Investment, equipment and operations
Korean construction and ICT companies are expanding their overseas data center activities beyond construction into integrated projects combining investment, essential equipment and operations. Korean companies have secured about $107 million in contracts through participation in a $320 million AI data center project being pursued in Jakarta, Indonesia, covering investment, mechanical, electrical and plumbing (MEP) systems, cooling and battery supply, and operations.
The project is attracting particular attention as an example of Korean companies making a substantial entry into the construction and operation of overseas commercial data centers. While overseas construction has traditionally centered on civil engineering and plant construction, AI data centers are high-value-added infrastructure combining electricity, cooling, batteries, ICT and operational technology. If accompanied by growing AI and cloud investment in Southeast Asia, this could develop into a new export model involving joint overseas entry by construction, ICT, power and equipment companies.
The Korea Overseas Infrastructure & Urban Development Corporation (KIND) announced on October 23 that the AI-Ready data center development project pursued with Korean companies in Jakarta, Indonesia, had generated about $107 million in overseas contracts.
The project involves building and operating an AI-Ready data center in Jakarta with one basement level, 11 above-ground floors and a total floor area of about 49,000 square meters. The total project cost is about $320 million.
Korean investors, including the Plus Indonesia IDC Fund, S Fund and KIND, are participating as joint project owners alongside SM+, an affiliate of Indonesia's Sinar Mas. KIND invested $14 million in equity to participate in the project.
Korean companies' participation extends beyond construction. LG CNS will install and operate the data center's mechanical, electrical and plumbing systems, securing at least $70 million in business, including $64 million for engineering, procurement and construction (EPC) and $6 million for operations and maintenance (O&M).
Korean products will also be used for essential equipment. LG Electronics will supply cooling and air-conditioning equipment for the data center, while LG Energy Solution will supply batteries used in uninterruptible power supply (UPS) systems.
Given the importance of cooling and power equipment in AI data centers, participation in equipment supply has significance beyond exports of ancillary facilities. As high-performance servers and GPUs used for AI computing consume more electricity and generate more heat, data center competitiveness is increasingly being determined by reliable power supply, cooling efficiency and operational technology rather than by the building itself.
Accordingly, the overseas data center market is changing from a market primarily for construction companies into a complex infrastructure market combining construction, ICT, power, cooling, batteries and finance. The significance of this project also lies in linking investment, construction, equipment and operations within a single business structure, rather than having Korean companies supply equipment individually.
Another feature is the connection between a public institution's equity investment and private companies' overseas expansion. Data centers require substantial initial investment and comprehensive consideration of power availability, permits and long-term operating returns, making it difficult for a company to enter a new overseas market alone. KIND's investment participation shares some early-stage project risks and helps secure Korean companies' participation in construction, equipment supply and operations.
Government support and regional expansion
The government also regards data centers as a new growth area for overseas construction and is establishing related support arrangements.
The Ministry of Land, Infrastructure and Transport established the AIDC Construction Promotion Forum, involving about 80 organizations from industry, academia, research and government, to respond to rising data center demand driven by the expansion of AI. The forum is identifying policy priorities focused on manufacturing and construction, operations and maintenance, institutions and standardization, and overseas expansion and financial support.
The Jakarta project is significant in connecting these discussions to an actual overseas project. In particular, it demonstrated the potential for Korean construction companies' overseas business to move beyond traditional contracting toward projects that also secure development, investment, equipment supply and operating returns.
The Indonesian market also has considerable strategic significance. If data center investment increases as data usage grows and cloud and AI services expand, the Jakarta project's construction and operating record could serve as a reference when entering other Southeast Asian markets.
Power, financing and follow-on contracts
However, challenges remain in turning a single project into a sustained export model.
AI data centers require higher power density, a stable electricity supply and more efficient cooling than conventional data centers. National grid conditions, electricity prices, access to renewable energy, data regulations and permitting requirements also determine commercial viability. These factors explain why data center construction capabilities alone are insufficient to secure an early position in overseas markets.
In particular, as AI data centers' electricity consumption grows, grid connections and access to environmentally friendly electricity are likely to become central to a location's competitiveness. Technologies that improve power usage effectiveness through more efficient cooling and provide reliable emergency power systems will also determine competitiveness in securing follow-on contracts.
Financial support is also important. Given data centers' large initial investments and long payback periods, Korean companies seeking to participate overseas as project developers need financing structures combining policy finance and private capital. An identified challenge is to establish a structure in which public institutions share risks during initial market entry and subsequently attract private investment, rather than investing directly in every project.
The criteria for evaluating future performance also need to extend beyond contract values alone. Important considerations include whether the project secures stable returns during actual operations and leads to subsequent exports of Korean cooling, power and battery equipment, and whether its operating record in Jakarta results in additional project contracts in Southeast Asia.
KIND plans to use this project to expand its investment scope from traditional transport, urban and plant infrastructure into digital infrastructure such as data centers, and to identify additional overseas projects linked to AI and big data. The Ministry of Land, Infrastructure and Transport also plans to continue institutional and financial support for overseas data center expansion.
The Jakarta project's significance is viewed as extending beyond Korean companies building a single data center overseas. The analysis is that it tests a model for entering overseas markets by combining construction, ICT, cooling and power equipment, batteries, finance and operations into a single export package.
An industry expert said, "If the Jakarta project's operating performance can be established as an actual overseas track record and linked to follow-on projects in Southeast Asia, AI data centers could become a new source of contracts for Korea's overseas construction sector, following plant and transport infrastructure." The expert emphasized, "Conversely, if it does not lead to follow-on contracts, it could remain a one-off project. The next challenge is therefore to create a sustainable business model combining competitive power and cooling technologies, financial support and local operating capabilities."
Original Korean article: energydaily.co.kr
English brief by Korea Wind Intelligence, koreawindintel.com
