South East Asia

The Southeast Asian data center market has experienced explosive growth, with total IT load capacity increasing from approximately 0.8 GW in 2019 to 1.7 GW in 2023. This rapid growth is driven by surging digitization demand and cloud service expansion, with the market expected to maintain its high growth trajectory. The Boston Consulting Group (BCG) highlights that, starting in 2024, the Southeast Asian data center industry will enter its 'third phase,' with new technologies like AI driving exponential capacity growth.

Singapore has long been the core data center hub in Southeast Asia, with over 70 data centers and a total capacity of approximately 1.4 GW as of 2023. Despite a moratorium on new data center approvals from 2019 to 2022, Singapore partially resumed approvals in 2022, granting about 80 MW of new capacity to operators like Equinix, DayOne, Microsoft, AirTrunk, and ByteDance.

Malaysia is rapidly emerging in the data center industry, with 32 operational data centers and 19 under construction by 2024. Thailand has around 30 operational data centers. Indonesia has seen significant growth, with about 79 data centers nationwide and a total capacity of 514 MW in 2023. Vietnam remains in early development, with only about 22 data centers.

Southeast Asia's data center landscape follows a "core hub + surrounding clusters" model, forming several regional clusters. The "SJB Corridor" (Singapore, Johor, Malaysia, and Batam, Indonesia) is the most prominent cross-border cluster. Singapore serves as the regional hub, with demand shifting to nearby Johor and Batam due to land and energy constraints, creating a tightly integrated cluster.

Malaysia's domestic data center landscape follows a "dual-core" model:

• Kuala Lumpur and Surrounding Areas: The Multimedia Super Corridor (e.g., Cyberjaya) houses many data centers, including early facilities by TM One and AIMS. Equinix recently established its KL1 data center in Cyberjaya.

• Johor: Due to its proximity to Singapore, Johor is rapidly emerging as a key data center hub, attracting major international investments like the YTL Green Data Center Park, planned for 500 MW capacity.

Thailand's data centers are mainly concentrated in Bangkok and its surrounding areas, with expansion towards the eastern coastal region. Operators in Bangkok have facilities in commercial and suburban industrial zones. Rising land costs are shifting focus to Chonburi, where the Thai government offers incentives in the Eastern Economic Corridor (EEC). In 2023, the Board of Investment (BOI) approved two large-scale data center projects in Chonburi with over 60 billion THB investment. DayOne is investing $1 billion USD to build a hyperscale data center park in Amata City Chonburi, positioning it as Thailand's next major data center hub.

Indonesia's vast geography makes the Jakarta metropolitan area the preferred data center location, with most facilities clustered around Jakarta and West Java. Indonesia is also developing the Nongsa Digital Park in Batam as an offshore data center hub for Singapore and international markets. The Indonesia Investment Authority (INA) is collaborating with China's DayOne to build a hyperscale data center platform in Batam, leveraging special economic zone policies for low-latency connections and investment incentives. In the future, Jakarta and Batam will form a "dual-center" model. Indonesia's plan to relocate its capital to Nusantara in Kalimantan may create new opportunities for data center expansion.

Southeast Asian governments recognize data centers as critical infrastructure and have introduced policies to attract investment.

Singapore: The Singaporean government prioritizes AI development, with a national AI strategy and substantial investments to enhance infrastructure and capabilities. Singapore introduced its first National AI Strategy in 2019, allocating over SGD 500 million through the "AI Singapore (AISG)" initiative. In the 2024 fiscal budget, the government committed over SGD 1 billion over five years to strengthen the AI sector, focusing on advanced computing chips, talent development, and AI centers of excellence.

Singapore offers an open and stable investment environment, encouraging digital infrastructure investment from local and foreign companies. The Economic Development Board (EDB) provides guidance and support, along with tax incentives and land-use benefits. There are virtually no foreign ownership restrictions in data centers and cloud computing, allowing foreign companies to operate independently.

Regulatory authorities balance investment promotion with risk management. A temporary moratorium on new data center approvals (2019-2022) was lifted and replaced with a pilot tender system that selectively approves projects based on stringent criteria, including exceptional energy efficiency (PUE

le 1.3) and support for critical computing workloads like AI, machine learning, and high-performance computing. Approved projects must also enhance Singapore's role as an international data hub.

