demand for edge data centers across multiple regions.
Teguh further highlighted strong investment momentum in 2025, including major commitments such as DAMAC Digital’s US$2.3 billion investment in AI-ready data centers in Jakarta, Microsoft’s US$1.7 billion commitment to cloud and AI infrastructure, and a US$250 million collaboration between Indosat and NVIDIA to develop an AI factory now serving more than 20 companies in Indonesia.
Conclusion
Indonesia’s strong market share, competitive cost structure, and growing digital ecosystem position the country as a highly attractive hub for AI data center development. The government’s push for data localization, combined with rising investment and infrastructure readiness, presents a compelling case for Grab Holdings to establish a local presence. However, success will depend on how effectively opportunities are balanced with regulatory, technical, and scalability challenges in the years ahead.
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