The Philippines is seen as a viable market for data centers because of its digitization initiatives and growing use of e-commerce, according to firms providing real estate and legal services to potential locators.
In a 2022 report by Quisumbing Torres titled Developing and Operating Data Centers in the Philippines, the Philippine data center industry is anticipated to reach $535 million by 2026, with a compound annual growth rate of 11.4% between 2021 and 2026.
According to Monica Gonzales, lead data center officer for real estate consultancy Santos Knight Frank, in a recent forum organized by the European Chamber of Commerce of the Philippines, the Philippines is considered favorably due to its regulations that encourage investment, its excellent talent pool in engineering and information technology, and its potential to utilize renewable energy in data center operations.
She said that hyperscalers like Alibaba Group, Microsoft Corp., and Amazon Web Services, Inc. are thinking about making an investment in the Philippines.
“As we expand the amount of activities that require us to store and process data, as we continue to move more functions to the internet and to the cloud from business to our personal lives, there will be a continuing demand for data center space and investment,” said Gonzales.
She continued by stating that the Philippine digital economy generated 9.6% of the country’s total economic output in 2021 and was worth P1.87 trillion (US$34 billion). Data centers are essential and required for fostering such growth because it is an important and worthy component of the economy.
Potential movers are also encouraged by the regulatory climate as a result of laws like the revisions to the Foreign Investment Act, the Public Service Act, and the Retail Trade Liberalization Act, according to Alain Charles J. Veloso, a partner with the Quisumbing Torres law firm.
Foreign nationals are now permitted to own up to 100% of the stock in a company that offers telecommunications services under the revised Public Service Act. Mr. Veloso also mentioned the Corporate Recovery and Tax Benefits for Enterprises Act’s incentives as being appealing to investment in data centers.
“This development will drive the country’s already aggressive forecast for the data center market,” said Veloso.
However, Veloso asserted that in order to successfully implement data centers, the Philippines and authorities must address issues including maintaining a steady supply of power, bolstering telco infrastructure, and enhancing corporate accessibility.