The Ministry of Investment of the UAE and the Ministry of State-Owned Enterprises of the Republic of Indonesia have signed a Memorandum of Understanding (MoU), to propel the digital economy in Indonesia.

The agreement aims to set out a framework for investment cooperation in digital infrastructure, with a special focus on data centre projects in Indonesia. The total capacity of data centres developed under this MoU can reach up to 1,000 MW.

The MoU was signed by Mohamed Hassan Alsuwaidi, Minister of Investment of the UAE, and Erick Thohir, Minister of State-Owned Enterprises of Indonesia.

Critical part

Data centres, which are critical parts of the digital economy’s infrastructure, provide organisations with a secure option to store critical data and run applications and have become a priority for Indonesia. As the fourth most populous country in the world, Indonesia has a thriving digital economy driven by a proliferation of start-ups.

Already today, there are more than 60 hyper-scale data centres in the country, and the local data centre market is expected to witness a compound annual growth rate of 14% between 2023 and 2028.

Fostering partnerships between the public and private sectors in the UAE and Indonesia is an area of focus under the agreement. The two nations will explore numerous forms of cooperation under the MoU, including investment partnerships, policy research collaboration, certification development, innovation and R&D.

Promising fields

Alsuwaidi said: “The agreement underscores the deepening bond between our nations and is testament to the UAE's commitment to collaborate with countries in promising fields such as the digital economy. We are committed to supporting and accelerating all developmental efforts in Indonesia, and this agreement will contribute to facilitating an increase in data centre capacity, with new facilities promising to unlock opportunities that reinforce the country’s path towards creating a prosperous future.”

Thohir said Indonesia is a leader in the field of data centres in the Southeast Asia region. One of the programmes carried out is encouraging PT Telkom Indonesia (Persero), or Telkom, one of the state-owned companies in Indonesia, to become the data centre leader in Southeast Asia.

“Telkom is investing optimally to ensure its data centre supports Indonesia's digital economy, which will be the largest in Southeast Asia. Telkom is also focusing on infrastructure, one of which is Mitratel, which had an IPO and became the largest IPO on the stock exchange for the subsidiary category,” said Thohir.

Economic infrastructure

This collaboration with the UAE, according to Thohir, will accelerate the development of economic infrastructure, in line with the sharpening of the strategic digital technological focus that has been implemented.

The MoU builds on strong bilateral relations between the UAE and Indonesia. Trade volume between the two countries reached approximately $5 billion in 2022, showcasing an increase of around 20% from the previous year, when it amounted to $4 billion. Following the UAE-Indonesia Comprehensive Economic Partnership Agreement (CEPA) which came into effect in September 2023, annual bilateral trade is expected to increase to $10 billion over the course of the next five years.

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