Indonesia Daily Focus September 17, 2026
We are Neutral on Indonesia's data center sector over the medium term and positive over the long term. Indonesia builds cheaper at USD8.9mn/MW and powers cheaper at USDc6.3/kWh, against Malaysia's USD9.9mn/MW and USDc10.6/kWh, but takes 36 months to energise 100MW versus 12 months there. Delivery speed, not cost, is deciding share: Malaysia has over 1,300MW operational and 3,252MW in the pipeline against Indonesia's 394MW and 1,221MW, while Jakarta's colocation vacancy sits at 20.4%.
We are Neutral on Indonesia's data center sector over the medium term and positive over the long term. Indonesia builds cheaper at USD8.9mn/MW and powers cheaper at USDc6.3/kWh, against Malaysia's USD9.9mn/MW and USDc10.6/kWh, but takes 36 months to energise 100MW versus 12 months there. Delivery speed, not cost, is deciding share: Malaysia has over 1,300MW operational and 3,252MW in the pipeline against Indonesia's 394MW and 1,221MW, while Jakarta's colocation vacancy sits at 20.4%.
Demand is not the constraint. Global data center power is projected at c.945TWh with capacity above 200GW by 2030F, hyperscaler capex at USD1.25tr in 2027F against c.USD2.5tr of cloud backlog, and AI workloads at c.65% of compute by 2027F rising to c.71% by 2030F as inference overtakes training. APAC holds 15.1GW operational with 4.8GW under construction and 21.7GW planned, a pipeline equal to 1.7x installed capacity. Johor's 0.7% vacancy and Singapore's 25MW construction pipeline point the spillover to Johor first and Batam next.
Returns already work. Our 100MW scenarios give a Jakarta colocation IRR of 16.3% against Kuala Lumpur's 16.2% at USD200/kW/month, and Batam hyperscale of 15.1% against Johor's 13.4% at USD150/kW/month, on yields on cost of 10-11%. Connectivity arrives first, with committed Google, Meta and Microsoft investment lifting Batam's subsea capacity above 1,750Tbps by 2029F (+407.8%) at latency under 2ms to Singapore. Power arrives late: PLN's Java to Sumatera link is expected only in 2031F, despite a c.41TWh generation surplus and low tariffs.
We favor the pick and shovel suppliers over the operators, monetizing construction and energisation rather than waiting on tenants. DMAS offers a c.300ha data center zone backed by 993MVA of committed PLN power, TOTL has c.39% of its project portfolio in data centers, POWR sees data centers reaching 20% of industrial load by 2028F from 12% in 1H26, and KETR and MORA carry Rising-8 at up to 400Tbps. Direct operator exposure sits with DCII (128MW live), EDGE, ISAT, TLKM and DSSA, against Indonesia's USD13.0bn and 1,471MW of announced investment since 2024.
