Breaking down Southeast Asia’s data center power struggle

The start of the AI boom has led to a global race among countries to build more data centers and ramp up their capacity.

It’s no different in Singapore and Southeast Asia, with billions of dollars committed to putting up such facilities in the region this year. After imposing a moratorium on building data centers in 2019, Singapore reopened its doors to new investments in 2022.

Despite the three-year moratorium, the city-state still enjoys a wide lead in terms of total capacity. From the current level of 1.4 gigawatts, it wants to build up another 300 megawatts of additional capacity. Overall, Singapore has over 70 data centers.

Image credit: Timmy Loen

Data center capacity is measured by the amount of electricity consumed, as defined by watts. However, analysts said space and power constraints are likely to limit Singapore’s pace of growth in this sector.

Malaysia has emerged as the frontrunner to challenge Singapore’s dominance, but Thailand is fast growing as a potential competitor, according to analysts.

As the race to construct more and larger facilities to accommodate the boom in AI charges ahead, will Malaysia be able to hold on to its pole position in Southeast Asia?

Malaysia powers ahead

Most analysts who spoke to The Business Times believe so, pointing out that Malaysia has a substantial leg up compared to Thailand and Indonesia.

Vivian Wong, senior analyst at market intelligence firm DC Byte, told BT that Malaysia is “significantly ahead” of its Southeast Asian neighbors. She noted that it has achieved more than half of Singapore’s capacity in about three years, with “exponential growth” from Johor, thanks to “the spillover demand from the Singapore moratorium.”

This is “setting the stage for future wave of expansion,”  she said.

RHB analysts Jeffrey Tan and Wan Muhammad Ammar Affan are also upbeat on Malaysia’s prospects.

Central City Park, Kuala Lumpur / Photo credit: Shutterstock

Is Indonesia falling behind?