Indonesia’s AI Paradox: One of the World’s Most Active Users, Yet the Biggest Profits Flow Overseas

Indonesia has emerged as one of the most enthusiastic adopters of artificial intelligence (AI) in the world. From small businesses automating customer orders to everyday users relying on AI chatbots for productivity and information, the country’s embrace of AI has been remarkably fast and widespread. Yet beneath this impressive adoption lies a troubling paradox: while Indonesians are among the most active AI users globally, the largest economic rewards continue to flow to foreign companies.

This issue was highlighted during the discussion forum “Bridging the AI Gap for Indonesia’s Data Sovereignty” held in Jakarta, where Samuel Lawrence, Representative of Axioo Indonesia, described the imbalance with a striking analogy. According to him, Indonesia is like a farmer planting rice on its own land, only to watch the harvest fill someone else’s granary. In other words, Indonesia generates immense AI usage and demand, but the financial benefits are largely captured by global technology giants rather than the domestic economy.

Data from the Stanford AI Index Report reinforces this reality. Public optimism and acceptance of AI in Indonesia reportedly range between 77 and 80 percent, placing the country among the top three most active AI adopters in the world alongside India and China. This figure stands in sharp contrast to many Western countries, including those in Europe and the United States, where public acceptance remains significantly lower. Indonesia’s rapid adoption is largely driven by its flexible business environment, particularly among small and medium-sized enterprises (SMEs), which increasingly use AI tools to streamline operations, automate order management, and improve customer service.

At the consumer level, AI-powered conversational platforms such as ChatGPT have also gained massive traction, consistently placing Indonesia among the top global user markets since the technology became mainstream. However, while usage numbers are impressive, Indonesia’s contribution to the development of foundational AI technology remains minimal.

One of the biggest challenges lies in research and development (R&D) investment. Indonesia currently allocates only around 0.28 percent of its Gross Domestic Product (GDP) to R&D, a figure that lags far behind several neighboring countries as well as advanced economies like South Korea, which invests around 5 percent of its GDP in research. This lack of investment has serious consequences. Without strong R&D infrastructure, Indonesia remains largely absent from the global race to develop advanced AI models, particularly Large Language Models (LLMs), which serve as the backbone of modern generative AI.

As a result, Indonesia has become more of a consumer than a creator in the AI ecosystem. While domestic users generate demand, the profits accumulate elsewhere—primarily in the United States, where technology firms dominate AI infrastructure, chip manufacturing, and cloud computing services. The enormous valuation of companies like Nvidia illustrates how concentrated the economic gains from AI have become. A significant share of global AI-driven economic growth is currently centered around a handful of foreign corporations, leaving countries like Indonesia dependent on imported technology.

Still, this situation is not without hope. According to industry observers, the global AI landscape has begun to shift since mid-2025. The focus is no longer solely on building increasingly massive AI models with trillions of parameters. Instead, the emphasis is moving toward efficiency, smarter frameworks, and agentic AI systems capable of autonomous decision-making. This shift could create a valuable opportunity for emerging markets like Indonesia.

The growing efficiency of AI models means that businesses may no longer need to rely entirely on expensive overseas cloud infrastructure. Instead, AI can increasingly be deployed through local, on-premise servers, offering stronger control over data security, regulatory compliance, and operational transparency. For Indonesia, this could be a game-changing development, especially in sectors where data sovereignty and privacy are becoming strategic concerns.

Recognizing this opportunity, local technology players such as Axioo are moving aggressively into Indonesia’s AI infrastructure market. By providing competitive local hardware solutions, they aim to help transform Indonesia from a passive consumer market into an active participant in building its own AI ecosystem.

Indonesia stands at a critical crossroads. Its population has already demonstrated extraordinary readiness to adopt AI, but adoption alone is not enough to secure long-term economic benefits. To truly compete in the AI era, the country must strengthen research investment, develop domestic talent, and build independent technological infrastructure. Otherwise, Indonesia risks remaining one of the world’s most enthusiastic AI users while continuing to enrich economies abroad rather than its own.