Indonesia Intensifies Efforts to Attract Tech Investments

Comprehensive Incentive Packages

Indonesia is stepping up its efforts to attract significant investments in the technology sector, particularly in data centers and artificial intelligence (AI), despite Nvidia's recent decision to invest in Malaysia instead of Indonesia. The National Council for Special Economic Zones (KEK) is spearheading this initiative through comprehensive incentive packages designed to make Indonesia an attractive destination for high-tech investments.

Fiscal Incentives

The Indonesian government is offering tax holidays for up to 20 years, along with other fiscal incentives such as VAT exemption and import duty relief. These incentives are part of a broader strategy to attract large-scale investments in strategic sectors like data centers, cloud services, and AI. According to Bambang Wijanarko, Acting Head of Investment, Cooperation, and Communication Bureau at the KEK Secretariat, these fiscal incentives are designed to be comprehensive and competitive ²

Non-Fiscal Incentives

In addition to fiscal incentives, the government is also focusing on non-fiscal measures to improve the investment climate. One of the key initiatives is the implementation of a one-stop service for licensing, aimed at simplifying the investment process and reducing bureaucratic hurdles for investors. This approach is expected to enhance the overall ease of doing business in Indonesia's special economic zones, such as the Nongsa Digital Park in Batam ¹

Existing Infrastructure and Investor Interest

The Nongsa Digital Park in Batam, part of Indonesia's special economic zones, has already shown promising results in attracting investors. According to Bambang Wijanarko, the area is now fully occupied by tenants, reflecting high investor confidence in the region. This existing infrastructure and the government's proactive approach to investment promotion are seen as positive indicators for Indonesia's potential to attract more high-tech investments in the future.

Competitive Landscape

The decision by Nvidia to invest in Johor, Malaysia, rather than Indonesia has sparked public debate about Indonesia's competitiveness as an investment destination. However, officials from the KEK Secretariat have downplayed concerns, emphasizing that Indonesia has a robust ecosystem in place, particularly through its special economic zones like Nongsa Digital Park.