Southeast Asia’s data centre market is booming, driven by AI and cloud demand, with Malaysia leading construction and other nations racing to attract investment

JAKARTA: New data centres are proliferating worldwide to meet soaring demand for artificial intelligence and cloud computing, with Asia among the fastest-growing regions.

Land and power shortages in Singapore have fuelled a tech infrastructure boom in neighbouring countries, attracting significant US and Chinese investment.

Malaysia now accounts for over half of all under-construction data centre capacity in five key Southeast Asian nations, according to market intelligence firm DC Byte.

This rapid growth followed Singapore’s moratorium on new data centre developments between 2019 and 2022.

“Malaysia moves faster largely because of its streamlined, standardised permitting system and predictable utility allocation,” said Michael Freeman of Turner and Townsend.

He noted this gives developers clarity on power, water, land use, and approval timelines.

The building surge has been particularly intense in Johor, which has since imposed stricter requirements on new facilities to prevent strain on local resources.

In contrast, Indonesia faces structural barriers including unreliable, coal-heavy power and slow renewable energy approvals.

“Indonesia’s comparatively slower speed stems primarily from unreliable and coal heavy power, slow renewable energy approvals, and grid access uncertainties,” Freeman added.

Despite these challenges, tech giants are investing heavily to serve Indonesia’s vast, tech-savvy population.

Microsoft is investing USD 1.7 billion in new cloud and AI infrastructure and recently showcased an operational data centre near Jakarta.

Google launched a new cloud region in Bangkok in January, projecting its data centres will contribute over USD 40 billion to Thailand’s economy within five years.

Singapore-based tech journalist Paul Mah noted that while many are rushing to Thailand, getting power to ideal locations remains a potential constraint.

The Philippines is also poised for a surge in data centre projects as companies target its developing digital economy.

KPMG highlights that emerging markets like Thailand, India, Indonesia, and the Philippines possess immense growth potential despite being at nascent stages.

“Vietnam has been a hot topic in the data center market for several years,” Freeman said, citing high demand and power availability. He expects an influx of multinational providers once initial projects demonstrate the permitting system is effective.

 The Sun Malaysia