Indonesia is often mentioned as a promising market for data centers. Its population size, economic growth rates and enormous mobile penetration reflect the scale of opportunity.
As the third largest by data center capacity among south-east Asia’s four principal economies, and having both strong international cable connectivity and an active Internet Exchange with more than 700 members, the country offers potential, development space and an attractive local economy to overseas investors and enterprises.
New facility build has been led so far by local companies, notably TelkomSigma but has also overseas investment including the acquisition of the CSF facility by NTT Communications and the new construction by Equinix in conjunction with a local partner.
Power developments have not been as fast, with most infrastructure based on coal, and although plans are in place to develop further significant clean power supply, this could take another four years or more to realise, so reliance on fossil fuels will continue for some time to come.
Enterprise outsourcing in common with other Asian markets is low in percentage points (compared to Europe where it is heading towards 50% over the next three years), which demonstrates there is much to go, but also reflects the stage of evolution in data centers in the country.
Cloud adoption has yet to be effectively developed among local enterprises, and retail colocation services yet to be offered universally across all data centers, many still small stand alone facilities, more than half of which are currently located outside Jakarta.
Although Government Regulation No. 82/2012 (Electronic System and Transaction) requires companies providing electronic services within Indonesia to install an onshore data center, uncertainty however surrounds a plan to pass data protection legislation to ensure all citizens’ data remains within Indonesia.
The Government is also considering applying additional taxes to multinational firms including the large digital information providers which also causes investor caution.
Indonesia has many advantages for data center growth which could yield 34% in terms of space over the next two years. However there remain barriers to investment. Significant advances in outsourcing may yet be driven at a faster rate as sheer demand overtakes sensitivities about data privacy and security.
The report assesses data center players, power, connectivity, drivers, pricing, and provides an outlook and forecasts for m2 and MW through to end 2018.