AI boom: Can Indonesia move from market to maker?

Indonesia possesses the population and digital market to fuel a burgeoning artificial intelligence boom. However, the country faces a critical challenge: transitioning from merely consuming AI tools to becoming a creator in this tech space. A plan to construct three data centers illustrates the global AI expansion's reach into Southeast Asia's largest economy.

While Indonesia's market potential is abundant, the real question looms: Can the nation capture the value that AI generates rather than merely relying on imported solutions? The global shift towards AI-driven trade is reshaping economies, but the benefits may not trickle down uniformly. Nations that import expensive chips and cloud services risk widening trade deficits, placing strain on currencies such as the Indonesian rupiah.

In contrast, Asia's economies with established tech manufacturing are already reaping the benefits. Countries like South Korea, Malaysia, and Vietnam have seen significant gains in export growth, driven by semiconductors, electronics manufacturing, and data center expansions. These nations benefit not only by consuming technology but also by exporting it, earning substantial foreign exchange.

The disparity is glaring. High-tech products constitute around 60% of manufactured exports in Singapore, Malaysia, Vietnam, and South Korea, significantly higher than Indonesia's 8.7% in 2024. This stark contrast underscores the urgency for Indonesia to pivot towards tech manufacturing and infrastructure. The country stands at a crossroads: it can remain a lucrative consumer market or rise as a tech 'maker,' capturing the value that AI creates. Failure to act could result in long-term economic pressure and currency devaluation.