In some ways, Singapore’s establishment as a data center hub in the region comes about as little surprise. The island-state has long-garnered a reputation for being a mature and reliable destination for investors and businesses- a healthy international standing has been prioritised by the government for many years.
The importance of attracting foreign investment, especially in the realms of manufacturing and electronics, was evident as early as 1969, with the opening of a Texas Instruments plant at the Kallang Basin industrial estate in Singapore. The American semiconductor manufacturer- then the world’s largest, was given pioneer status by the government, after being successfully courted by members of the country’s Economic Development Board.
This achievement was monumental at the time; Singaporean officials regularly travelled to the U.S. to meet with business executives, with an estimated one return visit by an American executive for every 40 visits made by a Singaporean delegate. Gradually, the city state’s pitching of asking for investments- not handouts, and political stability resulted in its development as an attractive hub, with Japanese investment following American in the 1980s and 90s.
Humpty Dumpty Cannot Be Put Together Again
When discussing the reasons why and how the tiny country has managed to lead the region and continues to do so, the strict but effective governance of the island nation has to be mentioned. As a small island nation in a mostly-developing region, Singapore had to succeed to ensure stability and achieve prosperity. The country’s lack of foreign debt, high government revenue and emphasis on reasonable pragmatism comes into focus; and a societal culture of continued growth motivates progress across a plethora of aspects.
In a 2007 response to criticism aimed at the generous salaries drawn by the country’s ministers, Lee Kuan Yew- Singapore’s first Prime Minister and visionary statesman, had a simple retort. “You know, the cure for all this talk is really a good dose of incompetent government, you get that alternative and you’ll never put Singapore together again: Humpty Dumpty cannot be put together again.” To put it plainly, Singapore almost had no choice but to be politically and economically stable. The nation cannot triumph without either of the two, and the city-state needs foreign investment to thrive.
Location, Location, Location
Despite having a lack of natural resources among other challenges, Singapore has played to its strengths, especially in fully leveraging on its natural geographic position. The nation’s location at the tip of the Malay Peninsula has effectively enabled it to serve as an active cultural and diplomatic bridge between the East and West. From its colonial use as a British trading post to today’s development as a subsea cable meeting point between the Indian and Pacific Ocean, Singapore remains a gateway into Southeast Asia for foreign investors seeking to enter the regional market.
Data centers operators often look at three key requirements; business and customer proximity, geo-political climate and tech infrastructure. Singapore is a start-up hotbed, with approximately 300 million USD in funding provided to deep-tech start-ups in 2020. From fintech and finance to storage solutions, the island nation is encouraging of both global and local organisations to launch their businesses. Furthermore, Singapore is a smart city, with the government-introduced SmartNation initiative in 2019 boosting development of the already-current island nation’s digital framework across a web of sectors.
Couple this with a disaster-free climate on the equator and a politically stable government, Singapore’s emergence and leading as a data center haven is easily understood.
Not Slowing Down
With any form of expansion however, come difficulties. In 2020, the establishment of new data centers were faced with a moratorium by the government, due to land scarcity and sustainability concerns. Despite the announcement of the moratorium lifting early this year, data center operators will carefully observe the situation, whilst the government looks to implement a more careful selection process with a new set of environmental guidelines.
If anything can be taken from Singapore’s history however, the economic and political maturity of the lion city should hint at the nation’s continued flourishing in a time of constant change. Interest from data center investors don’t look to waver anytime soon.