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Investors eye Indonesia for AI amid low energy costs, favorable policies
In addition to affordable energy, tech industry insiders have praised Indonesia's “very welcoming stance” on foreign direct investment.
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Zia Zaman, general manager at Microsoft Ventures, speaks during a panel discussion at the Tech in Asia conference held at the Ritz-Carlton Pacific Place hotel in Jakarta on Oct. 23, 2024. (JP/Ruth Dea Juwita)
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ndonesia has emerged as a prime destination for artificial intelligence investment in Southeast Asia, driven by low electricity costs and supportive regulations, tech industry insiders say.
The country is seen to harbor potential for hosting data centers and fostering AI applications, even though foundational AI infrastructure is expected to remain concentrated in more established tech hubs such as the United States and China.
“I believe that, in terms of creating an infrastructure of AI, Southeast Asia is definitely not playing the game. The reason Malaysia and Indonesia are such hotspots for investment is because, among Asia, they have some of the lowest electricity costs,” said Esther Wong, founder and CEO of venture capital firm 3Cap, in a panel discussion at the Tech in Asia conference held in Jakarta on Wednesday.
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In addition to affordable energy, Wong highlighted that Indonesia was also appealing for its “very welcoming stance” on foreign direct investment.
With its vast coastline, the country also had the ability to provide sustainable energy from sources such as tidal power, Wong pointed out, which could help reduce the energy burden of AI data centers.
Tech giants have committed more than US$55 billion in investments to the region since 2023, according to Tech in Asia data as of July plus a more recent investment by Oracle in Malaysia.
