Indonesia is exploring the creation of a “sovereign AI fund” as part of its long-term push to position itself as a major artificial intelligence hub in Southeast Asia. The proposal, outlined in a 179-page strategy document seen by reporters, envisions a publicly and privately funded vehicle overseen by Danantara Indonesia, the nation’s sovereign wealth fund, which already manages assets exceeding $900 billion.

While the paper stops short of specifying the fund’s size, it suggests a tentative launch window between 2027 and 2029. The plan includes fiscal incentives aimed at spurring domestic investment in AI, though exact details are still under discussion.

Also Read: The Humanoid Revolution in India Just Got Real

Part of Indonesia’s First National AI Roadmap

The proposed fund is central to Indonesia’s first national AI roadmap, slated for release later this year. The roadmap comes as Southeast Asian nations compete fiercely for investment in data centres, semiconductor production, and AI research. Neighbouring Malaysia has already attracted billions from global technology giants expanding cloud infrastructure and AI capabilities. Singapore and Vietnam are also intensifying their investor incentives.

According to an April analysis by Boston Consulting Group, ASEAN economies could see GDP growth of 2.3 percent to 3.1 percent by 2027 as AI adoption accelerates — with Indonesia, the region’s largest economy, poised for the biggest absolute gains.

Challenges & Gaps 

Despite the potential, Indonesia’s strategy paper acknowledges significant challenges. Demand for AI engineers, data scientists, and software developers is outpacing supply, and the country’s research and development budgets remain modest compared to regional peers. Connectivity outside major cities also lags, limiting access to the high-speed internet necessary for advanced AI applications.

Also Read: Perplexity Brings Video Creation to the Next Level

The roadmap warns of the risks posed by misinformation, cyberattacks, and data breaches — issues that have grown more pressing as AI services expand globally. The communications and digital ministry has invited public comment before the final roadmap is published.

Foundation for AI Growth

The strategy assesses Indonesia’s “computational readiness”, considering factors such as supercomputing capacity, energy needs, and skilled workforce availability. It underscores the importance of strong partnerships between academia, government, and the private sector.

Also Read: Rapido Rides Land at Noida International Airport

If approved, the sovereign AI fund would finance large-scale projects, including training centres, research hubs, and cloud computing infrastructure. Officials hope such investments will entice global tech firms to set up local operations, driving technology-led economic growth. Danantara Indonesia—the nation’s second-largest wealth fund after the Indonesian Investment Authority—has yet to publicly comment on the proposal. However, its involvement could add significant weight to the initiative.

Race Against Time

Analysts say Indonesia could emerge as a formidable AI innovator in Southeast Asia if the roadmap’s recommendations are executed promptly. But with regional rivals already moving fast, delays could allow others to cement their lead while Indonesia risks falling behind.