The Reshaping of Southeast Asia’s Datacenter Landscape: The Next Golden Decade for Emerging Markets

Southeast Asia is entering a transformative era in digital infrastructure. With rising demand for cloud services, AI computing, and data localization laws, the region is rapidly evolving from a hub-and-spoke model led by Singapore into a multi-nodal ecosystem spanning Malaysia, Indonesia, Vietnam, the Philippines, and beyond. As the global internet continues its eastward shift and as global tech players diversify away from saturated Tier-1 markets, Southeast Asia is poised to become one of the most critical battlegrounds for hyperscalers, cloud-native enterprises, and infrastructure investors.

This transformation is driven by three foundational shifts: an increasingly digitized population, evolving regulatory landscapes emphasizing data sovereignty, and a need for climate-resilient, energy-efficient infrastructure that can support next-generation workloads, including generative AI and low-latency edge services. Governments, telecom operators, cloud providers, and capital markets are all converging on one idea: Southeast Asia will not only be the world’s next digital frontier, but also its infrastructure proving ground.

1. The Saturation of Singapore and the Rise of Its Neighbors

Singapore has long been the region’s crown jewel due to its political stability, world-class connectivity, and investor-friendly regulations. Over the past two decades, it established itself as a global hub for finance, trade, and digital infrastructure. Its proximity to subsea cable landing stations, robust regulatory environment, and reliable power grid made it a first-choice location for hyperscalers like AWS, Microsoft Azure, Google Cloud, and Alibaba Cloud.

However, its land and power constraints have become a bottleneck. In 2020, the Singapore government imposed a moratorium on new datacenter construction due to concerns about energy efficiency and emissions. While the moratorium was lifted in 2022 under new sustainability criteria, the bar for new development is now high: proposals must meet stringent energy use effectiveness (PUE) standards and demonstrate alignment with the nation’s Green Plan 2030.

This has prompted hyperscalers, colocation providers, and infrastructure funds to look toward neighboring countries.

Country	2024 Installed Capacity (MW)	Estimated CAGR (2024–2030)	Key Locations
Singapore	1,200	8%	Tuas, Jurong
Malaysia	500	15%	Cyberjaya, Johor
Indonesia	450	18%	Jakarta, Batam
Thailand	150	12%	Bangkok
Vietnam	100	16%	Hanoi, Ho Chi Minh City
Philippines	70	14%	Manila
Cambodia	15	20%	Phnom Penh, Kandal, Takhmao

Malaysia — especially Johor — is rapidly becoming a preferred alternative. Just across the border from Singapore, Johor offers access to greenfield land, lower operating costs, and growing connectivity. Major operators such as YTL Power, Equinix, and GDS Holdings are launching hyperscale campuses here, some exceeding 100MW in planned capacity. In Cyberjaya, the digital infrastructure blueprint is expanding toward AI and edge services, supported by government-linked investment.

Indonesia is emerging as a cloud-first digital economy. Jakarta remains the primary hub, but the government’s plan to move the capital to Nusantara opens up additional long-term opportunities. Meanwhile, Batam is gaining traction as an offshore, low-cost datacenter zone due to its SEZ status and tax incentives. Players like PDG and Princeton Digital Group are investing heavily.

Vietnam and the Philippines, with their youthful demographics and rapid digital adoption, are experiencing strong demand for local cloud services, fintech, and ecommerce. Vietnam’s Cybersecurity Law (2019) and the Philippines' Data Privacy Act have both influenced the rise of domestic data storage needs. Edge datacenter projects are surfacing in Ho Chi Minh City and Metro Manila.

Even Cambodia, though small in scale, is showing early signs of demand, particularly around the new Phnom Penh International Airport and its surrounding special economic zones. Here, a greenfield approach allows for future-forward infrastructure to be built from scratch, tailored to the needs of climate-resilient and scalable workloads.

2. The Forces Driving the Shift

A convergence of market dynamics, policy shifts, and technology innovations are fueling Southeast Asia’s shift toward a multi-market digital infrastructure model:

• Cloud Localization & Sovereignty: Countries are enforcing data residency laws to protect national interests. Indonesia’s Government Regulation 71 (GR71) requires government and public service data to be stored onshore. Vietnam’s Cybersecurity Law mandates foreign firms to open local offices and store certain data in-country. Malaysia’s PDPA (Personal Data Protection Act) continues to evolve, aligning with global trends like GDPR.

  
  

• Digital Economy Expansion: According to the 2024 Google-Temasek-Bain report, Southeast Asia’s internet economy is projected to exceed USD 330 billion by 2025. Indonesia, Vietnam, and the Philippines are among the fastest-growing digital markets, driven by mobile-first consumers and strong fintech adoption. This surge demands localized compute, storage, and interconnection to support seamless app delivery and data processing.

  
  

• 5G and Edge Computing: Telcos in Indonesia (Telkomsel, Indosat), Thailand (AIS, True), and Malaysia (DNB) are expanding nationwide 5G coverage, enabling edge datacenter use cases for smart cities, autonomous logistics, and industrial automation. As latency becomes a critical metric for user experience, edge clusters are emerging beyond metro cores.

  
  

• Investor Diversification: Institutional capital, including sovereign wealth funds and private REITs, is flowing into alternative markets. GIC (Singapore), Temasek, EQT, DigitalBridge, and Brookfield are actively pursuing regional builds or partnerships. Diversified portfolios across multiple markets are seen as a hedge against single-jurisdiction risks and regulatory disruptions.

  
  

• AI Workloads: The rise of generative AI and high-performance computing (HPC) is redefining datacenter design. Southeast Asia offers opportunities to build power-dense, GPU-ready campuses in cost-effective and scalable zones.

  
  

3. Implications for Hyperscalers, Operators, and Investors

As Southeast Asia matures, success will hinge on forward-thinking strategy. Operators and investors must go beyond first-mover land grabs and instead adopt infrastructure strategies that are:

• Regionally Diversified, Locally Compliant: The future belongs to those who can deploy standardized infrastructure across borders while customizing to local laws, power regimes, and ESG standards.

  
  

• Power-Forward: Grid access is no longer a given. Long-term success depends on working with local utilities, investing in substation upgrades, and exploring private generation or renewable PPAs (power purchase agreements).

  
  

• Sustainability-Aligned: Datacenter builds must be increasingly green. This includes integrating solar arrays, district cooling, water recycling, and carbon reporting. Markets with renewable-friendly policies (e.g., Malaysia’s LSS program) offer long-term advantages.

  
  

• Ecosystem-Aware: Successful datacenter hubs are not standalone. They must support peering exchanges, IXPs, cloud on-ramps, and managed services to drive ecosystem density. Collaboration with local software firms, fintechs, and AI startups is also key.

  
  

• Resilient to Risk: Operators must model for macroeconomic shocks, climate events, regulatory swings, and supply chain volatility. Diversification across power zones, cable landing points, and legal regimes is part of long-term resilience planning.

  
  

Conclusion

The narrative around Southeast Asia’s datacenter growth is no longer about catching up with the West. It’s about leapfrogging into a distributed, resilient, and regionally integrated model of digital infrastructure.

Singapore will remain a strategic hub, but the decade ahead will be defined by what happens outside its borders. Malaysia, Indonesia, Vietnam, and the Philippines are not just complementary—they are essential to the future of cloud and data services in Asia-Pacific.

Operators and investors who understand the unique interplay of regulatory trends, power economics, technological demand, and cross-border integration will lead this new era. The region’s datacenter story is just beginning—and the next ten years could be its most pivotal chapter yet.