The growth trend of data centers in Indonesia is expected to continue to grow in line with the increasing demand for data centers.
Southeast Asia is one of the fastest-growing data center markets globally, driven by increased adoption of cloud services, the emergence of 5G services, and the adoption of advanced technologies such as artificial intelligence, big data, and IoT. Investment by data center operators in the region has also increased, especially in terms of colocation and hyperscale.
The data center market in Southeast Asia has the potential to add more than 2,400 MW of cumulative capacity between 2022 and 2027. In 2021, Singapore even accounted for more than 55% of the total capacity in Southeast Asia. Offers services supported by the internet, cloud, telecommunications, and local service providers. Submarine fiber optic network connections carry more than 90% of the world's internet traffic. Singapore has strong fiber optic connections to the important APAC data center market and continues to expand its capacity. The city-state has now begun a pilot phase in the second quarter of 2022, during which building permits for data centers will be granted in accordance with the provisions.
There are several new entrants in the Southeast Asian region, and new projects are announced and planned for the coming years. These companies include GDS, ESR Cayman, Vantage data center, First data center, and EdgeConneX. Along with the increasing demand, the central government is also trying to attract foreign direct investment from data center service providers by strengthening internet connections in Indonesia.
Data center operators such as Equinix and Big Data Exchange (BDx) have adopted renewable energy in their data centers. Southeast Asian countries are working to increase resilience and attract investment from global data center operators. Same with Indonesia. Indonesia's data center market is valued at US$ 1,785.2 million in 2020 and is expected to reach US$ 3,354.41 million in 2026 with a CAGR (Compound Annual Growth Rate) of 11.4% during the forecast period 2021-2026. Indeed, Indonesia's competitiveness index ranking is lower than other Southeast Asian countries. However, the potential revenue of Indonesia's data center operator business is quite large.
Indonesia today, we see the rise of foreign and local players who build data centers. In its announcement in August 2022, PT DCI Indonesia estimates that this demand will grow by an average of around 20% per year.
The data center itself facilitates companies to complete their important applications and data. Dara center is designed based on a network of storage and computing resources that enable the transfer of shared applications and data. The main elements of data center design include routers, firewalls, storage systems, switches, servers, and application delivery controllers.
Indonesia's data center market is segmented by infrastructure (electrical infrastructure (UPS system), mechanical infrastructure (rack), general construction, IT infrastructure), tier type (tier I and II, tier III, tier IV), and end user (banking, financial services, and insurance, IT and telecommunications, government and defense, and healthcare).
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