Indonesia’s sovereign wealth fund Indonesia Investment Authority (INA) and China-based data centers operator GDS have announced their partnership to develop and expand the data center landscape in Indonesia.

The two entities said in a statement on Friday that they recognized 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.

According to the statement, 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 duo opined that the upcoming Batam data center campus has the potential to set an industry benchmark for the region.

It is noted that the INA-GDS partnership emerges at a pivotal moment as the data center industry experiences robust growth, propelled by digital economy transformation, internet of things (IoT)-driven technologies, the widespread transition to cloud computing, and anticipated proliferation of artificial intelligence (AI) applications.

It is also noted that market research projects that Indonesia’s data center market capacity is projected to grow from 514MW in 2023 to 1.41GW by 2029.

According to the statement, Indonesia 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.

“Our partnership with GDS is more than a strategic alignment – it’s a reflection of Indonesia’s vibrant digital potential,” said Ridha Wirakusumah, Chief Executive Officer of INA.

According to him, the country is 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,” he said.

Recognizing the imperative of local data center development, he said the collaboration with GDS not only aims at scaling their digital infrastructure, but also places a strong emphasis on supporting data onshoring and enhancing data connectivity.

GDS Chairman and Chief Executive Officer William Huang said that 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,” he said.

By integrating the firm’s inaugural project in Batam with synergistic projects in Singapore and Johor, he said they 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,” he added.

According to the statement, 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 percent to 50 percent, and its relatively underpenetrated data infrastructure.

Major data center service providers, such as GDS, recognized 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.

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.

It is noted that 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 said the firm 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.

It said this endeavor marks INA’s third significant investment in the digital sector, one of its four prioritized sectors.

It is also noted that INA, Indonesia’s only sovereign fund, was launched in late 2020 with $5 billion from the government.

Previously, INA participated in the initial public offering (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.

According to the statement, INA and GDS will work closely to develop best-in-class data center facilities nationwide, addressing the evolving digital consumption needs and elevating the digital infrastructure landscape in Indonesia and beyond.

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