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27 Jan 2022

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Huge opportunities for data centers now that Indonesia is moving its capital

Data center companies have huge opportunities now that the Indonesian House of Representatives has decided to build a new capital. The Indonesian government plans to invest 32 billion dollars over the next ten years to construct Nusantara, the new capital in the East Kalimantan province of Borneo. A Nusantara Capital City Authority will be set up in the near future, to coordinate the construction and the relocation of government agencies.

The Indonesian government cites the fact that the current capital city, Jakarta, is overcrowded, polluted, and has infrastructure that cannot support the growth of the country's population and economy.

Hot data center market

No doubt business will quickly follow the government to Nusantara, where a brand-new infrastructure will be built - not only in terms of buildings and roads, but also in terms of digital infrastructure. There is no doubt that the already hot data center market in Indonesia will heat up even more in the future.

In a research report Mordor Intelligence states: “Indonesia ranks lower in the competitive index as compared to other Southeast Asian countries; however, the potential commercial upside for data center players is significant. Indonesia is witnessing a growing digital economy, coupled with the rapid growth of startup companies and ever-growing population, which is leading to a growth in hyperscale data centers”.

However Mordor researchers also found: “The latest research from Google and Temasek in their report, e-Conomy SEA 2020, stated that the growth of the digital economy in Indonesia is expected to reach USD 133 billion in 2025. Also, the internet economy GMV of Indonesia is expected to reach USD 124 billion in 2025”. These numbers do not account for the impact of moving the capital 2000 km.

Monumental undertaking

The reasons for these growth numbers: “Businesses have also started adopting data intensive applications, such as IoT, data analytics, and artificial intelligence. This translates to the surge of data exchanged and transferred and increased traffic”.

The relocation of a country's capital is already a monumental undertaking. The task of rebuilding the central node of a country's digital infrastructure may be even more difficult.

Photo credit: Adrian Pranata

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