There’s a global race among countries seeking technological advancement in artificial intelligence, and Indonesia is showing interest in securing a prominent position specifically in the chip supply chain. This competition is particularly taking place with Indonesia’s neighboring countries, which are benchmarks in development and innovation. What can we expect from this new national AI strategy?
National strategy for AI growth
Indonesia will finish work next month on its first national strategy on artificial intelligence in a bid to attract foreign investment, an official said, as Southeast Asia’s largest economy looks to join the global AI and chip-making race. The move follows neighbouring Malaysia’s push to establish itself as a regional hub for AI development, securing billions of dollars from global tech firms seeking to build critical infrastructure to meet growing demand for cloud and AI services.
Indonesia’s AI roadmap will be the first comprehensive AI document in the country, the fourth largest in the world by population, since a smaller ethics guideline in 2023, Deputy Minister of Communications and Digital Nezar Patria told Reuters in an interview at his office on Monday. “The roadmap will help AI developers navigate (Indonesia’s market), including on infrastructure and also on computational clusters,” he said, adding that it would detail AI adoption in sectors such as health and agriculture.
Nezar said the roadmap was designed to establish the country’s AI ecosystem. “This will give an idea to investors about the potential of AI use in Indonesia,” he said. “We’re hoping they are interested in investing their capital in Indonesia.” An April report by Boston Consulting Group said ASEAN nations were positioned for substantial AI-driven gains, with GDP contributions ranging from 2.3% to 3.1% by 2027, and Indonesia projected to see the highest impact in terms of absolute gross domestic output growth.
Beginning of investments in AI
Despite having major technology companies operating in the country, such as Microsoft and Nvidia, advances in infrastructure and production capacity are still slow. The country faces the challenge of transforming specific initiatives, such as the development of local businesses, into structured and lasting policies.
But despite some investments, development has been slow in Indonesia compared to other parts of the region.NvidiaNVDA.O was involved with Indonesia’s biggest tech company GoTo Gojek Tokopedia GOTO.JK for a large language model service last year, and supplied its chips to the telecommunications company Indosat ISAT.JK.
Microsoft MSFT.O also said last year it would invest $1.7 billion over the next few years into expanding cloud services and AI in Indonesia. Separately, Indonesia is also pitching foreign firms on its critical minerals, which are needed for hardware development, in order to secure a bigger share of the global semiconductor supply chain, he added. Indonesia has offered the United States the chance to jointly invest in a critical minerals project as part of its tariff negotiations. Washington has sought to find alternative suppliers to China, which dominates the sector but in April added some rare earths to its export restriction list in retaliation for U.S. tariffs
The US’s strategic interest in diversifying its partnerships may align with Indonesia’s plans. Opening this gateway to joint projects strengthens diplomatic ties and may lend more weight to tariff negotiations with other strong economies. Given the US’s recent conflicts with China, Indonesia’s position may be favorable for the production of technological inputs.
An integrated effort to lead in Asia
Indonesia is now seeking to align politics, economics, and innovation in a unified direction, and with this national artificial intelligence strategy, the country is taking a positive first step toward a promising future. The plan’s success will depend not only on attracting investment but also on ensuring effective implementation, regulatory transparency, and the development of local talent.
GCN.com/Reuters