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Investment boom in Indonesia's data centers to continue in 2023
While research has shown continued investment growth this year in data center development, a shift in policy mindset away from data localization and toward hyperscale computing was needed to fulfill market potential.
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Rows of tower servers stand at the NTT Data Center in this undated file photograph.
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nvestment in Indonesia’s data centers boomed throughout 2022, and industry insiders say this trend will continue in 2023 on high demand for digital adoption, given that the internet economy is a vital source for the country’s growth.
The government, private investors, state-owned enterprises and conglomerates invested a lot of money in data centers last year.
According to a report from Mordor Intelligence, the data center market was worth US$1.67 billion in 2022. The market research firm also projected a compound annual growth rate (CAGR) of 13.15 percent for the sector from 2022 to 2027, which translates into a market value of $3.43 billion in 2027.
“Data center investment and businesses, as the main backbone of digital technology, will grow rapidly in 2023 and years to come,” Deni Friawan, economic researcher at the Centre for Strategic and International Studies (CSIS), told The Jakarta Post on Tuesday.
Massive population potential, a low level of public access to digital services, a growing digital economy and digital transformation in government were among the mainsprings of rapid growth in Indonesia’s tech sector, which in turn led to higher demand for data center infrastructure, Deni noted.
Meanwhile, Toronto-based research and consulting firm Structure Research has revealed that colocation data centers in Jakarta had a market value of $336.6 million and a CAGR projection of 22.7 percent to 2027.
To date, 73.7 percent of the Indonesian population uses the internet. The country’s total data center capacity presents a high disparity relative to this figure at only 12.7 percent, which translates into just 0.6 watt per capita; a very low rate compared to Singapore’s 183 watt per capita.
