Historically, Thailand has lagged behind its economically stronger neighbours like Singapore, Indonesia and Malaysia. Yet, in some niche industries, Thailand has managed to pull it off into becoming Southeast Asia’s primary hub – think automotive industry (‘Detroit of Southeast Asia’) and tourism. How about the latest boom industry – data centres?
The general consensus suggests it would take 3-5 years for Thailand to even reach “hub” status. That’s because traditionally, its IT and connectivity infrastructure lags behind its more advanced neighbours. It would take some time before all the pieces come together to create a strong digital economy. This is despite the Thai government’s push for its digital economy to constitute 30% of its GDP by 2030 under its National Digital Economy Plan.
In my view, it’s almost a given that Thailand would become the Mekong region’s data centre hub in 3-4 years’ time. Several factors point strongly in that direction: Firstly, Thailand has always been the heart and economic powerhouse of the Mekong region. The Mekong region, also known as the Greater Mekong Subregion (GMS), comprises Vietnam, Cambodia, Laos, Myanmar, Thailand, and Yunnan province and Guangzi Zhuang Autonomous Region of China.
The vast region covers about 200 million acres of land mass, boasts an annual average GDP growth of 6.5% in the last decade and has a combined population of about 300 million. Many areas of the region are experiencing unprecedented urbanisation which translates into huge demand for bandwidth.
Its young population has a voracious appetite for the internet and social media. Vietnamese, for example, with their strong Confucian culture, are hardworking, innovative and very keen to hop onto the digital bandwagon. With a population of over 100 million people, it wouldn’t surprise anyone that Vietnam could eventually surpass the rest of SEA nations in terms of economic growth. Thailand and the rest of the Mekong region would benefit from the spillover effects just as Malaysia is benefitting from the spillover effects from a burgeoning data centre market in Singapore.
When all 3.2 million of Thai SMEs adopt digital transactions and cloud services including AI applications, this would drive demand for locally hosted cloud services. It’s not a small number; Thai SMEs account for over 35% of the country’s GDP in 2023.
The Land of Smiles also has the advantage of being in a region blessed with abundant renewable energy sources such as the sun, wind, water, geothermal, biomass, and ocean energy. And these are increasingly becoming more affordable, more available and more efficient, according to a report by Worldwide Fund for Nature (WWF).
Hence, when all the necessary infrastructures such as fibre-optic networks, connectivity, and cybersecurity are put in place and sustainable energy sources are harnessed, Thailand would then be on its way to becoming a data centre hub strongly rooted in digital innovation and sustainable technology. Not only is it cheaper to build in Thailand compared to Singapore, Indonesia or Malaysia, its improving data protection laws and regulatory environment would make Thailand a compelling case for being the next hot data centre hub in Southeast Asia.
To date, the biggest players in the data centre space have planted their footprint in Thailand, the latest being Alibaba Cloud, the digital technology arm of Alibaba Group, which opened its second data centre in Thailand in early February. This brings Alibaba Cloud’s global presence to 30 regions with 89 availability zones.
Prior to this, TikTok (through ByteDance) made a US$3.76 billion investment announcement in January. Last year, Google and Amazon Web Services (AWS) announced a USD1 billion and a US$5 billion investment in Thailand, respectively. Microsoft has also announced plans to locate its first regional data centre in Thailand.
As of February 2025, Thailand’s data center market was valued at USD1.56 billion which is projected to reach USD3.19 billion by 2030, based on a CAGR of 12.66%. For comparison, Malaysia’s market, on the other hand, was valued at about USD4.04 billion and is projected to reach USD13.57 billion by 2030, with a compound annual growth rate (CAGR) of 22.35%. Major tech companies such as Amazon, Nvidia, and Google, are behind this exponential growth.
As to whether Thailand can surpass Malaysia, clearly it would not be the case in the short term, but in the medium to long term, it would pose a formidable challenge to Malaysia, if Thailand plays it right. And history has shown that Thailand has a great capacity to surprise.