How Indonesia Can Get Ahead in the Artificial Intelligence Race

Artificial intelligence (AI) is reshaping economies worldwide, but discussions often overlook a crucial prerequisite: reliable electricity. AI applications run in data centers that demand industrial land, power infrastructure, cooling systems, connectivity, backup power, and substantial water usage. Indonesia faces an important question: does it have the necessary land, infrastructure, and energy to become a leading AI investment destination?

This answer will determine whether Indonesia becomes a regional AI hub or sees investment flow elsewhere.

AI's energy dependence is growing. Training advanced models requires numerous processors running continuously for weeks or months, while serving millions of daily queries creates a permanent demand for electricity. Indonesia benefits from several factors. It has Southeast Asia's largest economy, a population of nearly 300 million, a rapidly expanding digital economy, increasing cloud adoption, and government policies recognizing AI as a national priority.

Unlike Singapore, Indonesia has abundant industrial land, significant natural gas resources, and one of the world's largest geothermal resource bases.

Indonesia currently has around 580 megawatts of operational AI data center capacity, with over 1.3 gigawatts of additional capacity planned. Major hyperscale data center developers negotiate electricity supply agreements before construction begins, seeking dedicated substations, transmission infrastructure, reserved generating capacity, and long-term power purchase agreements.

BDx, a leading Indonesian data center developer, recently secured commitments for approximately 1.2 gigawatts of electricity for future AI campuses in West Java.

Indonesia's natural gas and geothermal resources present opportunities. Several major gas developments are under construction or expanding, including the Masela LNG project, Tangkulo gas development, BP's Tangguh LNG project expansion, and ENI's North and South Hub developments. These projects will boost Indonesia's future natural gas production and electricity generation.

Natural gas, when used for electricity generation, offers reliable, low-emission power that can operate continuously, making it well-suited for energy-intensive AI infrastructure.

LNG facilities in Indonesia provide existing industrial land, utilities, ports, and supporting infrastructure, allowing developers to integrate data centers with existing facilities. This model minimizes community disruption, streamlines permitting, and reduces development costs and construction timelines compared to building new AI campuses.