Data center race: Is the Philippines falling behind in SEA?

There’s an increasing need for bigger data center capacity in the Philippines as digital advancements continue across sectors – from ecommerce to fintech – and AI-driven innovations gain momentum.

The stakes are high. In Southeast Asia, the data center market is expected to reach US$18 billion by 2029, for a compound annual growth rate (CAGR) of 9.6% between 2023 and 2029.

Photo credit: STT GDC

Growth rate in the Philippines is expected to be even higher, with a 13% CAGR, according to Julian Cua, managing director at management consulting firm BCG.

However, the country still lags behind its neighbors like Singapore, Malaysia, and Indonesia. It will have to do more to stay in the game.

What’s driving this

There’s an uptick in demand for data centers because more companies are moving from in-house systems to cloud-based or hybrid setups, Cua explains.

Ferdie Saputil, country director for the Philippines and Vietnam at tech consulting firm Searce, tells Tech in Asia that digital transformation within the financial sector is driving greater demand for data localization.

Additionally, the Philippines’ business process outsourcing sector – where the country is a leader – continues to boost demand for secure and reliable data infrastructure, says Cua.

According to Saputil, the rise of AI is also expected to increase demand for higher-value services “beyond traditional repetitive tasks.”

Who the players are

Currently, the two most prominent players in the space are telco rivals PLDT and Globe.

PLDT, which is part of major conglomerate MVP Group, was first out the gate, establishing its data center arm Vitro in 2000. It also has the largest local data center footprint with 11 facilities.

In a statement to Tech in Asia, a Vitro spokesperson shares that global-scale applications and AI workloads have “quickly and exponentially” pushed up demand for data center capacity.

A rendered image of Vitro data center / Photo credit: Vitro

Upscale neighbors

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