# Indonesia data center market expansion and regulatory review

> Live situation record from CLSTR: https://clstr.news/situations/indonesia-data-center-market-expansion
> Updated: 2026-10-19T10:54:50.000Z. Sources: 5. Developments: 3.

Indonesia is experiencing significant growth potential in its data center market, driven by rapid digital transformation, cloud adoption, and the rise of artificial intelligence. Industry leaders have identified sectors such as finance and insurance as key drivers, while companies like PT Repower Asia Indonesia Tbk are diversifying into managed services and IT infrastructure to capitalize on these trends.

However, this expansion faces critical environmental and social challenges. Coordinating Minister for Infrastructure and Regional Development Agus Harimurti Yudhoyono has noted that while digital adoption makes data centers essential, their high demand for electricity and clean water must be managed to ensure development does not compromise the community’s right to a healthy environment or access to basic resources.

Investment leaders, including Danantara Chief Investment Officer Pandu Sjahrir, have advised that investors must account for environmental risks and potential public protests early in the process. Sjahrir cited the temporary suspension of the BDx Data Centers project in Jatiluhur due to licensing and environmental issues as a cautionary example, suggesting Indonesia should aim to derive broader economic benefits from digital infrastructure similar to the downstreaming of the nickel industry.

In response to these complexities, the Indonesian government is reviewing telecommunications deregulation to stimulate investment and lower costs, as current regulatory burdens account for approximately 13–14 percent of operator revenue. Simultaneously, members of the House of Representatives (DPR RI) are calling for rigorous feasibility studies. Lawmakers have emphasized the need to evaluate electricity and water requirements to prevent state losses, cautioning that rapid expansion without guaranteed occupancy rates could pose financial risks if funded through state-owned banks.

## Timeline

### 2026-10-19: Indonesia reviews telecom deregulation and data center investment

Indonesia is considering telecommunications deregulation to lower costs and boost investment, while lawmakers urge caution regarding the feasibility and resource requirements of new data center projects.

4 sources. https://clstr.news/cluster/indonesia-reviews-telecom-deregulation-and-data-center-investment

### 2026-10-12: Indonesia data center growth faces environmental and social hurdles

Indonesia's growing data center and AI infrastructure sector faces challenges as officials warn that environmental impacts and community concerns could lead to project cancellations and public protests.

3 sources. https://clstr.news/cluster/indonesia-data-center-growth-faces-environmental-and-social-hurdles

### 2026-10-07: Indonesia data center market sees growth potential amid digital expansion

Indonesia's data center market is poised for growth due to digital transformation. Digital Realty highlights the region's potential, while PT Repower Asia Indonesia Tbk expands into the sector via AI-driven IT.

2 sources. https://clstr.news/cluster/indonesia-data-center-market-sees-growth-potential-amid-digital-expansion

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Cite as: Indonesia data center market expansion and regulatory review. CLSTR, https://clstr.news/situations/indonesia-data-center-market-expansion