Batam’s data center boom is just getting started, with caveats

Batam is having a tech moment.

Once known primarily as an industrial outpost and a weekend getaway for those living in Singapore, the Indonesian island about 45 kilometers from the city-state is now emerging as Southeast Asia’s newest data center destination.

Global backers, private equity firms, and telecom operators are pouring capital into Batam. Investment in nine data centers in Nongsa Digital Park, the island’s special economic zone, was at 38 trillion rupiah (US$2.2 billion) as of April 2025, local media reports say. No official figures have been disclosed, however.

While Jakarta remains the top choice for Indonesian data center with a 56.72% market share as of 2025, Batam is rapidly expanding to take the No. 2 spot with about 10% market share, according to GlobeNewswire. It is expected to expand at a 21.7% compound annual growth rate through 2031, per a Mordor Intelligence report.

Indonesia had 330 megawatts of data center capacity, with an additional 825 megawatts planned, says the 2025 e-Conomy SEA report by Google and Bain. In comparison, Singapore had a capacity of 1,000 megawatts but only 300 megawatts in planned additional capacity.

Last year, Singapore-based DayOne built its data center with a total capacity of 72 megawatts in Nongsa Digital Park.

Another major data center project underway on the island is state-owned Telkom’s NeutraDC Nxera, which is building a hyperscale-ready facility. This will have an initial capacity of 18 megawatts, to be expanded in phases to 54 megawatts.

Currently, four data centers are operational in Nongsa Digital Park, while three are under construction and five are in the planning stage. Meanwhile, Batam hosts 18 data center facilities in operational, under-construction, and planned stages.

Batam owes its status to Singapore’s data center moratorium, which prevented new data center constructions in the city-state from 2019 to 2022 and drove investments to the island. Even after lifting the ban, Singapore remains highly selective, prioritizing only sustainable projects.

However, Batam’s ambition to become Southeast Asia’s top data center destination faces tough competition from Malaysia, particularly Johor, which hosts major developments. The country’s capacity stood at 690 megawatts last year, with planned additional capacity reaching up to 2,415 megawatts.

Capturing the spillover

Unlike Indonesia’s data center on Java, Batam is well-positioned to capture “spillover demand” from Singapore, says Alexander Kheder, a TMT analyst at Fitch Solutions’ BMI. He adds that the island’s proximity to Singapore – only 45 minutes by ferry – makes it an “ideal extension” for regional digital infrastructure.

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