The cloud comes to Indonesia

03 August 2018

Mention Indonesia, and many will probably think of its exceptional local crafts and thousands of idyllic, unexplored islands with pristine beaches. It is more than just a holiday destination, however, but is a potential-packed country that is also the fourth most populous country on Earth – and the largest economy in Southeast Asia.

To grow its economy, the central government in recent years has moved to curb the country’s traditional reliance on commodity exports with initiatives to raise the role of the manufacturing industry. Perhaps more notably, the wave of digitization and always-on connectivity sweeping across the world is also making itself felt in Indonesia.


Digital Indonesia

Current smartphone usage in Indonesia in terms of absolute number of devices is ahead of all other countries in the Asia Pacific except for China, Russia and India. And with smartphone penetration estimated at just below 30% in 2019 and a high number of millennials at around 60 million people, this offers substantial growth potential in terms of consumption of digital services.

Indeed, a report by McKinsey notes that Indonesia can unleash the next level of economic growth—to the tune of USD 150 billion in annual economic impact by 2025 by going digital. This is no pie in the sky projection, going by the home-grown technology unicorns that have already been spawned forth by the opportunities within the country. From hotel and airline ticketing platform Traveloka, e-commerce platform Tokopedia and Go-Jek, these fast-growing start-ups have already seen multiple investment rounds that values them at multiple billions of dollars.

And the cloud is an important part of digital growth in the country, going by comments by a Go-Jek executive at last year’s Google Cloud conference. According to CTO Ajey Gore, the Go-Jek platform relies on Google Cloud to support the one million motorcycle drivers and the “4TB to 5TB” of data that is generated every day. At a media briefing session, Gore also noted that Go-Jek has more than 200 developers and relies on more than 400 microservices to power its ecosystem.


The cloud in Indonesia

While there are no Google Cloud Platform region operated from Indonesia yet, the company announced last year that the cloud giant is currently working on launching it there. This comes on the heels of an announcement by US-based e-commerce behemoth Amazon which a month earlier in which it confirmed plans to spend as much as 14 trillion-rupiah (US$999m) in Indonesia, with a part of this amount spent on the company’s cloud computing service.

Elsewhere, China’s Alibaba Cloud is already one step ahead with its own cloud region in Indonesia since mid-2018, and which also launched a second data centre in Indonesia in January 2019 to improve disaster recovery by increasing the number of availability zones. The confirmation of public cloud platforms setting up in Indonesia comes not a moment too soon, considering data localization regulations such as Government Regulation 82 of 2012 (PP 82/2012).

As implementation of PP 82/2021 is tightened across industries, this is expected to be a driver for the local IT and data centre industry given how it makes sense for companies to simultaneously digitally transform their organisations as they make changes to adhere to the regulations. In this context, the availability of cloud platforms within Indonesia offers more choices to enterprises and technology start-ups alike.


A cloud for every need

Of course, it must be noted that enterprises around the world are starting to move towards hybrid and private cloud deployments, with an IDC study showing a 28.2 percent year-over-year increase in private cloud spending. The reasons behind this development will likely vary, though there is no question that an on-premises deployment offers far greater control and higher performance for some businesses.

Regardless of a preference towards public or private cloud deployments, it is a fact that Indonesia has substantial number of smartphone users – as well as the highest number of citizens who are not connected to the Internet. With the country rapidly digitising and more users getting wired to the Internet via smartphones than ever before, Indonesia offers ample business opportunities for businesses looking to expand into Asia.


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