AI Revolution in Indonesia: From Trend to the Heart of Business Strategy

Across Southeast Asia, Artificial Intelligence (AI) is undergoing rapid transformation, from a mere buzzword to a fundamental business need. In Indonesia, both startups and established corporations are beginning to adopt AI to streamline operations, personalise customer experiences, and unlock new revenue streams. Nevertheless, the pace of adoption and the effectiveness of AI integration vary across industries and job functions.

This phenomenon is summarised in a comprehensive report titled “AI in Southeast Asia: An era of opportunity”, a collaborative study by McKinsey, the Singapore Economic Development Board, and Tech in Asia. The report affirms that Southeast Asia, and particularly Indonesia, is a dynamic region with a young, digitally literate population, high mobile penetration, and strong economic growth driven by Micro, Small, and Medium Enterprises (MSMEs). Global companies are ramping up their investments, positioning the region as a hub for data centres and AI Centres of Excellence (CoE).

Supporting infrastructure is also becoming increasingly robust. The Southeast Asia-Japan Cable 2 (SJC2) undersea cable, set to become operational in mid-2025, serves as a key accelerator for technological growth and innovation. This 10,500-kilometre cable enhances regional connectivity, strengthens network redundancy, and supports low-latency needs for AI and cloud computing.

While AI opportunities are vast, uneven investment challenges loom large. In Indonesia, the large local ecosystem driven by MSMEs plays a crucial role in the AI resurgence. MSMEs’ contribution to the overall economy is highly significant, representing the majority of the workforce.

Digital enabler platforms like Grab and Sea (Shopee’s parent company) have propelled rapid digital transformation for MSMEs. For instance, Grab has launched an AI merchant assistant to over 1.2 million partners, helping them boost their businesses by around 10%.

PatSnap co-founder Guan Dian explains how AI assists customers in the innovation cycle, from determining research and development directions to launching new products.

This enthusiasm for technology adoption is supported by Indonesia’s young population, which is eager for technological advancements. The majority of society views AI products and services positively, with 70% of the population considering AI a benefit to society—a figure far higher than in Japan and the United States.

Indonesia’s Cloud Landscape: Synergy of Western and Eastern Strengths

Southeast Asia is attracting significant technology investments. Cloud service providers from China and the US are increasing their investments in the region by establishing new regions and data centres. Giants like Alibaba Cloud, AWS, Google Cloud, Tencent, and Huawei Cloud are creating an environment for innovation. The coexistence of these cloud providers offers greater flexibility and resilience for companies.

In Indonesia, an interesting phenomenon is occurring where the technology landscape shows a practical blend of Western and Eastern technology stacks, even within a single corporate group. Business leaders select the best platforms for each workload to maintain growth momentum.

A real-world example is Tokopedia (an e-commerce marketplace) using Google Cloud to power large-scale live video and data analytics. On the other hand, GoTo Financial, the digital finance arm behind GoPay, has completed the migration of Tokopedia’s core infrastructure to Alibaba Cloud’s data centre in Jakarta. This blend demonstrates how leading platforms in Indonesia choose the right cloud for the right job, signalling healthy competition and strong momentum in the e-commerce and digital services market.

With international technology companies driving AI in Southeast Asia, potential imbalances may arise. Recognising the need for strong regional focus amid cultural and linguistic diversity, local technology developers are beginning to build localised Large Language Models (LLMs) and culturally aware AI systems. Additionally, governments in the region, such as Malaysia and Singapore, are investing in sovereign AI infrastructure through national AI centres to maintain strategic control and tailor AI to local contexts.

Despite the data centre opportunities in Indonesia and Southeast Asia, there are underlying risks. Volatile ROI due to uncertain AI demand, technological shifts, and limited company scales can hinder short-term demand. Declining Graphics Processing Unit (GPU) prices and rapid hardware innovation risks can erode returns and render current infrastructure obsolete.

McKinsey Partner Vivek Lath highlights the crucial shift from the experimentation phase to full-scale implementation.

“Leading in AI in Southeast Asia requires bold and transformative ambition. It is about moving beyond isolated use cases to reinventing fundamental business models with AI at their core. This is how we will translate ambition into real, sustainable impact on outcomes,” said Lath on Friday (27/3/2026).

Lath added that the narrative in Southeast Asia is moving quickly from experimentation to enterprise scaling. The focus now is embedding AI into core business processes to drive real value, transforming broad adoption into sustainable performance and true competitive advantage on the global stage.