Observer: Digital infrastructure must generate technology transfer
Jakarta (ANTARA) - Telecommunications observer and Executive Director of the Indonesia ICT Institute, Heru Sutadi, said that digital infrastructure development in Indonesia requires Foreign Direct Investment (FDI) due to its high cost, but equally important is that it must generate technology transfer.
“Foreign investment needs to be directed by the government so that it produces technology transfer, improvements in human resource competency and economic added value for Indonesia,” Heru said when contacted in Jakarta on Tuesday.
According to him, FDI, or foreign capital investment (PMA), is essential because building data centres or digital infrastructure requires substantial capital, advanced technology and considerable operational capability.
However, he continued, the government should not merely chase the size of incoming investment, because what matters most is that the investment delivers a positive impact for the country.
“What is more important is the quality of the investment, such as whether it builds new capacity, employs local workers, involves Indonesian companies, pays taxes locally, and creates a new digital ecosystem,” he said.
Heru added that FDI must serve as an instrument capable of strengthening national capability, and Indonesia must not end up being merely a location for building data centres without any reciprocal benefit for domestic capacity.
“FDI should be a lever for national capability, not simply make Indonesia a place to construct data centre buildings,” he added.
The Ministry of Investment and Downstreaming/Investment Coordinating Board (BKPM) offered data centre investment opportunities in Indonesia to Chinese investors at the Indonesia-China Partnership Forum business forum in Jakarta on Thursday (23/7).
Andi Maulana, Deputy for Investment Services at the Ministry of Investment and Downstreaming/BKPM, said data centre development is one of the most promising investment opportunities, supported by Indonesia’s digital economic growth, which is among the fastest in Southeast Asia.
“Data centre development is one of the very promising investment opportunities,” Andi told the business forum, which was attended by representatives of 27 Chinese companies.
According to a BKPM presentation citing Mordor Intelligence, the value of Indonesia’s data centre market will reach around US$1.44 billion in 2025 and is estimated to rise to US$1.83 billion in 2026.
That figure is projected to continue growing to US$3.48 billion by 2031, with a compound annual growth rate (CAGR) of 13.71 per cent.
Meanwhile, the global data centre market value is estimated to rise from US$386.71 billion in 2025 to US$684.39 billion by 2031.