Amazon plans 14 trillion-rupiah investment in Indonesia

Amazon will face stiff competition from its Chinese rival Alibaba, which opened its data centre in Indonesia earlier this year. PHOTO: REUTERS

JAKARTA - American tech giant Amazon is planning a 14 trillion-rupiah (SS1.3 billion) foray into Indonesia, in another major investment in the South-east Asian digital economy. The plan was conveyed to Indonesian President Joko Widodo by Amazon Vice-President Werner Vogels during their meeting in Jakarta on Friday (Sept 21), according to local news reports.

Finance Minister Sri Mulyani Indrawati, who was also in the meeting, told Tempo news that the investment will be spread over a 10-year period. It will see the introduction of the firm's cloud computing unit, Amazon Web Services (AWS), to the Indonesian market.

Cloud computing generally refers to hosting services and applications over the Internet on a pay-for-use basis, and the platform is seen as a key pillar for the growth of Indonesia's vibrant start-up scene. According to market research firm Statista, cloud computing spending in Indonesia is expected to hit US$1.3 billion (S$1.8 billion) by this year, up from just US$160 million in 2012.

But Amazon will face stiff competition from its Chinese rival Alibaba which opened its data centre - the first by a major cloud service provider - in Indonesia earlier this year as part of the company's plan to support local start-ups in the country.

Alibaba has also invested US$1.1 billion in Indonesia's e-commerce unicorn Tokopedia, and already owns Lazada, another online shopping business in South-east Asia.

The digital economy in the region is projected to be worth more than US$200 billion by 2025, with Indonesia - South-east Asia's largest economy - expected to make up the lion's share of that market.

Amazon's plan to enter the Indonesian market comes after it expanded to Singapore last year and will be the second major expansion in South-east Asia.

Its fulfilment centre in Singapore for its Prime Now fast delivery service is the firm's largest in the world, occupying some 100,000 sq ft at the Mapletree Logistics Hub in Toh Guan Road East.

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