DBS Bank and United Overseas Bank(UOB) have jointly provided a landmark IDR6.7 trillion loan facility to finance the development of a new data centre campus in Batam, Indonesia, according to a joint statement released by both banks on June 5. Based on the exchange rate as of June 4, the loan facility, which is the largest IDR-denominated financing agreement secured for such a development, amounts to about $530 million.
The data centre project is jointly developed by Singapore-based data centre developer and operator DayOne and the Indonesia Investment Authority (INA), the country’s sovereign wealth fund. The new campus marks the expansion of DayOne’s presence in Indonesia and is INA’s first investment in the sector. Both parties have established a joint venture (JV) to drive growth and advancement of the data landscape in Indonesia.
According to DBS and UOB, the loan’s proceeds will be used to develop and operate three data centres in Batam’s Nongsa Digital Park (NDP). The NDP aims to be a “digital bridge” between Singapore and Batam where Singapore companies can tap on Indonesia’s infrastructure and digital talent pool. At the same time, Indonesia will also be able to leverage Singapore’s technological advancement and investment flows.
When completed at the end of 2025, the DayOne Nongsa Digital Park Data Centre campus will have a combined IT load capacity of around 72 megawatts (MW), accounting for around 5% of Indonesia’s projected data centre capacity of 1.41 gigawatts (GW) by 2029.
Referring to an Oct 15, 2024 report by the Boston Consulting Group (BCG), the demand for data centres in Southeast Asia is expected to surge up to 6.5GW by 2030, which is three times the existing capacity as of 2023. According to BCG, the demand spike is driven by the region’s continued digital transformation, growing regional connectivity and an acceleration of the adoption of artificial intelligence (AI). The Singapore-Johor-Batam corridor is projected to meet half of the demand with an estimated capacity of up to 3.3GW by 2030.
To Jamie Khoo, CEO of DayOne, the landmark loan is a “strong endorsement” of the company’s ability to “deliver digital infrastructure at speed and scale”.
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“It reflects deep confidence in our long-term commitment to Indonesia and in the strategic importance of the DayOne NDP campus in strengthening the region’s digital backbone,” says Khoo. “Our campus will be home to Indonesia’s most advanced AI-ready data centre, designed to support the next wave of digital transformation.”
Amit Sinha, group head of telecommunications, media & technology, western multinational corporations (MNCs) and digital economy at DBS, called the transaction a “strategic investment” in the future of Southeast Asia’s digital economy.
“Expanding the region’s data centre capacity will accelerate the digital transformation of businesses within the region as they embrace solutions such as AI, cloud services and real-time processing,” says Sinha. “The strengthened digital connectivity between Indonesia and Singapore better positions both markets to capture growing regional demand for computing power.”
Harapman Kasan, wholesale banking director at UOB Indonesia, noted that the partnership between DayOne and INA aligns with Indonesia’s ambition to become a regional digital hub and with Batam playing a pivotal role in serving as a key gateway to Singapore.
As at 2pm, shares in DBS and UOB are trading at $44.83 and $35.20 respectively.
