Move over Malaysia. Thailand Emerges as Southeast Asia's Next Data Center Powerhouse

Thailand's Strategic Push into Data Centers

สวัสดี (Sa-Wat-Dee) everyone. Following Malaysia’s footsteps, Thailand is positioning itself as the next benefactor of the data center boom. [Read my long analysis on Johor’s data center boom and the infrastructure challenges it faces]

The ASEAN country is emerging as a key relevant player in the data center infrastructure build up across the region. Thailand’s Board of Investment (BOI) recently approved $1.7 billion in investments from Quartz Computing (a Google subsidiary) and GDS Holdings to develop data centers, a move that is part of a broader surge in data center capacity across Southeast Asia. And this isnt the only project the BOI has received, it has received 47 applications for data center projects, predominantly from the U.S., Australia, and China.

Thailand has often been seen as the gateway to ASEAN as it is situated in the center wrapped around by Vietnam, Laos, Myanmar and Cambodia. Thailand’s digital economy is the second-largest in Southeast Asia and is expected to reach $50 billion by 2025, Google, Temasek and Bain & Company said in a 2023 report by e-Conomy SEA, according to CNBC’s report.

The data center sector in Thailand is projected to generate $2.35 billion in revenue by the end of 2024, with a compound annual growth rate of 5.01% from 2024 to 2029.

According to a report from Colliers, Thailand's data center investment could grow by 15%, positioning it as the third-largest industry in Southeast Asia if local governments can enhance incentives and infrastructure support. The current policies around FDI into this industry in Thailand are said by some to be insufficient compared to neighboring countries, prompting calls for extended tax exemptions and clearer regulations to attract foreign investment.

I previously wrote about how Malaysia has signed agreements with neighbouring Singapore to supply land/ infrastructure to build out data centers to power hyperscalers need for compute power as many big tech have set up APAC HQs in Singapore.

This could be the first, but definitely not the last of a deal like such by a hyperscaler. If Thai policymakers open up investment opportunities and offer supportive incentives, they could potentially position the country as a leading hub for data centers in Southeast Asia.