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RI missing AI data center opportunity despite having all it takes
Industry players say Indonesia could become an AI data center hub thanks to its significant renewable energy potential, if the government offers investors the right incentives.
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Illustration of a data center (Shutterstock/sdecoret)
D
uring Singapore’s data center moratorium from 2019 to 2022, Johor State in Malaysia increased its data center capacity from 10 megawatts to 1.3 gigawatts. By contrast, Indonesia currently operates only around 300 MW, despite a similar proximity to the city-state, according to the Indonesian Data Center Association (IDPRO).
Industry players forecast that Indonesia will reach a data center capacity of 2.3 GW in the next 10 years, driven by the rise of artificial intelligence computing and an abundance of renewable energy potential.
However, they suggest the government provide convincing incentives to ensure the country gets ahead of others in the region.
After the crypto mining craze of the last decade, AI has become the next energy-intensive tech innovation. According to estimates by the International Energy Agency, OpenAI’s ChatGPT consumes around 10 times more electricity than common computing tasks, such as Google Search.
Niccolò Lombatti, an industry analyst at Fitch Solutions’ country and industry risk research firm BMI Research, said major economic centers tended to be primary data center markets. However, due to competition with real estate firms looking to build offices in metropolitan areas, data center investments were moving to secondary cities that offered competitive land and electricity prices while being close to the urban centers.
Speaking to The Jakarta Post on Friday, Lombatti also pointed to the importance of renewable energy for data centers to protect existing and new customers against the increasing regulatory risk associated with the use of coal-powered infrastructure. Additionally, sustainable debt is becoming increasingly popular for data center investment.
Within Southeast Asian, Lombatti expects data center investment to shift from Singapore to Johor in Malaysia and Batam in Indonesia. However, despite both Malaysia and Indonesia having significant potential for renewable energy, the former has taken the lead in attracting demand from Singapore.
