As Indonesia’s economy grows and its technology sector becomes more sophisticated, specifically in artificial intelligence (AI), the Southeast Asian archipelago is set to become an important trade partner for the United States, creating new business opportunities for American companies like Microsoft and NVIDIA across various sectors that employ AI-powered solutions.
Microsoft recently announced a $1.7 billion investment over the next four years to develop new cloud and AI infrastructure in the maritime country, representing Microsoft’s largest investment in its 29-year history in Indonesia. The funds will go towards establishing Microsoft’s first data center region in the country to meet surging demand for computing services. The investment also includes major AI skill building initiatives to train 840,000 Indonesian workers, as well as support for the country's burgeoning developer community. These efforts aim to help Indonesia achieve its “Golden Indonesia 2045 Vision,” of becoming a global economic powerhouse powered by AI.
Additionally, NVIDIA plans to invest $200 million to build an AI Talent Development Center in Indonesia, as part of its push to expand into Southeast Asia’s growing AI market. This investment in Indonesia is just a piece of NVIDIA’s overarching regional strategy, as it recently committed an investment of $4.3 billion in Malaysia for AI development this past December (2023).
Indonesia’s National AI Strategy
As Southeast Asia’s largest economy rapidly embraces artificial intelligence (AI), Indonesia is positioning itself as data regional hub, spearheading technological advancements and economic growth. The government launched Indonesia’s National Strategy for Artificial Intelligence 2020-2045, identifying five key focus areas: (1) healthcare, (2) bureaucracy reform, (3) food sufficiency, (4) education and research, and (5) mobility and smart cities.
President Joko Widodo remarked, “Whichever country controls AI can potentially control the world.” He directed the Agency for the Assessment and Application of Technology (BPPT) to lead Indonesia’s technological intelligence with AI to support the economy in “an unconventional, yet effective manner.” Andreas Tjendra, Director of AI Innovation at KORIKA*, highlighted AI's role as a major facilitator for government programs such as Making Indonesia 4.0, whose purpose is to advance the country towards becoming a digital economy. According to a study by Kearney, the use of AI will contribute $366 billion to Indonesia’s economy by 2030.
In terms of the health sector, Andreas mentioned, “AI-driven healthcare solutions can extend healthcare services to remote areas.” He added that it could provide individualized treatment suggestions and remote diagnostics. In sustainable development, AI technology like remote sensing and predictive analysis enhances the “monitoring and management of environmental resources,” and ensures food security.
Investment in AI talent is crucial for preparing the country’s workforce for an integrated AI-powered economy through promoting a culture of lifelong learning and upskilling. According to the Georgetown Center for Security and Emerging Technology, Indonesia is among the top five STEM (Science, Technology, Engineering, and Mathematics) graduate-producing countries in the world, following China, India, United States, and Russia. Sam Altman, CEO of Open AI, in a joint video statement with the Consulate General of Indonesia in San Francisco, said “The young people in Indonesia are a huge asset, given the size of the country, and the ability of technical talents”. Following his own trip to Indonesia in 2023, he was amazed by “the energy and quality of developers and entrepreneurs building AI technology.”
The country is home to the third-largest developer community on Microsoft-owned software development platform GitHub in the Asia-Pacific region, after India and China, with over 3.1 million developers. Although these investments and initiatives appear beneficial, there are legitimate concerns of job displacement. McKinsey estimates that 23 million jobs could be displaced by automation by 2030. However, this loss of jobs could be more than compensated for by the creation of 46 million new jobs at the same time, effectively doubling employment opportunities, particularly in the manufacturing and construction industries.
Currently, there is no agency or institution to oversee and control the development of AI in Indonesian society. However, Article 39 of Law 11/2019 mandates that all development of science and technology must adhere to a code of ethics. In December 2023, Jakarta issued two AI ethical guidelines: the Circular Letter No. 9 of 2023 and guidelines from the Financial Services Authority (OJK). Andreas emphasized that the top priorities for ethical issues should be “algorithmic bias, data privacy, and societal effect.”
Overall, while substantial investments from US tech giants like Microsoft and NVIDIA mark a significant milestone in Indonesia’s AI journey, there is still a great deal of work to be done to ensure that the development and implementation of AI technologies adhere to ethical standards and mitigates risks to Indonesian livelihoods. As the country continues to establish itself as a regional AI powerhouse, the focus must remain on creating a balanced approach that safeguards against potential negative impacts on employment and societal well-being. The National Strategy for AI 2020-2045 lays out ambitious goals across various sectors, but the true challenge lies in executing these plans while maintaining a commitment to ethical principles.
*KORIKA is an Indonesian organization established in 2021 dedicated to advancing AI.
The authors would like to thank Andreas Tjendra, Director of AI KORIKA, for giving his time and valuable insights for this article.
Rocco Cartusciello is a participant in the Young Professionals Program at the East-West Center in Washington, DC. and a graduate student at Georgetown University Walsh School of Foreign Service, enrolled in the Master of Arts in Asian Studies program, focusing on Southeast Asian Affairs.
Arrizka Faida is a Spring 2024 Young Professional at the East-West Center in Washington DC. She received her master’s degree from Cornell University, Brooks School of Public Policy, studying MPA in Science, Technology, and Infrastructure Policy.