A recent survey of Indonesia banks conducted by IDC Financial Insights has found that most banks expect a growth of 10 to 20 percent in their data volume per year. This is attributed to an exponential growth in data volume as individuals and businesses access the Internet and use online services in the fourth most populous country on earth.

The rapid growth is making it necessary for banks to expand their data center capacity, says Agus Kurniad, research manager at IDC Financial Insights in a commentary on The Jakarta Post. In addition, Indonesian banks that previously operated overseas data centers must repatriate the information due to Government Regulation No. 82/2012, an issue which Datacenter Dynamics highlighted in an earlier report on Indonesia here.

According to IDC Financial Insights, each Indonesian bank currently operates an average of 2.27 data centers that are physically located within the country. A bank with total assets of Indonesia rupiah (Rp) 1.4 trillion (US$119 million) in 2013, for instance, operates two data centers, while the top five Indonesian banks that participated in the survey currently operate three data centers.

The combination of surging organic growth and government regulation means that data center spending is set to increase within the country. Kurniad said he expected that most Indonesian banks will spend at least $250,000 on data center-related investments in the next two years. On average, Indonesian banks plan to increase their data center budget by 5 to 10 percent every year.

Kurniad offered a few anecdotes from the survey, citing how “one of the largest Indonesian banks” intend to invest more than US$1 million in its data center in the next 12 to 24 hours due to the inability of its current data centers to meet its needs.

One “very large” Indonesia bank have also recently moved data from its Singapore data center to a new disaster recovery data center in Indonesia as a direct result of the government regulation, said Kurniad, and a foreign-owned bank has attributed it as a major reason to upgrade its data center capacity, and has prioritized on-shoring activities.

Of course, organizations setting up new data centers in Indonesia do face their fair share of challenges. This includes a general lack of network infrastructure and an unstable power supply compared to neighboring countries such as Singapore and Malaysia.

Indeed, a separate IDC data center index ranking released a few months ago had placed Indonesia in the bottom three of the fastest growing Asia Pacific regions in terms of its suitability for data centers.