GDS, a leading developer and operator of high-performance data centers in Asia with a diverse international investor base, and Indonesia Investment Authority (INA), Indonesia’s sovereign wealth fund, announced their partnership to develop and expand the data center landscape in Indonesia. The two entities recognize Indonesia’s potential as an emerging data center market and share a common vision regarding the pivotal role that data centers play as a cornerstone in Indonesia’s digital transformation.
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The partners plan to form an equity joint venture, as the vehicle for developing a countrywide data center platform. The first project to be completed is the ongoing development of a hyperscale data center campus located in Nongsa Digital Park (NDP), Batam, which has been officially designated as a Special Economic Zone (SEZ) by the Indonesian government. By embracing GDS’s advanced Smart DC (Data Center) solution and placing a strong emphasis on utilizing local renewable energy sources, the upcoming Batam data center campus has the potential to set an industry benchmark for the region.
The GDS-INA partnership emerges at a pivotal moment as the data center industry experiences robust growth, propelled by digital economy transformation, IoT-driven technologies, the widespread transition to cloud computing, and anticipated proliferation of AI applications. Market research projects that Indonesia’s data center market capacity is projected to grow from 514MW in 2023 to 1.41GW by 2029. The country seeks to capitalize from this growing demand for data center services to attract both domestic and international investment to propel Indonesia into the digital economy.
William Huang, Chairman and CEO of GDS, said, “Indonesia is rapidly emerging as a strategic location to fulfill the growing demands of our customers for premium data center services. It is our honor to be the first data center developer and operator to join forces with INA, which we view as Indonesia’s strong endorsement of our international vision, market leading expertise and explosive regional growth. At GDS, we are committed to creating a value-added ecosystem and fostering the development of digital infrastructure in Indonesia. By integrating our inaugural project in Batam with synergistic projects in Singapore and Johor, we are creating a unique platform ideally configured to serve the digital economy in Indonesia and the Southeast Asia region. We look forward to expanding this platform further into Indonesia in partnership with INA.”
Ridha Wirakusumah, CEO of INA, remarked, “Our partnership with GDS is more than a strategic alignment – it’s a reflection of Indonesia’s vibrant digital potential. We are experiencing rapid economic growth and making remarkable strides in active digital infrastructure development. Our youthful, internet-savvy population is a testament to Indonesia’s digital readiness and potential. The significant internet penetration rate, coupled with the rise of various digital platforms, indicates the vast opportunities ahead of us. Recognizing the imperative of local data center development, our collaboration with GDS not only aims at scaling our digital infrastructure, but also places a strong emphasis on supporting data onshoring and enhancing data connectivity.”
Indonesia’s journey towards a digital future is marked by a disparity between the increasing digital demands, with annual increase in the country’s mobile data traffic by 40-50% [1],and its relatively underpenetrated data infrastructure. Major data center service providers, such as GDS, recognize the potential of the Indonesian market given the strong positive sentiments surrounding the growth of data centers in Indonesia, fueled by demands for better and faster data flow, an evident shift of enterprises towards third-party providers, and increasing infrastructure requirements.
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Recognizing the gap within the digital landscape, INA is actively streamlining foreign direct investments throughout Indonesia, with a targeted approach to bolster Batam’s competitive advantage as it captures spillover demand from Singapore. GDS’s Singapore-Johor-Batam strategy is fully aligned with INA’s approach, as it will enable low-latency connectivity across GDS’s interconnected data centers in Indonesia, Singapore, and Malaysia, thereby creating a holistic data center services solution that caters to GDS’s diverse customer portfolio of both local and international clients. GDS is well positioned to leverage on its unparalleled technical expertise and established service track record to bolster Batam’s competitive edge as a data center hub within the region.
This endeavor marks INA’s third significant investment in the digital sector, one of its four prioritized sectors. INA, Indonesia’s only sovereign fund, was launched in late 2020 with $5 billion from the government. Previously, INA participated in the IPO of Mitratel and is a notable stakeholder in Southeast Asia’s largest telecommunication tower owner. Furthermore, in collaboration with partners like BlackRock, Allianz Global Investors, and Orion Capital Asia, INA bolstered Traveloka, Southeast Asia’s leading travel platform. Such strategic moves accentuate INA’s unwavering commitment to propel Indonesia’s digital transformation.
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