Building Indonesia’s Digital Sovereignty Through Special Economic Zones
Indonesia is entering a new phase of digital transformation, marked by rapid growth in data center capacity and increasing internet penetration. Currently, Indonesia’s data center capacity has reached 353 MW, with a projected pipeline of 895 MW by 2030 (Cushman & Wakefield Research). At the same time, national internet penetration has climbed to 80.66 percent (APJII, 2025), reflecting the country’s accelerating digital adoption.
What does this momentum mean for investment opportunities, the technology industry, and Indonesia’s long-term digital future?
These questions are explored in depth in the latest episode of Podcast Nusantara, featuring insights from key industry and government leaders:
- Ellya Cen, Business Vice President of Data Center, Schneider Electric Indonesia
- Rakhmat Yulianto, Director of Investment Promotion Development, Ministry of Investment and Downstream Industry (BKPM)
The discussion is moderated by Maulin Nastria, Assistant Manager of Corporate Communications at NeutraDC, offering a comprehensive perspective on how Special Economic Zones (SEZs) can become a cornerstone in building Indonesia’s digital sovereignty.
Indonesia’s Digital Sovereignty in the Era of Rapid Digital Growth
Indonesia is accelerating its digital transformation by prioritizing digital sovereignty as a national strategic goal. Digital sovereignty ensures that national data, digital infrastructure, and critical systems remain under domestic control and legal protection.
Special Economic Zones, known locally as Kawasan Ekonomi Khusus (KEK), play a vital role in supporting this objective by providing dedicated areas designed for digital infrastructure expansion.
This article explores how Special Economic Zones support Indonesia’s digital sovereignty through data center development, regulatory frameworks, sustainable infrastructure, and multi-stakeholder collaboration.
Understanding Digital Sovereignty and Its Strategic Importance
Definition of Digital Sovereignty in the Indonesian Context
Digital sovereignty refers to a country’s ability to control, protect, and manage its digital data and infrastructure independently. In Indonesia, this includes ensuring domestic data storage, compliance with national regulations, and protection from external interference.
Why Digital Sovereignty Matters for Indonesia’s Economy
- Localized data storage significantly strengthens national data security.
- Sovereign digital infrastructure enhances long-term economic resilience.
- Domestic data centers ensure compliance with Indonesian regulations.
- Local infrastructure improves digital service speed and reliability.
Special Economic Zones as Catalysts for Digital Infrastructure Growth
What Are Special Economic Zones in Indonesia?
Special Economic Zones are designated areas with customized regulations and incentives to accelerate strategic economic sectors. Digital-focused SEZs are equipped with reliable power, advanced connectivity, water supply, and supportive regulatory frameworks.
Strategic SEZ Locations for Data Center Development
Batam as a Regional Digital Gateway
Batam benefits from its strategic position near Singapore and the Sijori economic triangle. This location supports cross-border connectivity and international data exchange opportunities.
Singasari Malang as a Digital Talent Hub
Singasari benefits from proximity to universities and digital institutions that supply skilled technology professionals. This location supports long-term workforce sustainability for data centers.
Greater Jakarta as Indonesia’s Primary Data Center Cluster
The Jakarta metropolitan area remains the core data center hub, with expansion into Bekasi, Cikarang, and surrounding industrial zones.
Investment Incentives Supporting Data Center Expansion
Fiscal Incentives for Data Center Investors
- Long-term tax holidays for large-scale digital investments.
- Import duty exemptions for essential data center equipment.
- Reduced operational costs through SEZ fiscal facilities.
Non-Fiscal Support and Regulatory Ease
- Simplified licensing through Indonesia’s Online Single Submission system.
- Guaranteed legal certainty and transparent investment processes.
- Integrated infrastructure planning within Special Economic Zones.
Industry Insights on Data Center Development in Indonesia
Schneider Electric’s Perspective on Indonesia’s Data Center Market
According to Ellya Cen, Vice President of Data Center Business at Schneider Electric Indonesia, the national data center market is experiencing rapid expansion.
Indonesia’s data center capacity increased by more than thirty percent within one year. Capacity is projected to triple as demand from cloud computing, artificial intelligence, and digital services continues to rise.
Key insights include:
- Batam’s geographic advantage strengthens its role as a regional digital hub.
- Collaboration with AI technology leaders ensures future-ready facilities.
- AI-driven cooling systems can reduce electricity consumption significantly.
- Local manufacturing and workforce development remain strategic priorities.
Government Policies Supporting Digital Sovereignty
Role of the Ministry of Investment and BKPM
The Ministry of Investment and BKPM actively promote data center investment through clear regulations and investor-friendly policies.
Key government initiatives include:
- Enforcement of Government Regulation No. 71 of 2019 on data localization.
- Fiscal and non-fiscal incentives for global and domestic investors.Transparent l
- icensing systems supported by digital platforms.
- Development of renewable energy strategies for sustainable operations.
Building Sustainable and Future-Ready Data Centers
Technological Innovation in Data Center Operations
Modern data centers increasingly adopt advanced technologies to improve efficiency and sustainability.
Key innovations include:
- Liquid cooling systems for high-performance computing environments.
- Artificial intelligence for predictive maintenance and energy optimization.
- Integrated Building Management Systems and IoT-based monitoring.
Renewable Energy as a Foundation for Green Data Centers
Indonesia’s renewable energy resources, including solar, hydro, and geothermal power, offer long-term solutions for sustainable data center operations. Green energy adoption reduces emissions while supporting national climate commitments.
Human Capital Development for Digital Infrastructure
Strengthening Digital Talent Through Education Partnerships
Indonesia addresses digital talent shortages by collaborating with universities and technical institutions. Programs include hands-on training, internships, and industry-aligned curricula.
Creating a Sustainable Workforce Ecosystem
Talent development ensures long-term operational excellence while supporting innovation across the digital infrastructure ecosystem.
Strengthening Local Supply Chains and Industrial Capabilities
Supporting Domestic Manufacturing for Data Centers
Local production of electrical and digital infrastructure components reduces import dependency. Domestic manufacturing strengthens supply chain resilience and global competitiveness.
Integrating MSMEs into the Digital Infrastructure Ecosystem
Small and medium enterprises play an important role as suppliers, service providers, and technology partners within SEZ-based data center projects.
Key Regulations Supporting Digital Infrastructure Growth
- Law Number 6 of 2023 ensures long-term legal clarity.
- Government Regulation Number 42 of 2023 strengthens investor protection.
- OSS implementation improves licensing efficiency and accountability.
- Long-term tax incentives support large-scale capital investments.
Indonesia’s Vision as a Regional Digital Hub
Golden Indonesia 2045 and Digital Sovereignty
Indonesia aims to leverage its demographic advantage and digital potential to become a leading Southeast Asian digital economy by 2045.
Expanding sovereign data infrastructure remains critical to achieving this long-term vision.
Collaboration as the Core Growth Strategy
Strong collaboration between government institutions, private enterprises, academia, MSMEs, and global partners ensures sustainable digital ecosystem development.
Conclusion: Advancing Indonesia’s Digital Sovereignty Through SEZs
Indonesia’s digital sovereignty strategy is built on Special Economic Zones, strong regulatory frameworks, sustainable infrastructure, and continuous talent development.
By investing in data center development, green energy adoption, and local industry participation, Indonesia strengthens its digital resilience and economic competitiveness.
Special Economic Zones serve as the foundation for a secure, inclusive, and future-ready digital economy.
For more details, listen directly to the podcast on YouTube Nusantara Academy and don’t forget to register for training by contacting https://wa.me/6285176950083
