New investments from industry giants will boost the economies of countries in the region, from Singapore to Malaysia. Demand will grow around 20% annually over the next five to seven years. Microsoft has already pledged more than two billion dollars to Kuala Lumpur for cloud infrastructure and artificial intelligence.
Singapore () – The world’s largest technology companies look to Southeast Asia as a potential hub for the construction of global data centers, at a time when demand for infrastructure and computing power to fully enable artificial intelligence resources is increasing. (AI) are increasing rapidly. Analysts and experts believe that the new planned investments will help boost the region’s economies, creating skilled jobs in the construction, design and maintenance of data processing centers. At the same time, specialized talents in AI, cybersecurity, science and data management can be developed.
The investments will also improve the region’s digital infrastructure, allowing small businesses and large institutions to store their data locally, significantly reducing downtime and increasing data sovereignty. A report published by Maybank in October shows that with innovations in artificial intelligence – including ChatGPT searches with four to five times the processing capacity of traditional Internet searches – demand for data centers is expected to grow around 20% per year for the next five or seven years.
Data centers are large buildings that house servers, data storage systems and network equipment dedicated to improving Internet and telecommunications services. This also enables popular online activities such as gaming, live streaming and investing, as well as more advanced technologies such as cloud computing and artificial intelligence.
Thanks to lower costs, energy availability and geopolitical neutrality, Southeast Asia is emerging as an ideal region for technology operators, with five countries offering the greatest potential: Singapore, Malaysia, Thailand, Indonesia and Vietnam.
However, while Singapore is the preferred destination for hosting data centers because it has larger infrastructure and a stable regulatory regime, government authorities had imposed a three-year moratorium on data center construction between 2019 and 2022 in order to evaluate the environmental impact. That is why Malaysia has captured the majority of new investments in that period, and now expects that structures with a capacity of around one gigawatt (GW) will be put into operation in the next two years, which represents double the current capacity. of data centers.
In addition, others have already been announced that will be gradually installed over the next five years with a total capacity of 3GW, according to RHB Bank. A much higher potential, if we take into account that at this moment the capacity of Singapore’s data centers is approximately 1.4 GW.
Some of those funneling capital into Malaysia are tech titans like Microsoft, which in May said it would invest $2.2 billion over the next four years to build cloud and artificial intelligence infrastructure in the country.
Another of them is Amazon Web Services (AWS), which announced in August its intention to invest around $6.2 billion to create a data center and a cloud region in the country. The cloud services provider is also developing a similar hibe in Thailand with a capital of five billion dollars, which aims to make the kingdom the fourth AWS region in ASEAN (Association that brings together 10 Southeast Asian countries). after Singapore, Indonesia and Malaysia. Last month, Google also said it would invest $1 billion to build a data center and cloud region in Thailand.
By 2028, RHB predicts that Kuala Lumpur will account for more than half of the processing power of data centers in the top five Southeast Asian markets. Johor data centers will make up the bulk of the reserves with more than 2.3 GW. This could put Malaysia in close competition with Singapore as a hub for the region.
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