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South-east Asia poised for strong datacentre growth

Businesses and IT suppliers are planning to build datacentres across the Asean region, with challenges to Singapore’s dominance emerging

Datacentres in south-east Asia will see substantial growth over the next two years, with investment expected to hit US$3.4bn by the end of 2017.

According to a report by consulting firm BroadGroup, half of all datacentre spending in the region is now made outside Singapore. The report covered Brunei, Indonesia, Malaysia, Singapore, Thailand and newcomer Vietnam – all Association of South-East Asian Nations (Asean) members.

BroadGroup said that at least US$1.2bn of new investments are planned over the next two years.

Singapore remains “an epicenter of cloud and datacentre activity, with a market size exceeding that of the UK (Europe’s largest), and still adding more capacity before the end of the year”, according to the report.

But Singapore is not the only Asean location for datacentres and cloud. BroadGroup said there are aggressive growth plans in Indonesia for space and power, and early success in Iskandar in Malaysia. In the north of the Asean region, Bangkok and nearby areas will see significant growth from a low base, with the potential to expand into the economies of the Greater Mekong region. Across south-east Asia, the report identified at least eight new development zones, typically supported by government initiatives.

However, challenges remain. These include the fulfilment of current investment plans, and the need to solve power and connectivity challenges.

Chin Jun Fwu, research director at IDC, said Singapore is the regional hub of datacentre activity. He added there is “not much activity” in deploying and operating datacentres in the rest of south-east Asia.

Read more about cloud and datacentres in south-east Asia

“It’s a fairly significant investment to build up datacentres. The south-east Asian countries outside of Singapore may have more attractive construction, real-estate rental and labour costs, but they are not as competitive in connectivity costs, which means higher operating expenditures for the datacentre,” said Chin.

“Singapore may not be the perfect location to build a datacentre, but its advantages outweigh the rest.”

But he added that the growth of datacentres elsewhere across south-east Asia is expected, as organisations look to house a secondary centre for business continuity and disaster recovery purposes outside of Singapore.

And the datacentre within the enterprise is not the only driving force. Another is the emergence of Web 2.0 datacentres by organisations such as Google and Salesforce, and cloud hosting service providers like Amazon Web Services, which are also building datacentres in the region.

A third driving force is globalisation, said Chin. With multinational corporations (MNCs) building a presence in Asean countries, it means the need to build out datacentres, or turn to a datacentre service provider.

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