Between 2022 and 2027, the Indonesia data center market is expected to expand at a CAGR of 5.46%.
Driven Factor For Indonesia Data Center Market Growth
Indonesia is one of the fastest-growing countries in the world regarding data center market growth. The increasing demand for cloud computing, big data, and data center services drives this market.
Data centers are rapidly gaining momentum due to surging demand for better IT infrastructure, including data storage and cloud services. The collection and analysis of vast amounts of data have grown exponentially. In addition, several companies perform computational activities requiring high-performance storage systems and reliable network connectivity.
A rise in digital transactions is also fuelling the growth of this market. Furthermore, there is a need for high availability to ensure uninterrupted services for the customers. The increased demand for cloud computing creates opportunities for service providers to deploy their data centers in emerging markets such as Indonesia.
To reduce latency, companies are setting up data centers closer to their clients to minimize the distance traveled by information over the Internet, thereby improving the overall performance of the systems. Moreover, with the increased penetration of smartphones and other digital devices, there has been a surge in internet users which will drive demand soon.
The market is driven by factors such as an increase in customer base and demand for enterprise applications, a growing number of data centers in Indonesia, a high adoption rate of technologically advanced IT solutions, a reduction in average capital expenditure by enterprises, government initiatives to develop the local data center market, and rapid industrialization.
Due to investments from colocation providers, including DCI Indonesia, APIC Group (Greenex Data Center), Princeton Digital Group, Indonet, ST Telemedia Global Data Centers, and Telkom Indonesia, Indonesia is seeing an increase in biggest investment of data center for over 45%. Cloud regions were formed across the nation in 2021 by Microsoft, Google, Amazon Web Services (AWS), Tencent, and Oracle.
Core and Shell
Core and shell services comprise around 50% of the entire cost, and installation, design & engineering, project management, and relating to potential comprise about 30% to 35% of the price. Greenfield building and the development of modular data centers are quite common in Indonesian core & shell development.
With a CAGR of 13.15 percent from 2022 to 2027, the Indonesian data center market is expected to increase from its current value of USD 1.67 billion in 2021 to USD 3.43 billion by 2027. The region’s growing internet economy is one of the critical drivers of growth in the area. According to GreenexDC’s upper management, the SEA region’s internet economy is valued at over $100 billion and is expected to reach $300 billion by 2025.
As a result, it is expected that the demand for data services and infrastructure will increase quickly throughout the projected period.
Hyperscale Data Centers
Despite having a lower competitive index score than some other Southeast Asian nations, Indonesia offers a tremendous commercial opportunity for data center providers. A rise in hyper-scale data centers is being seen in Indonesia due to the country’s expanding digital economy, burgeoning startup scene, and expanding population.
The COVID-19 epidemic has put further strain on the economy as a whole, affecting all sectors. Emphasizing the value and promise of the online workplace that data centers support. Additionally, as a result of the expansion of the digital economy, some international vendors have expanded in the Indonesian data center market. To take advantage of the new prospects in the market under study.
For instance, Smartfren announced in November 2021 that it would collaborate with UAE technology company G42 to construct a 1,000 MW in the Indonesia data center market. The investment anticipates supporting the government of Indonesia’s efforts to preserve national data sovereignty and advance the country’s digital industry. Additionally, it encourages numerous multinational merchants to concentrate on the digital economy.
Read More: Indonesia Green Data Center Market Size Already Increased
The Number of Indonesia Digital Users
The number of internet users in Indonesia increased by 27 million (+16%) between 2020 and 2021. In 2022, Indonesia will have more than 200 million digital users. According to the report “Digital 2021” by content management provider HootSuite and social media marketing firm We Are Social. In Indonesia, 73.7% of people had access to the Internet in January 2021.
The current e-commerce market in Indonesia is comparable to the online market in China. With a sizable number of entrepreneurial vendors offering goods primarily based on social network recommendations. Additionally, it is the most mobile-first country in Asia, with one of the highest percentages of Facebook usage on mobile devices. So actively encourages the development of data centers.
Companies use a data center to house their essential applications and data. Data is the foundation on which a data center creates. Routers, firewalls, storage solutions, switches, servers, and application-aware controllers are the main components of a data center design.
Indonesia is attempting to stop using coal to generate electricity. By 2060, the nation will probably switch to and use renewable energy sources. Between 2022 and 2027, the Indonesia data center market expects to increase its power capacity by 417 MW.
Key Market Trends
“market anticipates becoming dominant by colocation data services.”
Since a few years ago, Indonesia’s e-commerce market has been expanding. The growth in Internet use and access is the critical factor behind this expanding market size. In 2020, there were 196 million Internet users in Indonesia or around 73.7% of the population. According to the report from the Indonesian Internet Service Providers Association.
Due to a growth in colocation demand from global cloud service providers, Indonesia’s data center services revenue is rising. One of the most undeveloped data center marketplaces in the world is thought to be in Indonesia. The Indonesian data center market is expected to grow exponentially. As a result of the high increase in OTT participant migration to Indonesia, rising IT spending, and the rollout of 5G.
Impact of Covid-19
The expansion of e-commerce has benefited local businesses functioning there throughout the COVID-19 pandemic. They are demonstrating the value of this sector to the Indonesian economy. According to the e-Economy SEA 2021 research, 28% of retailers felt that even without distributing on digital platforms, COVID-19 would have been their last. The growing dependence of the Indonesian data center market on e-commerce drives the colocation components of the data center ecosystem, boosting the need for data centers.
The server will receive the bandwidth, IP, and power from the colocation provider. Small businesses can take advantage of the benefits of having a large IT staff. Thanks to colocation hosting, which eliminates the high setup costs.
The Jakarta Post reports that not all regional businesses are ready to move to the public cloud. They want to be in total control of their data and not have it in anybody else’s hands. This is why colocation is still popular despite businesses’ significant interest in using cloud services.
According to the IDC report, Indonesia Data Center Market Size in 2022 will Keep Increasing. Jakarta hosts the most data center activity in Indonesia. For instance, Tencent Cloud opened its first data center in Indonesia in April 2021, demonstrating its dedication to meeting the country’s expanding business needs.
The rapid rise of the information technology industry. Along with motivating factors in the Indonesia data center market like mass consumption, urbanization, and mobile application usage. A young population that is tech-hungry has a positive effect on Indonesia’s economic growth. The country’s data center capacity will significantly increase as a result. It is enabling the government to handle the anticipated rise in demand.