Jakarta. Indonesia is inviting Chinese investors to invest in its rapidly expanding data center industry, betting on one of Southeast Asia's fastest-growing digital economies to attract fresh capital into the sector.

The domestic data center market is projected to grow from $1.44 billion in 2025 to $1.83 billion in 2026, and further to $3.48 billion by 2031, representing a 13.71% compound annual growth rate (CAGR), Deputy Investment Minister Andi Maulana said on Thursday, citing data from Mordor Intelligence.

"The development of data centers presents one of Indonesia's most promising investment opportunities," Andi told the Indonesia-China Partnership Forum in Jakarta, which was attended by representatives from 27 Chinese companies.

He said the industry's outlook is underpinned by Indonesia's rapidly expanding digital economy, whose gross merchandise value (GMV) is projected to reach $180 billion to $340 billion by 2030.

Indonesia's digital economy has evolved beyond a supporting sector into a key driver of national economic growth and digital transformation, Andi said.

"As one of Southeast Asia's fastest-growing digital economies, Indonesia is supported by a young, mobile-first population, expanding internet access, and pro-innovation government policies," he said.

According to the Investment Ministry, Chinese investment in Indonesia totaled $38.34 billion between 2021 and the first half of 2026, creating more than 500,000 jobs.

Beyond digital infrastructure, Indonesia is also promoting investment opportunities in downstream processing industries, renewable energy, and healthcare.

To attract more foreign investment, the government has continued regulatory reforms through its risk-based licensing system, strengthened the Online Single Submission (OSS) platform by integrating it with 28 ministries and government agencies, and introduced service-level agreements to provide greater certainty over licensing timelines.

Indonesia is also offering a range of investment incentives, including 25 Special Economic Zones, 181 industrial estates, expedited licensing for qualified projects, tax holidays, tax allowances, import duty exemptions on machinery and raw materials, and super tax deductions for vocational training as well as research and development.