Technological developments are driving Jakarta to become one of the strategic markets for the data center industry in Southeast Asia. This is revealed in the Data Centre Construction Cost Index 2025 report released by Turner & Townsend, a global professional services firm specializing in project and cost management primarily in the property, infrastructure and natural resources sectors.

According to the report, by 2025 Jakarta will rank 20th in terms of data center construction costs, dropping six places compared to last year. Still, Jakarta is still a city with an attractive market when compared to cities in neighboring countries.

Managing Director for Real Estate in Asia at Turner & Townsend Sumit Mukherjee said Jakarta has a competitive advantage in Southeast Asia, with its data center construction cost of Rp187,207 per watt, which is lower than countries such as Singapore and Tokyo (Japan).

"Indonesia, with its high growth characteristics, abundance of resources, and growing readiness for AI(artificial intelligence), remains a key market in Southeast Asia for data center development," Sumit explained.

Compared to Singapore, where the current data center construction cost is Rp257,681 per watt, and Tokyo, where it is Rp253,005 per watt, Jakarta is still able to make Indonesia a strategic market.

One of the drivers in making Indonesia a strategic market, is the increasing demand for facilities that are ready to adopt and use AI technologies. However, there are still a number of significant challenges posed by this demand ranging from rising operational costs to the use of high-voltage power systems.

Indonesia itself is considered to have adequate electricity supply, the challenge lies in infrastructure, especially in high-voltage transmission. The local supply chain to support the advanced cooling technology required by AI data centers is also an important thing to consider.

In terms of infrastructure, the increasing demand for AI-based data centers is expected to lead to a 165% increase in power usage in the Asia-Pacific region by 2030. The combination of AI workloads and infrastructure challenges, higher energy and cooling requirements, will drive operational and design costs to be 2 to 3 times higher in Indonesia compared to traditional data centers .

"Although the construction cost rating has declined, the growing demand for AI-ready infrastructure is putting significant pressure on the cost structure and capacity of the existing grid," he said.

Therefore, in order to develop data center designs that are energy efficient and minimize the risk of power connection delays, Sumit said there is a need for continuous innovation, so that the industry can keep up with the increasing demand for AI infrastructure.

"To remain competitive, Indonesia must continue to invest in improving its infrastructure, in order to meet industry demand," he concluded.

Infrastructure investment

The government through the Ministry of Communications and Digital (Komdigi) has also prepared a number of initiatives to expand infrastructure to meet the growing demand for AI-based data centers. In building infrastructure, investment plays an important role in making development faster and more efficient. 

As a result of continuous investment in Indonesia's digital infrastructure, the country now has at least 185 data centers with a capacity of 274 MW, and is expected to reach more than 2,000 MW by 2029.

Director General of Digital Infrastructure Wayan Toni Supriyanto explained that regulatory support, competitive electricity costs, and strategic locations such as Jakarta, Batam, and Surabaya, make Indonesia one of the main destinations for data center investment in Southeast Asia.

"We see the data center industry as one of the important pillars in national digital transformation. However, more than just a data storage facility, the existence of data centers has a very significant broad economic impact, both directly and indirectly on the industrial ecosystem," said Wayan.

The government is also currently encouraging green data centers with a target of energy efficiency or power usage effectiveness below 1.4 and the use of new renewable energy up to 100 percent.

Komdigi continues to strengthen national digital infrastructure through policies and regulations, and is working on a national roadmap to strengthen sea cable, fiber optic, and data center networks in various regions.

"The Ministry of Communications and Digital is preparing concrete steps, starting from the development of the Data Center Special Economic Zone, the preparation of a national roadmap, to the harmonization of policies across ministries," he explained.

Besides Jakarta, Batam is an ideal location for investment in digital infrastructure development, with its geographical proximity to financial and technology centers such as Singapore and 14 submarine cable infrastructures connecting Southeast Asia.

PT Telkom Indonesia Tbk through its subsidiary NeutraDC Nxera Batam is also developing Batam Island as a national data center, with Batam's status as a special economic zone (KEK).

President Director of PT Telkom Indonesia Dian Siswarini said Batam is an ideal location for investment in digital infrastructure development and has great potential to serve as a regional data center.

"Through policy support, strategic connectivity and public-private sector collaboration, this data center project offers extensive benefits to the digital business industry, local communities, and of course investors looking for opportunities in the fast-growing digital infrastructure sector," Dian said during the Topping Off of the NeutraDC-Nxera Batam Hyperscale Data Center, Thursday (30/10/2025).

The creation of Hyperscale Data Center (HDC) in Batam by PT Telkom Indonesia is expected to provide a multiplier effect that will then be felt for the Indonesian economy such as the acceleration of the digital economy and foreign investment in the form of data center upgrades.

Currently, NeutraDC Nxera Batam is developing with a target IT load capacity of 18 MW for the first building (BTM-1) in the Kabil Integrated Industrial Estate(KIIE) area. Data center development players in Nongsa Digital Park (NDP) and KIIE also get fiscal and regulatory incentives, because both areas have SEZ status.

"Thus, Batam can become a digital bridge between Indonesia and the Southeast Asian region. An advantage that is very relevant in the era of cloud computing, big data, and artificial intelligence or AI," he explained.

Meanwhile, the Director of Digital Economy at the Center of Economic and Law Studies (Celios), Nailul Huda, believes that Indonesia should learn from neighboring countries such as Singapore and Malaysia in terms of the digital economy and data center industry.

"The Jakarta market is still lower than the other two major cities in ASEAN. This is because Singapore and Malaysia have greater potential for digital companies, especially Singapore. Singapore, with its easy process and being a financial center in Southeast Asia, will require a large data center . So the ease of setting up a data center will be highly encouraged," Huda explained.

Even so, it does not rule out the possibility that in the future more and more domestic digital startups will emerge and other actors will develop data centers in Indonesia.

"However, the market share is still relatively small and the growing digital startups are also still small in scale. But it does not rule out the possibility that in the future the need for data centers can increase as the scale of their business increases," he continued.

The challenge of data center development in Indonesia, according to Huda, is also still about the existence of internet and electricity, which he said is still uneven in a number of regions in Indonesia.

"Inequality in digital access and electricity infrastructure is still an obstacle. There are still relatively few regions in Indonesia that have fast and stable internet. Even when there is, there is a risk of natural disasters, when in Kalimantan which is in fact safer from earthquakes, but the infrastructure is not yet adequate, including the internet and electricity," he concluded.