(Photo: iStock)
AI drives Southeast Asia data center boom. Johor Bahru, at the Malaysia-Singapore border, is emerging as Southeast Asia's fastest-growing data center city. This rise could position Malaysia to surpass Singapore as the region's largest hub. Neighboring Thailand is also in the race, with ST Telemedia Global Data Centres (STT GDC) highlighting Thailand's advantages, despite its slower growth compared to Malaysia.
Kasikorn Research Center predicts that Thailand's data center investments will reach $7.8 billion between 2024 and 2027, with an annual growth rate of 31%. Alongside local energy companies and real estate developers, multinational tech giants like Amazon, Google, Microsoft, Alibaba, and Tencent are vying for a foothold. Microsoft plans to invest $1 billion to establish its first Azure region data center in Thailand.
STT GDC Thailand's CEO, Supparat Sivapetchranat Singhara na Ayutthaya, attributes Malaysia's data center growth to the overflow effect from Singapore's limited capacity and government subsidies. He notes that while Thailand's growth lags, its political stability, open and neutral stance towards the US and China, and significant renewable energy potential provide a stable development path and long-term investment environment. He forecasts that by the end of 2024, Thailand's data center capacity will reach 357.45 MW and exceed 400 MW by the end of 2025.
Adam Simmons, an analyst at global data center research organization Dgtl Infra, believes Thailand's ample power supply, with a total installed capacity exceeding 50,000 MW—the highest among Southeast Asian countries—favors data center development. He estimates Thailand's data center investment will hit THB 110 billion (2.99 billion USD) by the end of this year.
Thailand plans to launch a national energy plan in September 2024, and to cap electricity prices at THB 4 (0.11 USD). Supparat suggests that data centers need electricity costs below THB 3.67 (0.10 USD) per unit and calls for government transparency in renewable energy development and incentives to reduce internet traffic transit costs to attract more data traffic.
The Exitra Data Center in Kuala Lumpur. Malaysian government has actively provided subsidies for building data centers. (Photo: Exitra Data Center)
In addition to Thailand, Indonesia's data privacy protection and local data retention policies are seen as drivers for data center development, though still significantly behind Malaysia. Kasikorn Research Center estimates Malaysia's data center investments will exceed 23 billion USD in four years, with Johor Bahru in Johor State experiencing rapid growth.
A report by data center research institution DC Byte highlights Johor Bahru as Southeast Asia's fastest-growing data center city, with projects under construction or planned to reach 1.6 GW. If all Asian countries' plans proceed as scheduled, the data center market will undergo a major reshuffle. With Johor Bahru's contribution, Malaysia could rank third in Asia, behind Japan and India, while Singapore would drop out of the top three. However, China was not included in the statistics.
Due to the extensive land, energy, and water resources required for data center development, emerging markets like Malaysia, with relatively cheaper resources, hold advantages over city-states like Hong Kong and Singapore. James Murphy, DC Byte's APAC General Manager, notes that Johor Bahru's data center presence was nearly zero two years ago, but within a few years, it is expected to surpass Singapore, becoming the largest in Southeast Asia.
Source: Bangkok Post, CNBC, Microsoft, DC Byte
