Communications and Information Minister Budi Arie Setiadi attends a meeting with House of Representatives Commission I overseeing information at the Senayan legislative complex in Jakarta on Sept. 10, 2024. - Photo: Antara
JAKARTA: Communications and Information Minister Budi Arie Setiadi has admitted that global tech companies like Google and Microsoft prefer Malaysia to Indonesia as a location for data centers.
He attributed this to lower electricity costs and attractive fiscal incentives in the neighbouring country.
“In Malaysia, electricity costs just 8 [US] cents per kilowatt-hour [kWh]. They also offer tax exemptions for capital goods and provide legal certainty for investors,” Budi said on Wednesday (Oct 9), as quoted by Kontan.
Setyanto Hantoro, president commissioner at Indonesian data center operator Bersama Digital Data Centres (BDDC), highlighted that Indonesia’s electricity prices, ranging from 11 to 12 cents per kWh, were not competitive.
Budi emphasised that Indonesia’s large population and abundant renewable energy resources could make it an appealing market for modern data centres, yet the country was only expected to attract US$634 million in data centre investment this year, significantly less than Malaysia.
He underscored the need to improve the investment climate in the country and offer competitive incentives to attract global players.
“I hope we can lower the electricity costs for data centres. We must not create the impression that investing in Indonesia is difficult,” he added.
Missed opportunity Singapore imposed a moratorium on data center development from 2019 through 2022, which some described at the time as a prime opportunity for Indonesia to step into the breach as an alternative location for globally connected data centres.
However, it was Johor State in Malaysia that seized the moment, expanding its data centre capacity from 10 megawatts to 1.3 gigawatts during that period.
In contrast, Indonesia currently operates just 300 MW of data centres, despite a similar proximity to the city-state, according to the Indonesian Data Centre Association (IDPRO).
Data centre capacity is commonly measured in power consumption and hence expressed in watts.
The IDPRO had predicted that Indonesia’s data centre capacity would grow to 2.3 GW over the next decade, positioning the country as a potential regional hub due to its renewable energy resources.
However, the association stressed that, for this to happen, the government needed to offer more than just income tax breaks to attract investors and prevent them from looking elsewhere in the region.
“To be honest, Malaysia has capitalised on Singapore’s data center moratorium in a really perfect way,” Hendra Suryakusuma, chairman of the IDPRO, said in June.
On Oct 1, Google held a groundbreaking ceremony for its data centre in Malaysia, attended by Prime Minister Anwar Ibrahim, five months after the tech giant announced the plan.
The facility located around 20 kilometers east of Kuala Lumpur involves a $2 billion investment.
It is expected to contribute $3.2 billion to the country’s GDP and create 26,500 jobs by 2030.
A day earlier, the company announced a $1 billion investment to build data centres in Thailand, which are projected to create 14,000 jobs by 2029.
In May, fellow tech giant Microsoft revealed a plan to invest $2.2 billion in Malaysia over the next four years, which would include the construction of its first data center infrastructure in the country. - The Jakarta Post/ANN
