The transformation of Batam from a humble city to a digital economy infrastructure hub has garnered attention, with its strategic advancements attracting interest from global businesses, particularly those from Malaysia and Singapore. In the aftermath of the COVID pandemic, the city is now beginning to reap the investment benefits, which is helping Indonesia’s economy too.
Since the last couple of years, many of the leading data center service providers, including hyperscalers, have set up bases in Batam. The strategic role of BP Batam and the Government of Batam in accelerating urban development has positively impacted the city’s economic growth.
Advantage Batam
All data centers in Indonesia are located in the capital, Jakarta, and as business centers grow in other cities, Batam gains prominence. For starters, Batam is an island in Indonesia’s Riau Islands Province, just 20 kilometers south of Singapore.
Batam presents distinctive advantages owing to its strategic positioning in close proximity to major financial hubs such as Singapore and neighboring nations. Moreover, the favorable seismic stability in Batam renders it a prime choice for establishing data center facilities.
Nongsa Digital Park (NDP), located on the NE part of Batam Island, is connected in close proximity to more than a dozen international submarine fiber-optic cable segments that land only approximately 5 km away with direct links to Indonesia, Singapore, and the US West Coast. This makes NDP a potential location for operators looking to target the Asia-Pacific market. Marco Bardelli, Board Member and Senior Executive Director at Nongsa Digital Park, explains:
“The very close proximity of NDP to Singapore allows for planned new additional submarine fiber optic capability to reach directly NDP with repeaterless cables that drastically reduce latency, making the DC infra in NDP “as if” it was in Singapore.“
As per recent findings from industry authorities, the data center industry in Batam presents considerable opportunities for enterprises aiming to broaden their presence in the Southeast Asian region. The Indonesia Data Center market (by capacity) grew from 134 MW in 2020 (it was 80 MW in 2018) to 363 MW in 2022, with an impressive CAGR of 64% (source: Broad Group).
To put it in perspective, NDP is located in Batam and was granted Special Economic Zone (SEZ) status on June 8, 2021, which comes with various benefits. NDP has taken charge of providing state-of-the art supporting infrastructure for services such as water, electricity, and connectivity with brand new distribution systems that will be completed by Q2 this year.
This is in line with Indonesian government guidelines received by the NDP to ensure that the Special Economic Zone is indeed an ideal landing point for data center operations, as pointed out by Bardelli. Ensuring the success of the data center industry necessitates robust infrastructure, particularly adequate electricity and water supply.
Security measures
Security is of paramount importance for data centers, and newer hubs have to go the extra mile to prove that enterprise data is in safe hands. So, what robust security measures are in place within NDP to ensure the physical and cyber security of data center facilities? “Well, from the regulatory side we have the Special Economic Zone status and we are strengthening the perimeter of the SEZ and new submarine connectivity is planned to come directly inside the NDP area directly from various international locations, so security can be significantly enhanced,” said Bardelli.
Key growth drivers
Nongsa and Batam have been described by Indonesian President Joko Widodo as a “digital bridge” between Singapore and Indonesia, as the demand for technology talent, sustainable power, land to develop data centers, and capacity continues to grow. One of the reasons for Batam’s emergence can be attributed to regulations in Singapore.
In 2019, the Singapore government decided to put a moratorium on building hyper-scale DCs in order to contain carbon consumption. Due to this, large enterprises and OTTs have been forced to rely on neighboring countries such as Malaysia and Indonesia for DC services.
“Now, NDP is quickly approaching saturation in terms of land available for data center development, we recently added another large player into our ecosystem and we are now left with not many other opportunities for new interested parties. So our focus is now shifting on how to support the activity of the data center operators with state of the art services, robust incentives and protective measures and enriching the overall ecosystem with initiatives that can represent collaboration opportunities for the data centers,” says Bardelli.
NDP is not just a data center hub; it is a Digital Economy cluster (or, as defined by President Jokowi, the “digital bridge” connecting Indonesia to Singapore and the rest of the world) that has business presences and education activities with international companies such as (in alphabetical order) Accenture, AIA, Apple, AWS, Epic Games, IBM, Infineon, RMIT University Melbourne.
Hyperscale data centers are looking to fully apply the next-generation Smart DC solution and actively use local renewable energy to achieve agile delivery and green eco-operation of their data centers on campus. All this has attracted many of the leading data center service providers in the world. As this article started out, the first data center on the campus is being completed by GDS, over an expansive area of almost three hectares. GAW Capital is also slated to complete its first building by year end. Construction works have started for the strategic Indonesia’s Government National DC campus, which will be located over 5 hectares of land in NDP. BW Digital announced the beginning of March 2024 land acquisition for an 80 MW DC campus, and PDG Group Chairman publicly spoke about an investment of USD 1 billion, in 96 MW DC infrastructure in NDP.
Continued investment by data center operators in the Nongsa Digital Park further strengthens the SEZ’s position as a data center hub in the region.
Thanks to its location and connectivity with the largest connectivity hub in the region, Batam, with locations such as NDP and Kabil Industrial Estate (the latter, only 15 minutes from NDP, is where PT Telkom and Singtel are developing DC infrastructure in JV), is an ideal location for driving Indonesia’s digital economy forward.