Data Centers in Palembang
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Palembang – Emerging Digital Hub for Sumatra
Palembang is establishing itself as a key digital gateway for the island of Sumatra, offering a strategic alternative to the congested Jakarta market. For businesses targeting western Indonesia, Palembang provides a cost-effective location with direct access to a growing economic region, ensuring lower latency and improved service delivery for millions of users.
Palembang: At A Glance
| Factor | Rating / Data | Notes |
|---|---|---|
| Global Connectivity Grade | B | Developing international connectivity options with reliable national links. |
| Direct Cloud On-Ramps | 0 – as of September 2025 | Connect via private extension to the nearest major hub in Jakarta. |
| Power Cost | IDR 1,650.00-1,800.00/kWh | Fossil fuels dominate the grid; renewables are a growing portion. |
| Disaster Risk | Moderate (4.5/10) | Primary risks include flood and earthquake; tsunami risk is regional. |
| Tax Incentives | Varies | DC-specific incentives may exist in designated zones, but are not universally applied. |
| Sales Tax | 12% VAT – as of September 2025 | Standard national value-added tax rate applies to services. |
Network & Connectivity Ecosystem
Carrier Density & Carrier Neutrality: Palembang supports a growing ecosystem of national and regional providers, with over 15 carriers available as of September 2025. Carrier-neutral facilities are present, providing essential interconnection options for building resilient network architectures.
Direct Cloud On-Ramps: There are no direct public cloud on-ramps located within Palembang as of September 2025. Businesses require private network connections, such as PNI or wavelength services, to access cloud provider fabrics in the nearest major hub, Jakarta.
Internet Exchange Points (IXPs): Peering is primarily conducted through private connections or via the Indonesia Internet Exchange (IIX) in Jakarta. The absence of a local public IXP means traffic is often routed through the national capital for interconnection.
Bare Metal: Bare metal server options are available in Palembang, typically through regional providers. For global platforms, services from providers like Hivelocity or Leasebew can be connected via the national network infrastructure.
Power Analysis
Average Cost Of Power: Industrial electricity rates in Palembang are estimated between IDR 1,650.00 and IDR 1,800.00 per kWh as of September 2025. These competitive power costs, relative to other regional hubs, can significantly reduce operational expenditures for high-density deployments.
Power Grid Reliability: The local power grid is reliable for commercial and industrial use. Data centers in the region are supported by redundant power feeds and maintain industry-standard N+1 or 2N UPS systems and generator backup to ensure high levels of uptime.
Market Access, Business & Tax Climate
Proximity To Key Business Districts: Data centers in Palembang serve the city's primary commercial centers and industrial estates. This proximity is critical for industries like manufacturing, agriculture, and local government, which require low-latency access to digital services.
Regional Market Reach: Palembang acts as a digital hub for the 60 million people on the island of Sumatra. Deploying infrastructure here reduces latency and improves application performance for users across this large and economically significant region.
Tax Advantage For Data Centers: Indonesia offers tax incentives for data centers operating within designated Special Economic Zones (SEZs). These benefits can include relief from certain taxes and regulatory duties, directly lowering the total cost of ownership for operators.
Natural Disaster Risk
Palembang has a moderate overall disaster risk profile, with a score of 4.5 out of 10 as of September 2025. The primary environmental threats are driven by high exposure to specific, localized events.
Key natural hazards include:
- Tsunami: 9.3/10 (A regional risk for coastal Sumatra)
- Earthquake: 8.9/10
- River Flood: 8.4/10
- Coastal Flood: 8.1/10 (Primarily affects coastal areas, less direct risk to the city center)
