Indonesia has been a rapidly growing country in past years. In this article, you will find out why data center investors should invest in Indonesia.
There is a massive demand for reliable and cost-efficient data centers that operate all the time. Many companies have established their data centers in Indonesia because of its proximity to other Asian countries and its growing economy.
Nine Reasons Why Data Center Investors Start to Invest in Indonesia
Indonesia has been a rapidly growing country in past years. In this article, you will find out why data center investors should invest in Indonesia.
Indonesia has a vast and growing middle class that is looking to connect and the rest of the world via ICT (Information and Communications Technology). This article will discuss why data center investors should invest in Indonesia and some of the risks associated with investing in Indonesia.
There are several reasons why capital venture and real-estate investors should invest in the data center industry in Indonesia.
Population in Indonesia
The first reason why data center investors should invest in Indonesia is the population of Indonesia. As we all know, the population is one factor that affects the business’s growth. The population of Indonesia is 270 million people, and it’s still growing.
Internet penetration is also relatively high, reaching nearly 80% of the total population, where each user spends at least 4 hours per day accessing the internet.
As an investor, this is important because it shows how much potential there is for growth in this particular sector. With the growing number of Indonesian people using the internet, more businesses and companies will surely use technology to reach these people to increase their sales or gain more customers. This means that data center investors can include data centers in Indonesia as a portfolio.
Government Support
The second reason why data center investors should invest in Indonesia is because of the government supports for business ventures. Indonesia and local governments provide many services for businesses, such as tax incentives, subsidies, and other policies that strongly support investors.
The government has also put up several initiatives promoting Indonesia as an ideal location for data centers, such as offering electric power at lower rates than other countries in the region and implementing a tax holiday until 2023 for companies that invest in a green data center.
The Indonesian government also supports the renewable energy sector and the green data center to reduce the level of carbon emissions in Indonesia. In 2022, Indonesia will receive carbon credits for reducing carbon emissions.
Location
The third reason why data center investors should invest in Indonesia is because of the location of Indonesia. As we all know, the Internet penetration rate is vital for any business, especially for data centers. The location of Indonesia is very strategic to support enterprises because it’s located near the Asia-Pacific region, with a population of more than 4 billion people, and near Europe and America, with a population of more than 1 billion people.
Indonesia’s climate is ideal for hosting computer servers as well. The hot and humid climate helps keep humidity levels in check inside the data center. The tropical climate means fewer issues with temperature swings throughout the year.
ICT Infrastructure
Since the government has invested more than $1 billion in data center infrastructure, Indonesia is becoming one of the most sought-after locations for data centers.
The new fiber optic lines will provide more access to international markets for businesses and consumers. The government is also planning on making internet access more affordable and speeding up internet speeds across the country. This will make it easier for people to conduct business online and shop online, which can only be a good thing for e-commerce companies.
Telecommunication operators in Indonesia are also very active in improving their communication infrastructure, both terrestrial and last mile. Investing in a multi-network data center in Indonesia can increase investment returns.
Rich in Energy Sources
Energy is a crucial factor in the success of any data center. Consuming large amounts of electricity, including power servers and cooling systems, and keeping lights on, it is crucial to have access to low-cost electricity. Indonesia has a rapidly growing economy, which means a rise in demand for data centers. With its location within Asia (and proximity to Australia), it is also becoming more attractive as a data center destination.
Although other locations with lower-cost energy sources are available, they often offer a different level of stability and dependability than Indonesia. Some countries may be heavily reliant on one or two energy sources, meaning that if something happens to those sources, the country’s ability to supply electricity could be compromised.
Indonesia has multiple energy sources available at all times, meaning that if something happened to one source, others would pick up the slack until it was repaired. The diversity of options available means that even if one type of energy source were somehow compromised or unavailable for some reason, others would step in and continue delivering electricity without any problems—an excellent feature for a data center investment.
Besides being rich in coal and oil, Indonesia is rich in liquid gas and geothermal, which can reduce carbon emissions by up to 75%, so it is in line with government and business goals, namely to reduce carbon emissions for the next seven years by 50%.
Talents
Especially in Jakarta, the Capital City of Indonesia. Many data center professionals are available and training around networking, such as CISCO, AWS, Google, and so on. The average salary for data center professionals globally is USD 77,810 per year, while in Indonesia, their average salary per year is USD 25,000. The cost of data center staff in Indonesia is even lower than that of its neighbor, Singapore.
The use of English in Indonesia has become common, especially in the data center industry. Investors can handle the scarcity of data center talent like what happened in other countries. Likewise, for IT security professionals, quite a lot are available in Indonesia whose capabilities are equal to IT Security pros in other countries.
As this need becomes more widely understood, more people will join the market as professional data center workers. It won’t be long before Indonesia has developed a robust working environment and infrastructure for businesses looking to shop within its borders.
Place Availability
Even though Jakarta has the highest land prices in Indonesia, there is still a lot of lands available in Jakarta. For example, GreenexDC, which has dozens of locations in Jakarta, will start building eco-friendly data centers in 5 locations in Jakarta to meet the need for data centers and support businesses in Europe experiencing an energy crisis.
Apart from Jakarta, areas around Jakarta, such as Tangerang and Bekasi, are also starting to become the choice of data center investors due to lower land prices. Even so, the area around Jakarta also has supporting infrastructure for Tier III and Tier IV data centers.
Availability of land is also essential when you want to build a green data center. Green data centers must have space for renewable energy generation infrastructures such as wind turbines and solar farms. Room for electric batteries in the data center must also be available.
Stable Political Situation
A stable political situation is critical, especially for data center businesses. As a data center provider with tenants from various companies, the data center must be able to guarantee the running of its critical mission operations.
Not only in Indonesia, but Indonesia has harmonious relations with neighboring countries in Southeast Asia, Asia, and the rest of the world. As a democratic country with a population that is among the top 10 in the world, there have been demonstrations in Indonesia.
Even though there were demonstrations, such as labor demonstrations, there were no big riots; all situations tended to be under control. Police officers in Indonesia tend to use a humanist approach in managing protests.
Government agencies in Indonesia are also becoming more professional with digitalization and vigorous law enforcement. Currently, in Indonesia, it is increasingly rare for government officials to make it difficult for business people to get money from them.
The Presence of a Technology Giant in Indonesia
Indicates that Indonesia has become a target for investment in digital technology, where data centers are the backbone of digital activities. Giant companies such as Google, AWS, Amazon, and Microsoft have a presence in Indonesia and continue increasing their data center capacity.
In addition, support from data center industry players in Indonesia is relatively unified, with the presence of the Indonesian data center association. This association is active in advancing the data center industry, such as standardizing green data centers, which can be a reference for data center providers in Indonesia.
Conclusion
Indonesia has the fourth largest population globally, with a population projected to increase by 8% in the next decade and an average 6.7% growth rate over the past decade. The country is also expected to have a high Internet penetration growth.
There are at least ten reasons for investors to start investing in the data center industry in Indonesia, especially in green data centers. Indonesia’s data center market has continued to increase both due to increased local demand and because many data center tenants from abroad are relocating their data centers to Indonesia.
Finding the most attractive location for a data center in Indonesia is relatively easy. You can enjoy many benefits, such as low energy costs and high-skilled human resources if you have one. Contact our expert if you have any questions regarding a green data center investment in Indonesia.