DXN’s Indonesian JV Faces Regulatory Hurdles Despite Growth Potential

Strategic Partnership to Capture Indonesian Market

DXN Limited, a specialist in prefabricated modular data centres, has taken a decisive step to expand its footprint in Southeast Asia by signing a non-binding Memorandum of Understanding (MOU) with Super Sistem Indonesia (SSI). This agreement sets the stage for a joint venture (JV) headquartered in Singapore, equally owned by both parties, aimed at capitalising on Indonesia’s burgeoning digital infrastructure sector.

Indonesia’s digital economy is surging, fuelled by government initiatives like the 'Making Indonesia 4.0' strategy, which seeks to transform the nation into a leading digital powerhouse. With a population nearing 285 million and one of the largest internet user bases globally, the demand for local data storage and processing facilities is intensifying, especially under stringent data sovereignty regulations.

Localisation as a Competitive Advantage

The JV will operate a manufacturing facility in Jakarta, enabling DXN and SSI to produce modular data centres locally. This localisation is critical given Indonesia’s regulatory environment, which imposes import tariffs ranging from 20% to 40% on data centre equipment. By manufacturing domestically, the JV can bypass these tariffs, comply with local regulations, and offer competitively priced, high-quality solutions tailored to the Indonesian market.

Moreover, the JV structure allows DXN to navigate regulatory complexities without ceding control or compromising on quality, positioning the company to capture a significant share of the expected growth in modular data centre demand.

Growth Prospects and Market Dynamics

The partnership targets a revenue opportunity of approximately US$7 million over the next three years, with most growth anticipated in years two and three. This forecast aligns with Indonesia’s rapid expansion in digital infrastructure, where data centre capacity is projected to nearly double from 970 MW to 1,800 MW by 2028.

DXN’s Managing Director, Shalini Lagrutta, highlighted the strategic importance of this move, noting that the JV not only secures modular orders from SSI but also opens doors to additional customers seeking cost-effective manufacturing solutions in Southeast Asia. The collaboration taps into the momentum created by global tech giants and regional investors who view Indonesia as a prime destination for digital infrastructure investment.

Navigating Challenges and Looking Ahead

While the MOU is non-binding and future purchase orders depend on JV execution and market conditions, the initiative reflects DXN’s proactive approach to overcoming barriers such as import tariffs and regulatory compliance. The JV’s success will hinge on its ability to scale manufacturing efficiently and secure a robust pipeline of orders beyond SSI.

As Indonesia continues to embrace digital transformation, driven by e-commerce, fintech, cloud computing, and emerging technologies like AI, the demand for modular data centres is set to accelerate. DXN’s partnership with SSI positions it well to ride this wave, but the coming months will be critical in translating strategic intent into tangible growth.