Cloud adoption in SEA remains “Politically Agnostic”
Published 24 February 2021
As the world gears up to welcome a post-pandemic normal informed by digitalisation, data centres have proven themselves to be the backbone that carries a cloud-based society.
In this context, Southeast Asia has emerged as a strong player competing for unprecedented growth in the global data centre market.
The world’s cloud figures and where SEA stands
According to research and consulting firm Structure Research, revenue from the world’s biggest cloud providers saw a massive year-on-year jump in Q4, 2020: revenue for Microsoft’s Azure went up 17 per cent, AWS 28 per cent, and Google Cloud reported a spike of 47 per cent.
How about major cloud providers from China? Despite sustained growth in Asia, Tencent, Huawei Cloud, Alibaba Cloud still face limited global penetration. This is where the Southeast Asian market comes in.
Addressing participants at W.Media’s Digital Week keynote, Kevin Imboden, Director of Research at market research firm Cushman and Wakefield, pointed out that Southeast Asia remains “politically agnostic” when it comes to the cloud adoption wars between US and China. Also, as such, the region has now become a battleground for these companies aiming to capture a larger slice of the data centre market.
Four key markets, Sydney, Singapore, Hong Kong, and Tokyo, are set to establish data centres with a total of 400 MW of capacity this year. Imboden also said that secondary markets throughout the region are gaining much interest from both operators and investors, including Seoul, Osaka, Jakarta, and Kuala Lumpur.
“While certain secondary markets are more developed than others, latent demand exists as companies move through their IT transformation process,” he added.
Singapore remains as SEA’s digital hub, but challenges in store
It’s hard not to talk about Southeast Asia’s data centre market without mentioning Singapore. The city state remains as the region’s mega-connectivity hub for data centres thanks to its corporate-friendly policies.
However, two significant challenges that Singapore has to address are the island’s land shortage when it comes to building more data center facilities, and energy efficiency that follows from new data centres.
Keppel, a Singaporean conglomerate firm has been consistent with its efforts in developing renewable energy systems for its data centres. It is also said that the Singaporean government is also looking into sourcing renewable energy from its neighbour Malaysia.
Other Southeast Asia markets
Singapore’s neighbors are equally primed to become lucrative markets in the near future. Jakarta already has several big name data center operators constructing facilities in the region, including NTT, SpaceDC, and Keppel. Microsoft, Amazon, and Google have gained conditional approval from the Malaysian government to construct hyperscale data centers, which will generate an estimated $3.7 billion (RM15 billion) for the country.
In all, Southeast Asia remains as an attractive destination for both operators and investors in the data center industry. With an abundance of land and water resources as well as a highly concentrated population, there is much to be explored and expanded.