The Southeast Asia (SEA) region is fast emerging as a hotspot for data centre players as enterprises are rapidly deploying new-age technologies and adopting cloud services for operational efficiencies. The onset of the Covid-19 pandemic and the ensuing lockdown and other restrictions imposed by governments across the region seem to have fast-tracked the digital journey of enterprises. In addition, various factors are acting as the driving force behind the growth of the data centre industry in the region. Growing internet penetration in the region is leading to an uptake of internet of things (IoT)- and artificial intelligence (AI)-based solutions by enterprises and smart devices by consumer segments. As such, this is creating huge amounts of data, which needs to not only be managed properly but also secured from malicious actors.

A look at some of the key drivers of the data centre industry in the SEA region, the opportunities that are emerging in the segment and the way forward…

Key drivers


Ever since the outbreak of the Covid-19 pandemic and the onset of the work-from-home culture, there has been a rapid uptake of remote working solutions and new-age technologies. Moreover, the pandemic-induced lockdown and restrictions imposed by government agencies across the SEA region have caused an uptake of internet-related services throughout this region. As enterprises across sectors took the digital route to keep their businesses and operations afloat, the need and demand for data centres became even more pronounced.

According to a recent report released by ReportLinker, the Asia-Pacific (APAC) data centre market share has been witnessing an exceptional growth ever since the Covid-19 outbreak. Moreover, co-location service providers witnessed strong uptake of data centre spaces by existing customers, owing to the growth in demand during the pandemic.

Industry analysts have highlighted that new learning among companies regarding work-from-home and data accessibility during the lockdown period have resulted in increasing enquiries for space and services at data centres and this trend is expected to only gather further momentum.

Adoption of cloud-based services

Of late, enterprises in the SEA region have been increasingly adopting cloud-based services. In fact, tech giants such as Google, Amazon Web Services (AWS) and Alibaba have been showing an increased interest in expanding their cloud business in the SEA region. Consequently, this is acting as a strong growth driver for the data centre market in this region.

Further, the growing internet penetration in the region is enabling both enterprises and consumer segments to deploy solutions based on new-age technologies such as AI, IoT and augmented reality (AR)/virtual reality (VR). The increasing internet penetration is likely to aid the adoption of smart devices in this region. The uptake of these technologies is consequently leading to a surge in the amount of data getting generated from various channels across networks. As such, to efficiently manage this humongous amount of data, enterprises are moving to cloud. And the sustenance of a robust cloud ecosystem is dependent on the existence of co-location services and data centres. Most co-location providers are involved in the construction of hyperscale data centres to co-locate space to cloud service providers.


Cybersecurity concerns are yet another driver of the data centre growth within the SEA region. As more and more data is getting generated by local and government-linked enterprises, which contribute a large proportion to local economies, the need to properly secure and store this data is also gaining prominence. As such, enterprises are increasingly moving to data centres to safeguard their data from malicious actors as well as to efficiently manage it. Further, due to national security concerns, governments across the region would prefer to see data stored and processed domestically rather than relying on major data centres outside their territory.


According to a recent study by Knight Frank, SEA is expected to see maximum growth in the data centre segment within the APAC region. This is because apart from Singapore, the remaining region is largely underdeveloped in terms of its data centre industry.

As far as growth estimates are concerned, a recent report by Cushman and Wakefield predicts that the SEA region will be the fastest growing region for co-location data centres over the next five years, with its market size expanding at a compound annual growth rate (CAGR) of 13 per cent between 2019 and 2024. Similar estimates have been given by other research agencies too. Research and Markets predicts that the data centre market in SEA will be worth $11.63 billion by 2024.

The majority of this growth is expected to be driven by Singapore, Indonesia and Malaysia. According to the Data Gravity Index, Singapore is expected to be the fastest growing market across the 21 global metros analysed in terms of data gravity. Data gravity is defined as the state of attracting so much data that moving it becomes an almost impossible task.

Meanwhile, according to a Digital Realty and Eco-Business study, the data centre ecosystem in Indonesia and Malaysia is developing rapidly and over the next couple of years the share of the two countries in the region’s data centre pie will increase manyfold. The study highlighted that both the countries offer ease of access and lower cost of entry in comparison to Singapore. Moreover, the two countries have a young, fast growing and sizeable base of digital and tech-savvy consumers, which drives a dynamic e-commerce and technology industry, escalating data storage needs.

Recent developments in the region

Over the past few years, the SEA region has garnered a lot of interest from both big and small data centre players who are rushing to grab a share of the growing market.

Recently, in February 2021, Microsoft announced that it will soon establish its first data centre region in Indonesia to deliver trusted cloud services locally, with data security, privacy and the ability to store data in the country. Likewise, in January 2021, SpaceDC launched the 1.45 MW JAK2, its first data centre at Jakarta Barat, Indonesia. The data centre was established in partnership with Singapore’s sovereign wealth fund, GIC. Along with this launch, SpaceDC also started the construction of JAK1, a larger 24 MW Tier-III facility, which is set to be launched in 2021. Earlier, in July 2020, Google had launched Google Cloud in Indonesia as part of which the company is offering services such as data storage, security and big data analytics to institutional and individual customers in the country using data centres of local partners. The stepping in of big players such as Google and Amazon in the country is also expected to drive the growth of the data centre market in Indonesia. According to a recent ReportLinker report, the Indonesia data centre market is expected to grow at a CAGR of around 11 per cent during 2019-25.

In Singapore too, the data centre space is bubbling with opportunities and is, therefore, seeing increased activity. In August 2020, Zoom Video Communications set up its first SEA data centre facility in Singapore. Usage of the conferencing platform skyrocketed due to the Covid-19 pandemic. Until now, Zoom was using AWS to serve its growing needs, and the company is now expanding its data centre portfolio. Earlier, in July 2020, Singapore Press Holdings (SPH) announced that it was setting up a joint venture (JV) with Keppel Corporation to develop and operate a data centre at SPH’s Genting Lane property in Singapore.

Malaysia too has made positive strides in building a robust data centre ecosystem in the country. And the government is playing a key role in facilitating this development. For instance, recently the Malaysian government granted conditional approval to AWS, Microsoft, Google Cloud and Telekom Malaysia to build and manage hyperscale data centres and cloud services in Malaysia. This move will support the government’s aim of migrating 80 per cent of public data to the hybrid cloud system by end 2022 as part of its “cloud first” strategy. In a similar development, HeiTech Padu Berhad recently entered into an unincorporated JV agreement with Regal Orion Sdn Bhd for the construction of a Tier IV data centre on an unused portion of land owned by the former in Shah Alam, Selangor. The JV project entails the proposed construction, commissioning and testing of the Tier IV data centre, which comprises a five-storey building with racks to be tenanted upon completion by international or multinational tenants. Likewise, in February 2021, Bridge Data Centres announced that it will build a data centre offering 16 MW of IT power in Malaysia.

The way forward

Net, net, the outlook for the SEA data centre industry seems positive. With the middle-class demographics of the region growing rapidly and the subsequent boom in technology and data consumption being caused by this, the SEA region is becoming the hotbed of opportunities for investors, infrastructure providers and solution providers, among others. However, effective materialisation of these opportunities would require that the governments of the states create a conducive environment by enacting growth-inducing policies for the sector. s

By Diksha Sharma