Indonesia eyes 'sovereign AI fund' to drive development, document shows

JAKARTA (Reuters) -Authorities overseeing the development of artificial intelligence in Indonesia have proposed a "sovereign AI fund" to finance the archipelago's ambitions to become a regional hub for the fast-growing technology, a government document showed.

Last month, Reuters reported that Southeast Asia's largest economy would release its first national roadmap on AI in a bid to attract foreign investment as it looks to join the global AI and chip-making race.

The race has seen neighbouring Malaysia secure billions of dollars from global tech firms seeking to build critical infrastructure to meet growing demand for cloud and AI services.

The Indonesia strategy, released in the form of a 179-page white paper seen by Reuters, recommends, among other things, a sovereign AI fund mainly handled by the country's new sovereign wealth fund Danantara Indonesia, which controls over $900 billion in assets.

Danantara Indonesia did not immediately reply to a request for comment.

The paper did not specify the amount that would be needed, but estimated a 2027 to 2029 timeline to set up the fund, and a public-private model to finance Indonesia's AI push. It also suggests increasing fiscal incentives for domestic investors in AI, without providing details.

The strategy paper, which the communications and digital ministry said still awaits public feedback before the final draft, maps Indonesia's computational readiness for AI and makes recommendations for AI-related policy strategies until 2030.

"Indonesia right now is in the early stages of AI adoption," the document reads. Industry players including Chinese giant Huawei and Indonesia's biggest technology company GoTo contributed to the report.

An April report by the Boston Consulting Group said ASEAN nations were positioned for substantial AI-driven gains, with GDP contributions ranging from 2.3% to 3.1% by 2027, and Indonesia could see the highest impact in terms of absolute gross domestic output growth.

The roadmap also details challenges for Indonesia including a lack of talent, low research funding, uneven connectivity outside big cities, risks of misinformation and data leaks.

Global tech companies have courted the AI drive in Indonesia, including Nvidia and Microsoft.

(Reporting by Stanley Widianto; Editing by Gibran Peshimam, Alexandra Hudson)

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