Enabling Digital Transformation in Southeast Asia

Southeast Asia is in a phase of rapid digital transformation, with developments underpinned by a supportive policy backdrop, rising disposable incomes, cloud migration, and the high penetration of mobile users.

A fertile ground for the digital economy

It is not only consumers who are participating in Southeast Asia’s expansion, but fledgling companies are also booming. These start-ups attracted nearly US$26 billion in funding last year. Moreover, the attractive backdrop is encouraging many outside firms to establish a foothold in the region.

Regional initiatives include Malaysia’s Digital Investments Future5 (DIF5) Strategy, driven by the Malaysia Digital Economy Corporation (MDEC). This is a five-year plan with the goal of realizing US$12 billion of investment in the country’s digital economy by 2025. The focus is on the health-tech, smart tourism, and agri-tech sectors.

Elsewhere, Indonesia has established a digital roadmap that offers guidelines on how the country will take its digital transformation to the next level. Policymakers have formulated over 100 programs that target four principal areas: digital citizens, digital government, digital infrastructure, and the digital economy.

Meanwhile, Singapore’s Infocomm Media Development Authority (IMDA) is promoting the Spark initiative to support new companies by establishing a collaborative startup community and introducing a grant system that draws on governmental and private-sector funding.

These strategies, and others, are forging a constructive business climate in Southeast Asia. As a result, the region is now home to more than 7,000 digital start-ups, some 80% of which are located in Indonesia, Singapore, or Vietnam.  Yet, this is not just a regional phenomenon; these nascent firms are attracting global attention with the number of unicorns – privately owned start-ups with a valuation of over US$1 billion – rapidly rising.

GDS – an intelligent approach to data-center development

Digital developments have catalyzed multiple new technologies, such as the cloud, edge computing, artificial intelligence (AI), and 5G.  Sequentially, these breakthroughs generate customer demand that offers multiple business opportunities.

This innovation is recognized by NASDAQ-listed GDS, a leading operator of strategically positioned, high-performance data centers in China. A 21-year track record underpins the company’s success as a platform provider, and over this time it has developed the skills needed to establish world-leading hyperscale facilities. To date, the company has built around 100 data centers.

GDS has also instituted its Smart DC solution, which delivers fast, agile, low-carbon hyperscale facilities with intelligent operational-management systems. The innovative Smart DC approach, which supports the digitalization trend and the digital economy, is being applied to the construction of all its domestic and overseas campuses.

Simultaneously, GDS has committed to achieving carbon neutrality by 2030. The commitment GDS made is founded from three key pillars: minimize impact on the environment, create value for all stakeholders, and engender trust via rigorous governance.

Strategic opportunities in Southeast Asia

Encouraged by the ease of communication and a favorable policy climate, GDS is contributing to Southeast Asia’s growth and better serving its clients by developing a strategic Southeast Asia strategy that harnesses the strengths of the region’s data center ecosystem.

It will achieve this by collaborating with local governments and corporations to hasten digital transformation, concentrating on strategic locations in Singapore, Johor (Malaysia), and Batam (Indonesia) (S-J-B).

Through this S-J-B Area strategy, GDS’ customer base, which encompasses cloud service providers, large internet companies, financial institutions, telecommunications carriers, IT service providers, as well as leading domestic private sector and multinational corporations, will benefit from a network of interconnected environmentally friendly hyperscale facilities.

Using the S-J-B program as a first step, the next few years will see GDS plans to expand its presence in other regions as it strives to become a genuinely global data-center specialist.

The first phase of the co-development

Given a linked opportunity for stability and opportunity, GDS’ initial focus for its physical data center developments is on Johor and Batam. These locations, which are well-placed to serve regional and national markets, ensure that all network connectivity and latency needs are met.

Also, at the end of April 2022, international multi-utility infrastructure group YTL Power signed a partnership with GDS to co-develop 168MW of data center capacity across eight integrated, sustainable-energy-powered facilities at the upcoming YTL Green Data Center Park in Johor, Malaysia. The Malaysian government views these moves as “solidifying Johor’s strategic location as a hub for regional growth”.

In Indonesia, GDS will open a campus within the Special Economic Zone at the Nongsa Digital Park in Batam, which the President of Indonesia, Joko Widodo, earlier described as a “digital bridge” that joins Indonesia to nearby Singapore.

A catalyst for change

Amid robust demand for hyperscale data center capacity in Southeast Asia – especially from cloud and internet customers in China – GDS can be seen as a catalyst or a nexus for digital technology in the region. Not only has it developed greenfield projects, but it is also encouraging Malaysia and Indonesia’s digital ambitions and creating high-skilled job opportunities. Furthermore, its goals and vision are closely aligned with those of Singapore’s IMDA and the Economic Development Board (EDB), as these two bodies strive to support business development in the city-state.

A sign that the S-J-B Area strategy is delivering positive outcomes came in 2022 when GDS was one of the first companies to be awarded the Malaysian government’s top recognition for digital infrastructure firms – Malaysia Digital (MD) status. The MD initiative was launched by Malaysia’s Ministry of Communications and Multimedia in conjunction with MDEC. The strategy seeks to recognize those businesses powering digital development and attract the talent that will ensure Malaysia plays a critical role in the global digital economy.

With these initial components in place (data centers in Batam and Johor, a hub in Singapore, plus the alliance with YTL), GDS’ clustered blueprint, underpinned by a constant focus on sustainability and value creation, will inject a power source for domestic enterprises seeking to expand overseas and help fuel the region’s digital transformation.

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