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Randy Mulyanto · · 4 min readData centers power up industrial regions beyond Jakarta
Batam island, which is about an hour away from Singapore by ferry, is a minuscule part of Indonesia – it makes up under 0.1% of the country’s total land area.
Yet, developments on the island may be a sign of things to come for the country’s data center sector. They also show Indonesia’s focus on developing areas beyond Jakarta, which has been both the business and political capital of the country.
As of June this year, investment in the development of data centers on Batam island reached around US$3 billion.
Photo credit: Shutterstock
Even Airlangga Hartarto, Indonesia’s coordinating minister for economic affairs, touted Batam’s potential as a hub for fiber optic cable networks, which connect data centers to the broader internet infrastructure.
Data center investments have been increasing in other parts of Indonesia, too.
US$3.6 billion by 2029
According to the Indonesia Data Center Provider Organization (IDPro), at least seven foreign data center companies expressed interest in investing in Indonesia in the second half of 2024.
This will contribute to a market that is estimated to reach US$3.6 billion by 2029, according to market research institute Arizton.
Ferry Salanto, head of research at Colliers Indonesia, said the rise of data center investments in the country coincides with greater digital adoption.
“Large corporations are projected to choose Indonesia as their data storage location, which increases the demand for national data storage,” he tells Tech in Asia.
Another driver of investments in the sector: government policy, both local and foreign.
Indonesia’s government requires public electronic system operators to process and store personal data in Indonesia, even though private operators are not required to do so.
The government has also offered tax incentives for data center players, eased the repatriation of profits, and allowed foreign entities to own land for building data centers.
Industrial regions to benefit
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Seven foreign data center companies expressed interest in investing in Indonesia in the second half of 2024.
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