DBS and UOB approves US$411M loan for Batam data centre

DBS and UOB has approved a US$411M loan to finance a data centre campus in Batam. Here's what you should know about this new data centre hotspot.

On Thursday, the banks jointly provided a 6.7 trillion rupiah ($411M) loan to DayOne (Formerly GDS International) and the Indonesia Investment Authority (INA).

The investment

This is the largest ever rupiah-denominated data centre financing deal, says DBS and UOB.

Proceeds of the loan will be used to develop and operate three data centres located in the Nongsa Digital Park in Batam, Indonesia.

But why Batam? And what's happening at Nongsa Digital Park?

A new cluster of data centres

Batam is the site of a growing cluster of data centres in Southeast Asia. Today it hosts around a dozen data centres, almost all built over the last few years.

These data centres aren't small at all. Here's some of them and their fully built-up capacity:

• PDG - 96MW.
• BW - 120MW.
• NeutraDC - 51MW.
• DayOne and INA - 72MW.
• Golden Digital Gateway - 25.2MW.

What of Nongsa? It's the location for a new and growing number of data centres, including all the ones above but NeutraDC's data centre.

Why Batam?

As I wrote previously, Batam has distinct advantages as a data centre location.

• Designated Free Trade Zone (FTZ).
• 13 subsea cables; more on the way.
• Future access to renewable energy.
• Away from earthquake-prone areas.

Importantly, it's just 20 kilometres south of Singapore, which means latency is negligible - crucial for latency-sensitive enterprise apps. And with its lower land and power costs, Batam is ideally positioned to capture spillover demand.

That's what investors are betting on anyway.

As I wrote previously, I've heard unverified reports that Nongsa is looking to expand the park.

The irony: Over a decade after the Singapore Data Centre Park was met with lukewarm response, data centres located in close proximity are finally in vogue.

Some shortcomings

Of course, not everything is perfect. One complaint I've heard is how things are pricier in Batam compared to other parts of Indonesia. That's because practically everything is imported.

Proponents say the 1-hour ferry ride from S'pore is more reliable than crossing the congestion-plagued causeways to Johor.

But what if one must visit the data centre in the middle of the night for an emergency? It remains to be seen if ferry operators will eventually offer around-the-clock timings.

What do you think of the potential of Batam as a data centre location?