Indonesia’s commitment to artificial intelligence (AI) took center stage at the nation’s first AI Day, a landmark event featuring global tech leaders like NVIDIA CEO Jensen Huang and Accenture CEO Julie Sweet. This milestone underscores Indonesia’s ambition to transition from an AI consumer to a developer and infrastructure powerhouse.

A significant highlight of the event was the unveiling of Sahabat AI, Indonesia’s first large language model (LLM), developed in collaboration with telecom giant Indosat and tech leader GoTo Group. Meaning “AI Friend” in Indonesian, Sahabat AI represents a crucial stride towards technological sovereignty, offering advanced natural language processing tailored to Indonesia’s unique linguistic and cultural landscape.

As the world's fourth most populous nation prepares for the race, it brings unique advantages to the table that could reshape the global AI landscape.

A Rising Economic Powerhouse

Indonesia’s emerging AI potential is fuelled by robust economic fundamentals. By 2024, Indonesia is projected to be the world’s fourth-largest economy by purchasing power parity (PPP) and eighth by GDP. With a population of over 270 million and a median age of 29, Indonesia provides a substantial consumer base and a youthful and innovative workforce.

Government initiatives like the National AI Strategy (Stranas KA) have further attracted significant international investment:

• Microsoft: $1.7 billion for cloud and AI infrastructure, with training for over 800,000 digital talents.

• NVIDIA: $200 million for an AI Talent Development Center.

• Tencent: $500 million in their third Internet data centre by 2030.

A Digital Giant Awakening

Indonesia's digital footprint is massive and growing. With over 205 million internet users and 350 million mobile connections, the country generates an unprecedented volume of data in Southeast Asia. More importantly, with 33.5% of its population still offline, Indonesia's digital potential remains largely untapped. The nation's rich cultural tapestry, featuring over 700 spoken languages, provides an invaluable resource for training more sophisticated and culturally nuanced AI models—a potential already being realized through initiatives like Sahabat AI.

The Building Blocks of AI Leadership

Three critical pillars position Indonesia favourably in the AI race:

1. Connectivity

Robust connectivity infrastructure is essential for AI training and inference. High-speed, low-latency networks capable of handling intense data flow within and between regional data centers will become pre-requisites. With 59 international submarine cables—surpassing both Singapore and Malaysia—Indonesia is well-positioned to provide the essential infrastructure for seamless AI data flow.

2. Energy Economics

In the AI era, energy is the new oil. Indonesia's industrial electricity rates of 11-12 cents per kWh (compared to Europe’s 22 cents) make it a compelling case for international data center investments, currently concentrated in Malaysia ($21 billion) and Singapore ($15 billion). This cost advantage, combined with regulations allowing foreign entities to own land and build data centers, positions Indonesia as an attractive destination for AI infrastructure.

The country’s vast renewable energy potential—550 GW in solar, 450 GW in wind, 100 GW in hydropower, 20 GW in biomass, and 10 GW in geothermal power (the largest globally)—further strengthens this case. The Just Energy Transition Partnership (JETP) is mobilizing $20 billion to accelerate the energy transition, with plans to increase renewable energy generation to 44% and cut carbon emissions to 250 million metric tons by 2030.

3. Digital Economy Growth

Indonesia's digital economy is surging, growing 20% to reach $90 billion in 2024, with projections pointing to $360 billion by 2030. This explosive growth into Asia’s largest digital economy, driven by e-commerce and digital financial services, will further drive demand for high-capacity data center and cloud infrastructure.

The Path Forward

Indonesia must recognise several key principles in its advancement:

1. The production of intelligence in Indonesia is both an opportunity and an imperative. As AI becomes one of the world’s most valuable commodities, it will create a completely new industry. Indonesia must recognize it cannot outsource this critical capability to stay competitive.

2. The narrative that AI requires prohibitively expensive infrastructure doesn’t tell the whole story. While frontier AI models demand significant resources, developing practical AI solutions away from the bleeding edge is increasingly accessible and cost-effective.

3. AI serves as a powerful equalizer for Indonesia, offering intuitive, accessible tools that make technology easier to use than ever before. This unprecedented usability has the potential to close the technology gap across the country.

4. Just as transportation infrastructure was built on manufacturing, AI requires strong infrastructure. It needs to be built on a robust energy infrastructure. Indonesia’s competitive energy costs and progressive energy transition plans provide a significant advantage.

Indonesia's journey from AI consumer to creator isn’t just ambitious—it’s necessary and increasingly achievable. The nation isn’t just talking about AI ambitions—it’s actively building them. With continued investment in infrastructure, sustained commitment to renewable energy, and strategic partnerships with global technology leaders, Indonesia is positioning itself at the forefront of the AI revolution in Southeast Asia and beyond.

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