Malaysia’s AI Boom: How Indonesia Plans to Compete

Summary:

News Overview

Malaysia has been receiving significant investments in artificial intelligence (AI) from major technology companies, with Oracle being the latest to invest. The Ministry of Communication and Informatics (Kominfo) of Indonesia, led by Minister Budi Arie Setiadi, has acknowledged this trend but has refrained from extensive commentary. Budi Arie Setiadi emphasized the importance of Indonesia becoming a significant player in technology advancement, both in terms of knowledge and access.

Investment Details

According to Access Partnership, a public policy consultancy, Malaysia’s readiness to adopt AI is higher than that of Indonesia. This has attracted global tech giants to invest in building AI-supporting infrastructure in Malaysia, such as data centers and cloud computing facilities. The list of investments in Malaysia includes:

• Oracle: US$ 6.5 billion or Rp 99 trillion
• Microsoft: US$ 2.2 billion or Rp 33.6 trillion
• Google: US$ 2 billion or Rp 30.5 trillion
• ByteDance: US$ 2.13 billion
• Vantage Data Centers: Building a 256 Megawatt data center

In contrast, Indonesia has received the following investments:

• Microsoft: US$ 1.7 billion or Rp 25.9 trillion
• Google: US$ 2 million or Rp 30 billion
• Apple: Rp 400 billion for building an Apple Developer Academy

Government Response and Initiatives

In August, Budi Arie Setiadi noted that Malaysia’s policy of offering numerous incentives has been a major draw for investors to establish data centers there. In response, the Indonesian government is reviewing regulations that may hinder data center investments. Kominfo is preparing several measures, including:

• Providing tax incentives for data center investors in Indonesia
• Ensuring land availability and readiness of eco-friendly water and electricity facilities to support data center operations

Budi Arie Setiadi highlighted the importance of green energy and environmentally friendly data centers. He also pointed out the significant investment potential in Indonesia due to its large population and rapid digitalization. The presence of data centers is crucial for storing domestic data, which is vital for maintaining data sovereignty.

News source

Key Points:

Point 1: Malaysia’s AI Investment Surge

– Malaysia is attracting substantial AI investments from global tech giants, including Oracle’s US$ 6.5 billion investment.
– The country’s readiness to adopt AI and supportive infrastructure development are key factors.

Point 2: Indonesia’s Strategic Response

– Indonesia’s Kominfo is reviewing policies to attract similar investments, focusing on tax incentives and eco-friendly infrastructure.
– The government aims to enhance Indonesia’s role in technology advancement and data sovereignty.

Point 3: Comparative Investment Landscape

– Malaysia’s investment figures significantly surpass those of Indonesia, highlighting the need for competitive policies.
– Indonesia’s investments include notable contributions from Microsoft and Apple, but at lower scales compared to Malaysia.

Resources:

Access Partnership

Access Partnership is a public policy consultancy that provides insights into technology adoption and regulatory landscapes. Their analysis highlights Malaysia’s readiness for AI adoption, influencing investment decisions by global tech companies.

Oracle

Oracle is a leading global technology company that recently invested US$ 6.5 billion in Malaysia to develop cloud infrastructure. This investment underscores Oracle’s commitment to expanding its presence in Southeast Asia.

Microsoft and Google

Both Microsoft and Google are major tech companies investing in AI infrastructure in Malaysia and Indonesia. Their investments reflect strategic interests in expanding digital capabilities in the region.

Next Steps:

1. **Policy Review and Adjustment**: Indonesia should expedite the review of regulations hindering data center investments and implement competitive incentives to attract global tech companies.

2. **Infrastructure Development**: Focus on developing eco-friendly infrastructure to support data centers, ensuring readiness in terms of land, water, and electricity.

3. **Promote Digital Sovereignty**: Emphasize the importance of data sovereignty by encouraging the establishment of domestic data centers to store and manage local data securely.