Indonesia is quietly building the backbone of its digital future. By the end of this decade, Indonesia’s data center capacity is projected to surge to 2.7 gigawatts. The drivers are already visible everywhere. Internet use keeps expanding. Small businesses are going digital. Regulations continue to evolve. Artificial intelligence is no longer a distant concept. All of it depends on one thing. Data centers.
According to the Indonesian Data Center Providers Association (IDPRO), this growth is not happening by chance. It is the result of several forces moving in the same direction. Hendra Suryakusuma, Chairman of IDPRO, explained that Indonesia’s massive online population is the starting point.
“Currently, around 78 percent of Indonesia’s population has internet access. That means more than 210 million people are generating, transferring, processing, and storing data. The backbone of all these data activities is the data center,” he said in a statement on Friday (6/2/2026).
This digital activity is no longer limited to large corporations. Millions of micro, small, and medium enterprises are now part of the ecosystem. Out of roughly 73 million MSMEs across the country, a growing number have adopted digital tools. Point of sale systems, online payments, and integrated platforms are becoming standard. Behind every transaction sits server infrastructure that must be reliable, secure, and scalable.
Regulation has also played a decisive role. Hendra pointed to Government Regulation No. 82 of 2012, especially Article 17 paragraph 2. The rule required public service providers to place their data centers and disaster recovery centers inside Indonesia. Since 2013, this policy encouraged many sectors, particularly finance, to migrate their information technology infrastructure back onshore.
The Financial Services Authority reinforced this approach. Financial service systems were required to operate from within Indonesia. The goal was simple. If an incident occurs, law enforcement can trace and respond more effectively.
That framework later shifted. In 2019, Government Regulation No. 71 introduced a more flexible approach. Data was divided into public and private categories. Public data still had to remain in Indonesia. Private data, however, could be stored overseas.
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“One impact of this relaxation can be seen in the case of ByteDance. The largest number of TikTok users is in Indonesia, yet their AI data centers were built in Johor Bahru, Malaysia, and are also planned for Thailand,” Hendra explained.
At the same time, artificial intelligence has become a major catalyst. AI systems require far greater computing power than conventional applications. This demand is accelerating the development of large, high specification data centers. Hendra highlighted several projects already moving in that direction. BW Digital is developing a 120 MW AI ready facility in Batam. Princeton Digital Group is building another 120 MW site in Cikarang.
“With this strong growth potential, the industry is urging the government, especially the Ministry of Finance, to provide fiscal incentives for AI servers,” he said.
Costs remain a concern. Hendra cited Indosat as an example. The mobile operator has partnered with Nvidia as a cloud provider and committed around US$200 million in investment. Despite this, taxes and import duties can reach up to 23 percent. For many players, that level of burden slows expansion.
Licensing is another obstacle. Data center development still requires approvals from multiple ministries. Investors often wait six to nine months just to secure permits. According to Hendra, this complexity stands in contrast to neighboring countries.
“This situation is different from neighboring countries such as Malaysia or Thailand, which have already implemented a one stop licensing system,” he said.
The numbers show how fast the sector is moving. In 2025, Indonesia’s data center capacity stood at around 500 MW. By 2026, it is expected to reach 900 MW. Even so, facilities that are fully AI ready account for only about 30 percent of total capacity today.
Looking ahead to the 2030 target of 2.7 GW, IDPRO estimates the industry will grow at a compound annual growth rate of roughly 25 percent per year. It is an ambitious trajectory. But with internet penetration rising, businesses digitizing, and AI adoption accelerating, the foundation is already in place.
The challenge now lies in execution. Incentives, licensing reform, and infrastructure readiness will determine whether Indonesia simply consumes digital services or becomes a regional hub powering them.
