Indonesia Races to Build Data Centres: The Economic Potential
Indonesia is joining the race to build data centres to strengthen its digital economic infrastructure and develop national artificial intelligence (AI) capabilities. This strategic move could create economic value and attract billions of dollars in investment.
The drive is underpinned by Indonesia’s position as one of South-east Asia’s largest digital markets. The country’s digital economy is forecast to approach US$100 billion in 2025, the largest in South-east Asia.
But a large market needs infrastructure to support it. The more digital activity grows and AI advances, the greater the demand for computing capacity.
Coordinating Minister for Economic Affairs Airlangga Hartarto views this relationship as part of the national economic growth agenda.
“Indonesia wants to grow by more than 8 per cent, and one of the drivers is the digital economy. The key is, of course, AI, and AI will only be possible if its infrastructure, including data centres, is good,” Airlangga said, according to a written statement on Wednesday (7 October 2026).
From Data to Value
Deputy Minister of Communication and Digital Nezar Patria said strengthening AI infrastructure and computing capacity was essential if Indonesia was not to remain merely a technology user.
“We do not want to be just a market or a user. We want to secure a strategic position in the global AI industry value chain,” Nezar said.
Digital activity continually generates large volumes of data, from banking transactions and online shopping to digital services and business operations. But data does not create value automatically. It must be processed, stored and accessed through computing infrastructure.
Data centres are therefore needed to support cloud services, fintech, e-commerce, AI, cybersecurity, digital government services and a range of technology businesses operating at scale.
The government has recorded interest in around 1.3 GW of additional data-centre investment in Indonesia, worth US$15–20 billion. Each additional 100 MW represents approximately US$1.2–1.5 billion in investment.
The investment goes beyond building facilities. It generates demand for construction, energy, networks, technology, maintenance and skilled workers, while broadening economic activity and the country’s tax base.
Chile offers an example of data centres acting as a wider economic driver. The Chilean government estimates that AWS’s investment of more than US$4 billion in three data centres will contribute about US$10 billion to GDP and support more than 7,000 full-time jobs each year.
This indicates that the benefits of data centres are not limited to computing capacity: they also depend on how far investment creates jobs, stimulates supply chains and builds a country’s digital capabilities.
Computing needs are growing as AI develops. While the initial phase of digitalisation focused on connectivity, the next phase requires large-scale computing, GPUs, cloud services, networks, electricity and data centres.
A large digital market does not automatically make Indonesia a winner. What matters is the country’s ability to develop technology and turn data into higher-value products and services.
The competition to build this capacity is becoming increasingly apparent in South-east Asia. World Bank data for the first half of 2025 puts Indonesia’s total data-centre capacity at around 1.17 gigawatts (GW), compared with 3.17 GW in Malaysia and 1.25 GW in Singapore. CSIS Indonesia estimates that Indonesia’s capacity could grow by 16.8 per cent a year through to 2029, reaching around 1.41 GW.
However, data-centre expansion requires serious attention to energy and water consumption. These facilities use substantial amounts of electricity and also require water supplies, depending on the cooling technology used.
“Energy and artificial intelligence (AI) technology will become important pillars of development. AI itself requires a great deal of energy to operate,” said ITB researcher Reini D. Wirahadikusumah.
Indonesia has strong foundations for building an AI ecosystem, including its digital-market potential, rising demand for computing and available energy resources. The key is to manage these advantages efficiently and sustainably so they generate added value for the national economy.