The Data Center Industry in Indonesia Is Finally Coming of Age



The Data Center industry in Indonesia is finally coming of age, having lagged behind more advanced markets such as Singapore, Malaysia and Hong Kong.


In this latest Wellington Perspective, we examine the highly positive trends becoming evident in the Data Center sector in Indonesia.


Investment is being stimulated by the explosive growth of the digital economy in Indonesia and the rapidly accelerating adoption of Cloud-based services from home-grown companies such as GoTo Group (formerly Gojek and Tokopedia), Bukalapak and Traveloka.


Many global service providers - attracted by the increasing breadth and depth of the in-country ecosystem - are also entering the Indonesian market. They are seeking to establish greater reach and diversity by building out their multi-national presence, as well as providing world-class services to financial institutions and multi-sector conglomerates in Indonesia.


International powerhouses such as Alibaba Cloud, Google Cloud Platform, Amazon Web Service and Microsoft Azure are all now highly active in Indonesia.



Indonesia is expected to become a critical market for Cloud-based, on-demand computing service providers.


Indonesia is undergoing a Data Center construction boom, especially within the political and economic capital of Jakarta. However - by both regional and international standards - the total market is still relatively small.

To date, Indonesia has built a total capacity of 91 megawatts (MW) which is dwarfed by the equivalent total for Singapore of 613 MW.


However, industry analysts are forecasting a 3X increase in overall power consumption capacity for Indonesia between 2022 and 2026 with the primary impetus for this growth coming from hyperscale Cloud platforms.


The disruption caused by the COVID-19 pandemic has also steered both regional and international vendors to focus more sharply on the digital economy in Indonesia. These players are increasing their investment in Cloud infrastructure and enterprise-grade computing resources in order to provide new services to companies across multiple industries - thereby facilitating the overall COVID-19 recovery effort.


The Cloud-based intelligent solutions that are becoming available also support the game-changing digital transformation programs that are being widely implemented by Indonesian companies across all sectors of the economy. It is generally accepted by all market commentators that COVID-19 has brought forward the digital transformation ‘revolution’ by five years.



Emerging technologies will drive the need for more capacity and processing power located within Indonesia.


The nationwide rollout of 5G technology by the incumbent mobile network operators will dramatically expand the adoption and use of new services available to both the business and consumer markets. In Indonesia, network-wide mobile data payload has been increasing by a minimum of 40% per annum over the past five years and this rate of growth will continue unabated going forward.


In the enterprise market, the array of available services will broaden dramatically, comprising private 5G networks; high-precision, ‘Internet of Things’ (IoT/IoE) applications; ‘edge computing’ solutions; etc. Again these service innovations will be a major stimulant to the volume, velocity and variety of data traffic streams.


Regional and international data transmission will be enhanced by the construction of two new sub-sea cables, which are scheduled to be completed in 2023 (‘Echo’) and 2024 (‘Bifrost’). They will allow faster connectivity between Jakarta and financial centers such as Singapore.


Backed by Facebook and Google, these new cables are being dimensioned with a view to elevating trans-Pacific capacity by up to 70% and they will establish the first direct link between SE Asia and the USA.


Overall, the competitive intensity amongst the various Data Center and Cloud Service providers is expected to be remain high for the foreseeable future, as they each invest in upscaling their capabilities to retain and grow market share in their chosen categories.


For a deeper-dive into the sector - featuring both the current structure of the marketplace and the likely dynamics going forward - please refer to this latest Wellington Perspective.


Meanwhile if you would like to open a dialogue on any aspect of the Data Center industry in Indonesia, please contact us.


Wellington Perspective - Data Centers in Indonesia
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