Thailand: The Thai government explicitly identifies the digital industry as a strategic economic priority, aiming to establish a "regional digital hub." They offer investment incentives for data centers and cloud computing. Since 2022, the Thailand Board of Investment (BOI) has updated its incentive catalog. In June 2024, BOI added "Data Hosting Services" (Activity 8.2.4) as a key promoted category. Eligible projects can receive up to eight years of corporate income tax exemptions, duty-free equipment importation, and visa facilitation for foreign personnel. To qualify, projects must construct at least two ISO 27001-compliant data centers and have a minimum investment of THB 5 billion, targeting large-scale investors. In 2023, foreign direct investment (FDI) applications in data centers and cloud services surged, driving overall investment applications up by 35% to USD 33 billion. The government also offers similar incentives for software development and smart cities. Major projects by TikTok and AWS have enhanced Thailand's digital infrastructure.

The Thai government approved the "National Artificial Intelligence Strategy and Action Plan (2022-2027)," overseen by the Ministry of Higher Education, Science, Research and Innovation and the Ministry of Digital Economy and Society. This strategy aims to build a comprehensive AI ecosystem, promote AI adoption, and emphasize ethical and regulatory frameworks. In 2023, USD 216 million was allocated to support AI-related projects across 68 governmental agencies. In 2024, the second phase launched six flagship projects, including AI talent development (training 30,000 AI professionals) and development of a Thai Large Language Model (ThaiLLM), with a budget of THB 1.5 billion (approximately USD 43 million).

Thailand imposes restrictions on foreign investment in telecommunications infrastructure. Under the Telecommunications Business Act (2006), foreign entities are prohibited from holding controlling stakes in telecom network operations. Foreign telecom companies typically enter the Thai market through partnerships or minority shareholdings. However, in emerging sectors like cloud data centers, Thailand has adopted a more open stance, allowing foreign enterprises to establish wholly-owned data centers through BOI approval and benefit from land ownership privileges.

Overall, the Thai government maintains a proactive yet cautious approach, promoting investment through national strategies and tax incentives while ensuring secure and sustainable digital economic growth through legal frameworks like the Personal Data Protection Act (PDPA) and forthcoming AI regulations. The current policy environment is generally favorable, but foreign enterprises must carefully navigate local data privacy, cybersecurity, and ownership restrictions.

Malaysia: The Malaysian government maintains a highly supportive and open stance toward digital infrastructure, providing a favorable policy and regulatory environment. The National Investment Aspirations (NIA) framework (2021) aims to attract high-quality digital investments. The Malaysia Digital Economy Blueprint (MyDIGITAL) established a "cloud-first" strategy, aiming to migrate 80% of government data to the cloud by the end of 2022. The government swiftly introduced international cloud service providers while allowing local companies to participate. The Digital Investment Office (DIO) was established as a one-stop service center to accelerate digital infrastructure project approval.

Under the Communications and Multimedia Act 1998, if data center services involve network services, network facilities, or application services, foreign investors must obtain relevant licenses from the Malaysian Communications and Multimedia Commission (MCMC), with foreign ownership capped at 49%.

Data center investors in Malaysia can benefit from various incentive policies. The Malaysia Digital Economy Corporation (MDEC) offers Malaysia Digital (MD) certification to eligible companies, enhancing digital capabilities and driving economic growth. MD-certified companies can apply for incentives like exemptions from foreign equity restrictions, permits to hire foreign knowledge workers, income tax exemptions, investment tax allowances, and duty exemptions on multimedia equipment imports.

Malaysia introduced the DESAC Program, offering two qualification categories for investors: Digital Technology Provider (DTP) for cloud computing, data analytics, IoT, AI, and software development; and Digital Infrastructure Provider (DIP) for data centers, telecommunications infrastructure, submarine cables, and Internet Exchange Points (IXPs).

Data center projects must comply with data protection and security regulations, particularly the Personal Data Protection Act 2010 (PDPA), ensuring lawful processing of personal data. Amendments to the PDPA were approved in July 2024, with the effective date yet to be announced.

Indonesia: The Indonesian government is actively advancing strategies to establish the country as a leading data center hub in Southeast Asia. They have reinforced existing regulations, particularly Government Regulation No. 71 of 2019 (GR 71), governing electronic systems and transactions. On October 17, 2022, the Personal Data Protection Law (PDP Law), Indonesia's first comprehensive data protection legislation, was enacted to regulate personal data collection, use, and disclosure.

Under the PDP Law, data controllers and processors must fulfill obligations like processing personal data based on lawful grounds, implementing security measures, preventing unauthorized disclosure, and responding to data subjects' rights. Notably, the PDP Law does not impose data localization requirements, offering flexibility for data center operators. By improving its legal and regulatory framework, Indonesia provides greater legal certainty, enhanced business predictability, and fosters competition, laying a solid foundation for becoming a regional data center hub.

Overall, as Southeast Asia's digital economy flourishes and cloud computing adoption rises, the region's data center capacity and number of facilities will continue to grow rapidly.