South-East Asia is becoming a global hotspot for data centres as AI usage rises, with Malaysia and Singapore leading the market. Major tech firms are investing heavily in the region to meet the growing demand for infrastructure and computing power driven by AI advancements. These investments are expected to boost local economies by creating skilled jobs in data centre construction, engineering, and maintenance, while also fostering talent in AI, cybersecurity, and data management.
The influx of data centres will enhance the region’s digital infrastructure, allowing businesses to store data locally, reducing downtime, and increasing data sovereignty. Analysts predict that data centre demand will grow by around 20% annually over the next five to seven years due to the increased processing capacity required for AI-supported innovations like ChatGPT.
Singapore, despite a temporary halt on data centre construction to assess environmental impacts, remains a preferred destination due to its superior infrastructure and stable regulatory regime. However, Malaysia has capitalized on this pause, attracting significant investments from tech giants like Microsoft and Amazon Web Services, which are set to boost the country’s data centre capacity significantly.
By 2028, Malaysia is expected to account for over half of the data centre processing power in the top five South-East Asian markets, potentially rivaling Singapore as a regional hub. The competition between Singapore and Malaysia highlights the strategic importance of data centres in supporting advanced technologies and economic growth in the region.
Among the notable investments, Microsoft announced in May that it will invest US$2.2 billion over the next four years to build cloud and AI infrastructure in Malaysia. Similarly, Amazon Web Services (AWS) revealed plans in August to invest an estimated US$6.2 billion to establish a data centre and cloud region in Malaysia. AWS is also developing a similar region in Thailand, with a planned investment of US$5 billion, making it the fourth AWS region in ASEAN after Singapore, Indonesia, and Malaysia.
In September, Google committed US$1 billion to build a data centre and cloud region in Thailand, which has seen around US$9 billion in investments from operators, according to Morgan Stanley analysts. These substantial investments underscore the region’s growing importance as a data centre hub, driven by its lower costs, power availability, and geopolitical neutrality
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