Jakarta. Indonesia is positioning itself as Southeast Asia’s next major digital infrastructure hub, as the government declares data centers a strategic national asset in an era increasingly defined by artificial intelligence and data-driven economies.

Chief Economic Affairs Minister Airlangga Hartarto said on Monday that the country is seeing interest from global tech giants, with digital economic zones, particularly in Batam, now operating at full capacity.

“The Batam digital zone has already sold out. Global players like Google, Amazon Web Services, and Oracle have secured their spots,” Airlangga told the Investor Daily Roundtable in Jakarta. “We’re now preparing for an expansion to meet the growing demand.”

Batam’s Nongsa Digital Park has emerged as a focal point for Indonesia’s data infrastructure ambitions. Its proximity to Singapore and Malaysia, combined with its free trade zone status, makes it an attractive location for foreign investors looking for alternatives to land- and energy-constrained Singapore.

As of mid-2025, at least 10 data centers are under development in Nongsa. Key investors include China’s GDS, Singapore-based Princeton Digital Group, New Zealand’s BWD, Hong Kong’s GAW Capital, and US giants AWS and Oracle.

In June, Singapore’s DBS Bank and UOB extended a Rp 6.7 trillion ($411 million) loan for a new DayOne-INA data center campus in Nongsa. The project will feature three facilities totaling 72 megawatts of capacity and is expected to come online by the end of the year. It marks the largest rupiah-denominated financing for the sector and accounts for roughly 5 percent of Indonesia’s projected 1.41-gigawatt national data center capacity by 2029.

Airlangga said data centers are no longer just backend infrastructure but are foundational to AI and digital transformation.

“Speed today is powered by data centers, and data centers are increasingly powered by green energy,” he said. “The ecosystem is expanding quickly.”

Nongsa has signed electricity supply agreements for up to 369 MVA by 2031; current capacity stands at about 2×30 MVA, with projected demand exceeding 1,000 MVA. To meet this demand, operators are exploring renewable energy sources, including hydroelectric power from Sumatra.

Indonesia’s vast and digitally connected population gives it a competitive edge as global tech firms move computing power closer to users to reduce latency and improve efficiency. Jakarta already hosts more than 65 operational data centers, and new investment is increasingly spreading beyond the capital.

Airlangga also addressed the ongoing debate over local content requirements (TKDN) in the data center sector, stating that servers are not subject to the minimum local content threshold.

“The servers are modular and swappable, much like cartridges in aircraft or power plants. So these should not be counted under TKDN,” he said.

Indonesia’s digital economy, already the largest in Southeast Asia, is forecast to reach $146 billion by 2025, according to a Google-Temasek-Bain report. The broader regional market is expected to hit $330 billion, driven by AI, e-commerce, fintech, and cloud services.

The country’s data center market alone is projected to double from $1.67 billion in 2023 to $3.43 billion by 2028, growing at a compound annual rate of 15.2 percent, according to Mordor Intelligence and Arizton.