Southeast Asia data center market to reach $14.19 billion by 2028

The Southeast Asia data center market is expected to reach a value of $14.19 billion by 2028 from $9.68 billion in 2022, growing at a CAGR of 6.57% from 2022 to 2028, according to Research and Markets.

The Southeast Asia data center market has the presence of IT infrastructure providers such as Broadcom, Arista, Cisco Systems, Dell Technologies, IBM, Lenovo, and others continuously innovating their product offerings to meet customer needs.

Investment from data center projects in Singapore dominates the Southeast Asia data center market. However, the Singapore market witnessed a setback in recent years due to the moratorium on data center construction. The moratorium was lifted in 2022, and the market is expected to bounce back in the next 2-3 years with the ongoing pilot project from the local government for data center construction.

Markets such as Malaysia, Indonesia, and Thailand are witnessing major growth as emerging markets are especially driven by the spillover demand from Singapore. Other markets, such as the Philippines and Vietnam, are emerging as new preferences for data center construction in the region.

Rising Adoption of Artificial Intelligence in the Region
Southeast Asia is among the most significantly growing global markets for adopting advanced technology solutions, including artificial intelligence. Government and business organizations across the region are taking initiatives to adopt such technologies for smart operations.

In November 2021, the Singapore Government planned to invest around USD 133 million in national research and innovation to support AI technology in healthcare and education. In addition, around USD 370 million is funded by the Singapore government in the Research, Innovation, and Enterprise (RIE) 2025 Plan for AI-based activities.

Malaysia plans to develop the next smart city project in Johor using IoT, AI, big data, 5G technology, and autonomous vehicles. Healthcare, fashion & apparel, education, legal, and finance are the major sectors witnessing high adoption of AI in Malaysia.

Data Localization Laws in the Market Will Drive Investments in Data Centers
Data localization law has been a major driver for data center construction in countries where operators must develop facilities to store data and information within their borders. Data localization in Malaysia, Indonesia, and Vietnam has been a boon for the growth of the data center market in such countries.

Various governments have imposed laws on data localization, which can challenge global data center operators looking to enter a particular country in the region. This can be overcome by partnering with local providers with a presence in locations for data center development.

In Singapore, Singapore Digital is a national-level initiative to support Singapore’s digitalization goal and will help different industries achieve their digitalization goals and develop new ecosystems.

In Malaysia, the government introduced a cloud service regulation, which states that cloud services must be licensed under the Applications Service Providers Class license. Companies providing cloud services via local data centers in Malaysia must register under the ASP (C) license. Research and Markets