Tech giants plan to invest heavily in South East Asia, boosting regional economies, from Singapore to Malaysia. Demand is expected to grow by about 20 per cent per year for the next five to seven years. Microsoft has already pledged over two billion dollars in Malaysia for cloud infrastructure and AI.
Singapore (AsiaNews) – The world’s largest technology companies are looking to Southeast Asia as a potential hub to build global data centres at a time when the demand for infrastructure and computing power to fully enable artificial intelligence (AI) resources is rapidly increasing.
Analysts believe that planned new investments will help drive the region’s economies, creating skilled jobs in data centre construction, design, and maintenance. At the same time, this will develop talents specialised in AI, cybersecurity, data science, and data management.
The investments will also improve the region’s digital infrastructure, allowing small businesses and large institutions to store their data locally, significantly reducing downtime and increasing data sovereignty.
A report published in October by Maybank shows that demand for data centres is expected to grow by about 20 per cent per year for the next five to seven years because AI-supported innovations such as searches on ChatGPT will need four to five times more processing capacity compared to traditional Internet searches.
Data centres are large facilities built to house servers, data storage systems, and networking equipment dedicated to better Internet and telecommunications services.
This also enables popular online activities such as gaming, live-streaming, and investing, as well as more advanced technologies such as cloud computing and artificial intelligence.
With lower costs, energy availability, and geopolitical neutrality, Southeast Asia is emerging as an ideal region for tech players, with five countries offering the greatest potential, namely Singapore, Malaysia, Thailand, Indonesia, and Vietnam.
However, while Singapore is the preferred destination to host data centres due to superior infrastructure and a stable regulatory regime, local authorities imposed a three-year stop on data centre construction between 2019 and 2022 to assess their environmental impact.
As a result, Malaysia snapped up most of the new investment over this period and now expects facilities with a capacity of around one gigawatt (GW) to come online over the next two years, which is double its current data centre capacity.
In addition, other projects have also been announced for the next five years with a total capacity of 3GW, the RHB Bank said. This potential is far greater than Singapore’s data centre capacity, which is currently around 1.4GW.
Microsoft is one of the tech giants investing in Malaysia; in May it announced plans to invest US$ 2.2 billion over the next four years to build cloud and AI infrastructure in the country.
Last August, Amazon Web Services (AWS) expressed its intention to invest about US$ 6.2 billion to create a data centre and a cloud region in the country.
The cloud service provider is also developing a similar region in Thailand, with US$ 5 billion that would turn the kingdom into the fourth AWS region in ASEAN[*] after Singapore, Indonesia, and Malaysia.
Google said last month it would invest US$ 1 billion to build a data centre and cloud region in Thailand.
By 2028, RHB expects Malaysia to account for more than half of the data centre processing power in the five major Southeast Asian markets.
Data centres in Johor State will make up the bulk of the inventory with more than 2.3GW. This could put Malaysia in close competition with Singapore as a data centre hub for the region.
[*] The 10-member Association of Southeast Asian Nations.
