Data centre (DC) markets across Malaysia, Singapore and Indonesia are expected to account for a combined 74% of the USD5.7 billion ASEAN DC market by 2025, according to Frost and Sullivan.
Malaysia is seeing a raft of emerging DC investments with over 800 megawatt capacity projected to come on stream in phases over the next five years, with lower land and energy costs as the key draws.
Singapore’s decision in early 2022 to calibrate new DC builds has been a blessing in disguise, with the likes of Equinix, AirTrunk, Yondr Group, and GDS Holdings locating their maiden facilities in Malaysia’s southern state of Johor.
The Indonesian DC market is expected to grow at a 6% compounded annual growth rate between 2022-2028 to USD3.1 billion, according to Arizton Advisory and Intelligence’s Mar 2023 report. Compounded annual growth rate is the mean annual growth rate of an investment over a specified period of time longer than one year.
RHB Research (RHB) in the recent Regional Thematic Research Report said that the report is timely, considering the explosion of interest in the DC space, accelerated digital adoption, and the good valuation premiums fetched for strategic infrastructure assets. The positive DC outlook resonates well with RHB’s preference for fixed line plays.
“More importantly, we view the setting up of cloud regions by Microsoft and Amazon Web Services as a major coup with significant upsides for the domestic DC industry and the economy,” said RHB.
Growth will be fuelled by rapid capacity expansion by hyperscalers, data localisation regulations, and as internet penetration closes the gap with its ASEAN peers. Indonesia is already home to multiple cloud regions by Google, Alibaba, Amazon, Huawei, and Microsoft with Batam Island emerging as the new DC economic zone.
While Singapore continues to be the epicentre of DC growth in South-East Asia, the more stringent conditions laid out for new builds have compelled investors to consider alternative sites and hubs in the region.
The regionalisation of the DC business is a key focus area for Singtel, with 70 megawatt capacity to be added over the next 3-5 years from its Indonesia and Thailand joint ventures. The expansion will see its DC footprint expand to more than 170 megawatt regionally from 70 megawatt in Singapore currently.
