Microsoft States Indonesia Still Lacks Data Centers

Indonesia's Data Centers
Indonesia's Data Centers
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Indonesia stands at the crossroads of becoming a digital powerhouse, with vast potential in its digital economy. However, a critical piece of the puzzle remains missing: adequate data centers to support this growth in Indonesia. Microsoft has identified this gap, stressing that expanding data center infrastructure is key to maximizing the adoption of generative artificial intelligence (AI).

A collaborative report by Microsoft, Access Partnership, and ELSAM projects that the growing adoption of generative AI in Indonesia could significantly boost the national economy. The report highlights how AI can enhance productivity, generate new employment opportunities, and drive growth in various industries, paving the way for a robust AI-driven economy.

Generative AI relies heavily on rapid and efficient data processing. It demands enormous computational power for executing machine learning algorithms, conducting complex analyses, and making real-time decisions based on data.

“Data centers, particularly those with high capacity, are the essential infrastructure needed to meet these demands and unlock AI’s full potential,” Microsoft emphasized in its statement on Friday, January 24, 2025.

Despite Indonesia’s digital economy ambitions, the current capacity of AI-ready data centers falls far short of demand. Only around 200 megawatts of capacity are operational—just 10% of the estimated requirement. This underscores the urgency of expanding the nation’s data center capacity to keep pace with its aspirations.

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Advancements in modern data center design offer hope for addressing this shortfall. Microsoft, for example, is developing its latest data centers with features specifically designed to support AI workloads. These facilities maximize power efficiency while minimizing costs and energy consumption. The designs incorporate advanced cooling systems tailored to the high heat demands of AI workloads and the unique environmental conditions of their locations.

Dharma Simorangkir, President Director of Microsoft Indonesia, believes the nation has the potential to emerge as a leading AI hub in Southeast Asia.

“Indonesia has a unique advantage with its young, creative, and innovative population. Microsoft is committed to supporting Indonesia in this digital transformation journey through strategic investments in infrastructure, talent development, and innovation support,” he said.

The Future of Data Centers in Indonesia
According to Mordor Intelligence, Indonesia’s data center market is projected to grow at a compound annual growth rate (CAGR) of 14%, reaching USD 3.98 billion by 2028. Additionally, the total data center capacity, currently estimated at 2,000 MW, is expected to increase substantially in the coming years.

The road to realizing Indonesia’s digital and AI potential is clear—expanding data center capacity is not just an option but a necessity. By addressing this infrastructure gap, Indonesia can unlock unprecedented economic opportunities and position itself as a digital leader in the region.