Market Trends of Indonesia Data Center Construction Industry
Major ICT Indicators Contributing to the Growth of Data Centre in Indonesia
- The country's Information and Communications Technology (ICT) spending declined significantly during the pandemic. The country's mobility and cloud technologies offered opportunities for vendors in the market. Enterprises in the country differed in hardware purchases as an initial response to the economic uncertainty, and many enterprises moved to the remote working phase and adopted cloud-based solutions in the country. Over the coming years, ICT spending on the cloud is expected to increase significantly.
- Apart from this, the country's mobile and internet penetration is increasing at a significant pace. According to Groupe Speciale Mobile Association (GSMA) 2020 report, the country had 176 million mobile service subscribers in 2017 and is expected to reach 199 million by 2025 with 69% penetration. Such growth in demand is expected to fuel data consumption and internet usage in the country.
- The study by GSMA also found that, the number of smartphone connections stood at 73% of total connections in the country, which is expected to reach 77% by 2025. Such exponential growth is further influencing the data consumption rates in the country. Such developments are expected to drive the demand for data centers in the region.
- The ongoing increase in the use of smartphones that coincides with the growth in e-commerce transactions, including mobile phones or computer games, is positively impacting the data center growth in the country. For instance, according to JP Morgan, 2020 report, the country's mobile commerce market value stood at USD 13.2 billion and expected to reach USD 22.9 billion in 2023; and mobile commerce is growing at a faster pace in the country. Also, Indonesia is a mobile-first e-commerce market, with 58 percent of transactions completed on a mobile device. This fact suggest that there is wide scope for the data centers market in the country.
Understand The Key Trends Shaping This Market
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Tier 3 is the Most Preferred Tier Type
- The tier 3 segment had a market share of over 50% in the Indonesian data center market in 2022. It is further projected to register a CAGR of 15% to reach an IT load capacity of 652.6 MW by 2029. On the other hand, the tier 4 segment is expected to witness the highest growth of 25.9% by 2029. Implementation of standards in the data center facilities ensures minimal downtown while increasing the efficiency of facilities. Therefore, data centers with additional redundant equipment in place for backup are preferred by customers.
- Tier 1 & 2 facilities are losing their demand as they are incompetent in fulfilling the growing uninterrupted services of businesses. The growing number of global conglomerates has given rise to business continuity services 24*7, which has gradually shifted the preference toward tier 3 and 4 data centers.
- As of 2022, there were nearly 25 tier 3 data center facilities in the country, followed by eight tier 4 data centers. PT DCI Indonesia Tbk's JK1 facility was the first data center in the country to receive the Tier 4 certification in 2013. Since then, the Nippon Telegraph and Telephone Corporation (NTT) and Digital Edge (Singapore) Pte Ltd have had to build tier 4 data centers in the country. The growing demand from customers is expected to drive the construction of tier 3 and 4 data centers in the country in the coming years.
