Jakarta, INTI – Indonesia is considered to have strong potential to become a major player in the Southeast Asian data center industry. This was conveyed by Denny Setiawan, Director of Digital Infrastructure Policy and Strategy at the Ministry of Communication and Digital (Komdigi), while discussing the latest trends in the sector.
According to Denny, this opportunity arises from Indonesia’s massive mobile user base. “We rank fourth in the world, with 354 million mobile connections. One person can even own two phones. The data center market is also growing rapidly, with a compound annual growth rate (CAGR) of 14 percent projected until 2028,” he explained.
Incentives and Regulations as Key to Competitiveness
To compete with neighboring countries such as Malaysia, Thailand, and Vietnam, Indonesia must build a more supportive data center ecosystem. Denny emphasized the importance of tax incentives for both data center providers and customers importing equipment.
“These incentives must be accompanied by long-term policy certainty to build investor confidence. This way, our competitiveness can improve,” he said.
Electricity and Water Challenges
Despite its strong potential, there are serious challenges related to electricity and water supply. Currently, most data centers are concentrated in Jakarta, Cikarang, and Batam. Denny stressed the need for more balanced development, including expansion into western, central, and eastern Indonesia.
“We cannot rely only on Jakarta and Batam. If everything is concentrated there, in 5–10 years electricity and water could be depleted,” Denny warned.
In line with this, Hendra Suryakusuma, Chairman of the Indonesia Data Center Provider (IDPRO), highlighted that electricity and water are critical for the industry. He cited Singapore’s moratorium in 2019 when data center electricity consumption reached nearly 3 percent of total capacity, and Johor Bahru, Malaysia, which faced restrictions due to water supply shortages.
Strategic Location and Green Energy
Location is another crucial factor. Denny pointed out that data centers should ideally be built near international submarine cable landing stations (SKKL) to reduce data latency. Additionally, access to green energy is essential to attract global investors.
“There must be a national integrated mechanism to map data center locations and capacity. This data will serve as a clearer roadmap for future development,” he added.
Currently, Indonesia’s data center capacity reaches 500 MW. However, according to Structure Research, the ideal capacity needed is around 2,700 MW.
Conclusion
With its massive digital user base, fast-growing market, and strategic location in Southeast Asia, Indonesia has a strong opportunity to become a regional data center hub. However, to realize this potential, both the government and industry must work together to overcome electricity, water, and location challenges, while ensuring sustainable green energy supply.
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