Indonesia Data Centre Market Outlook to 2028

Indonesia Data Centre Market Overview

• The Indonesia Data Centre market is valued at USD 1.40 billion, based on a five-year historical analysis. The growth is driven by the rapid digitalization of industries, increased internet penetration, and rising demand for cloud-based services. The government's push toward digital economy initiatives, including e-government and e-commerce expansions, further fuels this growth, creating a high demand for robust data infrastructure across sectors.
• Jakarta dominates the market due to its status as Indonesias economic hub, housing key financial institutions, technology companies, and global headquarters. The city's strong infrastructure, skilled workforce, and proximity to major internet exchanges make it the ideal location for data centre operations. Other cities like Surabaya and Bali are emerging due to improved connectivity and strategic geographical positioning, attracting investments from global data centre providers.
• Modular and prefabricated data centers are gaining popularity due to their quick deployment and cost-efficiency. As of 2024, several companies are opting for modular data centers, which can be assembled rapidly and scaled according to demand. These centers are particularly useful in remote locations and are increasingly being used to support edge computing. Prefabricated units reduce construction time, minimize costs, and provide flexibility for scaling operations as digital demands grow.

Indonesia Data Centre Market Segmentation

• By Solution Type: Indonesias Data Centre market is segmented by solution type into cloud data centres, colocation data centres, managed services data centres, and hyperscale data centres. Recently, cloud data centres hold a dominant market share under this segmentation due to increased cloud adoption by businesses of all sizes. The flexibility and scalability offered by cloud services, coupled with lower operational costs, have made them particularly appealing to companies seeking to optimize their IT infrastructure.
• By Industry Vertical: The Indonesia Data Centre market is segmented by industry vertical into IT & Telecom, BFSI, healthcare, retail & e-commerce, and government. The IT & Telecom sector dominates this segmentation, driven by the rising demand for data storage, cloud services, and network infrastructure to support the expansion of digital services. The sectors reliance on robust, secure, and scalable data centre facilities explains its leadership in this space.

Indonesia Data Centre Market Competitive Landscape

The Indonesia Data Centre market is dominated by several major players, including both domestic and international companies. These firms are competing on service offerings, operational capacity, technological innovation, and green data centre initiatives.

Indonesia Data Centre Industry Analysis

Indonesia Data Centre Market Growth Drivers

• Growing Digitalization: Indonesia's digital economy is expected to surpass $130 billion by 2025, driven by the rapid adoption of digital services. With over 200 million internet users as of 2024, Indonesia is the fourth-largest internet market globally. The country has seen exponential growth in online services, digital payments, and e-commerce, which in turn accelerates demand for data centers to support the digital infrastructure. The Indonesian governments push for digital inclusion is also increasing online access for rural areas, expanding the digital user base.
• Rising Cloud Adoption: Indonesia has witnessed a surge in cloud adoption, with over 50% of businesses shifting their operations to the cloud in 2023. Public and private cloud services are increasingly being used by enterprises and SMEs, with global players such as AWS and Google Cloud investing heavily in local infrastructure. This shift towards cloud services is driving the demand for scalable data storage and computing power, spurring growth in data center construction. The expansion of cloud services is critical for Indonesia's digital economy growth.
• Increased E-commerce Penetration: Indonesia's e-commerce market is expected to grow to $65 billion by 2024, with millions of daily online transactions. The growth of platforms like Tokopedia and Shopee is contributing to an increased demand for data centers to handle vast quantities of transactional data. This digital shift in retail also leads to heightened demand for secure, scalable data infrastructure, necessitating the growth of the data center market. The surge in digital payments, logistics, and warehousing for e-commerce operations is contributing significantly to this trend.

Indonesia Data Centre Market Restraints

• Limited Energy Infrastructure: Indonesias energy sector struggles with high demand, as power generation capacity stands at 74 gigawatts in 2024. Data centers require constant, reliable energy, which is hard to achieve with the country's frequent power outages and underdeveloped grid infrastructure in rural areas. Moreover, Indonesia's reliance on coal-based energy raises concerns about sustainability and carbon emissions, adding pressure on the data center industry to adopt renewable energy solutions.
• Cybersecurity Concerns: With the rise in digital services, cyberattacks in Indonesia have surged by 40% over the past two years, making cybersecurity a significant concern. In 2023, the country experienced several high-profile data breaches, affecting millions of users. This has led to increased scrutiny of data centers, which must adhere to strict security protocols. As the volume of sensitive data grows, ensuring robust cybersecurity measures is critical for data center operators, particularly as Indonesia's digital landscape continues to expand.

Indonesia Data Centre Market Future Outlook

Over the next five years, the Indonesia Data Centre market is expected to experience significant growth driven by increasing digital transformation efforts, the adoption of cloud computing, and government policies promoting a digital economy. The rise of e-commerce, fintech, and smart city projects will further accelerate demand for data storage and processing capabilities. Additionally, advancements in green data centre technologies and the push toward carbon neutrality will shape future market developments.

Market Opportunities

• Technological Advancements: The integration of technologies like AI, IoT, and edge computing presents a major opportunity for Indonesia's data center market. With more than 140 million devices connected to the internet in 2024, the need for edge computing infrastructure is critical to reduce latency. Local data centers equipped with AI and IoT capabilities are expected to meet this rising demand, enabling real-time processing of large datasets for sectors such as manufacturing, healthcare, and smart cities.
• Growing Demand for Hyperscale Data Centres: The demand for hyperscale data centers has grown significantly, with major tech companies such as Amazon and Google investing in large-scale facilities in Jakarta. As of 2024, Indonesia has seen an influx of over $2 billion in investments toward hyperscale centers. These data centers can host thousands of servers and are critical to supporting cloud services, e-commerce platforms, and enterprise applications, making Indonesia a key player in Southeast Asias data center expansion.