Last year, 13 data center projects were under construction in Indonesia, and the total investment value was approximately USD 2.3 billion. The data center investment amount is growing at a fast rate of 22% over the last several years. Most of these projects are located in Bekasi, West Java, and Jakarta.
Jakarta has the Fastest Growing Data Center Investment Amount in Indonesia.
Jakarta is a favored location in Indonesia because of its improved network connectivity and proximity to end customers, which reduces latency. The COVID-19 pandemic is causing a rise in cloud adoption across several industrial verticals, including businesses, governmental organizations, and the education sector.
The market for data centers in Indonesia is dominated by telecom companies and colocation operators, respectively. Additionally, new investors are entering the Indonesian data center market. For instance, Data Center First intends to construct data centers there.
The government offers tax benefits to the data center business. According to the Indonesian Ministry of Finance, to encourage data center investment amount.
The capital Jakarta has the fastest-growing data center investment in Indonesia, worth US$ 274 million in 2022.
CAGR-2022 to 2027
In 2022, the prospective green data center market is anticipated to generate US$ 2.84 billion in revenue. Network Infrastructure is the market’s largest category, with a US$1.99 billion market volume expected in 2022. By 2027, the market will generate US$3.63 billion in revenue. With a 5.01% compound yearly growth rate (CAGR) throughout 2022 to 2027. Compared to other countries, the United States will generate the most significant revenue ($94.78 billion in 2022).
Infrastructure and Hardware
The market for data center investment amount includes all hardware-related costs associated with establishing and sustaining an IT infrastructure. It encompasses servers, storage, and network hardware, such as switches and routers. However, some external suppliers rent out space in data center investment amount to make their IT infrastructure entirely or partially accessible.
Market values indicate direct or indirect payments to primary suppliers at manufacturer pricing levels (excluding VAT) through distribution channels. The nation where money is spent receives the revenues.
Between 2022 and 2027, the prospective green data center market is anticipated to expand at a CAGR of 5.46% due to investments from colocation providers, including DCI Indonesia, Greenex Data Center, Princeton Digital Group, Indonet, ST Telemedia Global Data Centers, and Telkom Indonesia. Indonesia is seeing an increase in data center investment amount of over 45%.
Core and shell services make up around 50% of the entire cost. Assembly, architecture & engineering, project planning, and commissioning services make up about 30% to 35% of the price. Greenfield building and the production of on-premises portable data centers are quite common in Indonesian core & shell development.
Due to its excellent connection, fast broadband penetration, and industrial districts like Cikarang and Karawang provide better infrastructure, abundant land, and electrical supply. Indonesia is a desirable location for data center investment amount in Southeast Asia. The moratorium in Singapore from 2019 to 2021 also helped the Indonesian market expand.
Ten data center facilities contribute over 45% of the country’s current third-party data center capacity. Jakarta is the central location for data center growth in Indonesia.
The Indonesian government offers tax breaks to encourage the construction of data centers all around the nation. Developers of data centers, for instance, will enjoy a tax break of up to 50% for about five years if they invest $7 million to $34 million in Indonesia. Telecom companies, including Telkomsel, Indosat Ooredoo, and Nokia, are deploying 5G in Indonesia.
Colocation Data Service is Expecting to Dominate the Market
Since a few years ago, Indonesia’s e-commerce market has been expanding. The growth in Internet usage and access is the critical factor behind this expanding market size. In 2020, there were 196 million Internet users in Indonesia or around 73.7% of the population. According to the report from the Indonesian Service Providers Association.
Due to a growth in colocation demand from global cloud service providers, Indonesia’s data center investment amount is rising. One of the most under develop data center marketplaces in the world is thought to be in Indonesia. The data center market is expected to grow exponentially due to increasing OTT participant migration to Indonesia, rising IT spending, and the rollout of 5G.
Jakarta Data Centers are moving towards Public Cloud
The server will receive the bandwidth, IP, and power from the colocation provider. Thanks to colocation hosting, small businesses can take advantage of the benefits of having a large IT staff, eliminating the high setup costs.
The Jakarta Post reports that only some regional companies are preparing to move to the public cloud. They want to be in total control of their data center investment amount and not have it in anybody else’s hands. This is why colocation is still popular despite businesses’ significant interest in cloud services.
Jakarta hosts the most data center activity in Indonesia. For instance, Tencent Cloud opened its first data center in Indonesia in April 2021, demonstrating its dedication to meeting its expanding business needs. In Jakarta’s central business district, the data center has two utility power lines, two N redundant transformers, and an N+1 redundancy diesel generator that can run continuously for up to 72 hours.
Read also: Singapore Data Centers Lead World in Carbon Emissions
IT and Telecommunications is Expecting to Hold a Major Market Share
The rapid rise of the information technology field, along with motivating factors like mass consumption, urbanization, increased smartphone usage, and a young population that is tech-hungry, has positively affected Indonesia’s economic growth. The country’s data center investment amount will increase as a result. They are enabling the government to meet the anticipated rise in demand.
Memorandum of understanding (MoU)
An Indonesian telco named Smartfren and a UAE technology company called G42 announced. Their ambition was to erect a 1,000MW data center there in November 2021. The two corporations signed the project’s memorandum of understanding (MoU).
The partnership would lead to establishment of data centers within the nation and the protection of national data sovereignty. Both of which the Indonesian government is already doing. The sector significantly impacts the interests of such telecom companies and their upcoming projects in IT and telecom.
The use of smartphones, better service, more comprehensive coverage, and more affordable options, and these factors all contribute to the telecom industry’s growth. Indonesia continues to make significant capital data center investments to increase the size of its fiber optic network and 4G coverage. In Asia, the nation boasts the third-highest percentage of internet users.