AI in Indonesia: Business Insight
Recently, our capital market has been revitalised by a new trend. It is no longer driven by commodity and consumer product issuers, but by companies building data centres. This is because these issuers are considered proxies for artificial intelligence (AI) companies listed on the Indonesia Stock Exchange.
As we know, the global stock market has been obsessed with AI for several years. After lagging behind for a long time, investments related to AI are finally entering Indonesia in the form of data centre construction. With the market value of data centres projected to soar from US$6.09 billion to over US$8.4 billion by the 2030s, massive capital is flowing heavily into regions ranging from Cikarang to Batam.
Tech giants are flocking to the country, enticed by more efficient construction costs compared to Singapore. Additionally, Indonesia’s geopolitical position serves as a primary junction for new undersea cables that avoid tensions in the South China Sea.
However, behind the euphoria of these trillion-rupiah investments, there lies an ecological and structural time bomb. AI data centres are not an invisible “cloud”; they are energy-hungry thermodynamic infrastructure. Modern AI server racks draw tens of kilowatts of electricity and demand liquid cooling technology, as air circulation is no longer sufficient to dissipate the heat.
In our tropical climate, cooling such facilities risks triggering local clean water crises if operators are not compelled to adopt closed-loop circulation technology with strict Water Usage Effectiveness (WUE) monitoring.
The grandeur of this foreign-owned infrastructure also stands in paradox with domestic governance realities. A deficit of millions of AI technical talents leaves us vulnerable to becoming merely manual labourers and end consumers. The tragedy of the National Data Centre (PDNS) hack and the lack of data backup procedures serve as naked proof of how primitive our institutional cybersecurity fortresses remain.
The government must not be lulled into complacency by investment figures alone. Allowing capital to enter without enforcing technology transfer, cybersecurity audits, and strict limits on water and electricity exploitation will result in us being mere “landlords” leasing out space.
True digital sovereignty is the ability to control technology for the welfare of the people, rather than simply hosting the heat waste and carbon footprint of foreign artificial intelligence.