Market Trends of Indonesia Data Center Construction Industry
IT and Telecom to Register a Significant Market Share
- The Indonesian government, acknowledging the significance of cloud computing, has initiated programs to bolster its uptake. Specifically, it aims to digitally onboard over 64 million MSMEs, urging them to 'Go Digital and Go Global.' By 2024, the government aims to have 30 million MSMEs transitioned into the digital realm.
- Furthermore, the Indonesian government is actively encouraging tech giants to invest in the nation, bolstering its tech economy. For instance, during his visit in April 2024, Microsoft's CEO, Satya Nadella, unveiled plans for a substantial USD 1.7 billion investment in Indonesia. This investment is earmarked to enhance Indonesia's tech landscape, particularly in the realms of advanced cloud services and artificial intelligence. Central to this initiative is the establishment of data centers. Microsoft focuses on expanding Indonesia's data center infrastructure and cloud computing capabilities. Nadella stressed that this move is pivotal in bringing cutting-edge AI infrastructure to Indonesia, positioning Microsoft as a leader in this technological frontier.
- Even in the telecom industry, the government is prioritizing technological collaborations and investments. In September 2023, the Indonesian government highlighted its openness to investment partnerships, particularly in advancing 5G digital connectivity to bolster the nation's digital infrastructure. Notably, by early September 2023, 5G networks were operational in just 49 Indonesian cities, leaving significant room for further expansion, as emphasized by the Communication and Information Minister.
- In September 2023, Telkomsel (PT Telekomunikasi Selular) and Ericsson unveiled their reinvigorated collaboration, aimed at bolstering and expanding their 4G and 5G networks across Indonesia. Ericsson, known for its connectivity solutions, rolled out its energy-efficient 5G Radio Access Network (RAN) products. These were deployed across strategic regions, including Aceh, North, Central, and West Sumatra, and the eastern part of Kalimantan, which encompasses the new capital city, Nusantara.
- This surge in data storage demand is poised to elevate the need for data centers in the region, thereby bolstering the prospects of data center construction firms in the coming years.
Understand The Key Trends Shaping This Market
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Tier 3 is Expected to Hold a Major Share of the Market Studied
- The tier 3 segment had a share of over 54% in the Indonesian data center construction market in 2023. It is further projected to register a CAGR of 14% to reach an IT load capacity of 672 MW by 2030. Reliability and affordability are the major factors driving the demand for tier 3 data centers in the country.
- Furthermore, in 2023, Indonesia boasted over 22 tier 3-certified data centers, with approximately 18 concentrated in Greater Jakarta.
- In 2023, Space DC Pte Ltd led with a tier 3 certification, offering a maximum IT load capacity of 48 MW. XL Axiata Tbk PT (Princeton Digital Group) followed closely with 45.9 MW, trailed by Nusantara Data Center at 19.84 MW and Indosat Tbk PT (Big Data Exchange (BDx)) at 13.5 MW. Other players in the market also contributed.
- Considering IT load capacity, the tier 3 data centers in the region focus on accommodating large and massive loads. Massive centers take the lead at 48.5%, closely trailed by large centers at 42.4%. Although less prevalent, medium and small loads still hold notable shares at 5.7% and 3.5%, respectively.
- Over 8 data center facilities are currently under construction in the country, all adhering to tier 3 standards. Key players leading the tier 3 data center construction landscape include GTN Data Center (Edge Connex), GDS Holdings, and Indosat Tbk PT (Big Data Exchange (BDx)). A majority of these facilities are from Jakarta and Batam, with a smaller number in other regions.
- Such instances in the market studied are expected to drive demand for tier 3-certified facilities. This surge in demand, specifically from the tier 3 segment, will, in turn, bolster the need for data center construction services in the years ahead.
