According to ARC Group (2025), the data centre industry in Southeast Asia is undergoing a significant transformation, driven by rapid digitalisation, increasing demand for cloud services, and evolving regulatory landscapes. While Singapore has historically been the region's data centre hub, emerging markets like Malaysia, Indonesia, Vietnam, and Thailand are now attracting substantial investments, reshaping the regional data infrastructure landscape.

Singapore: From Dominance to Strategic Evolution

​

Singapore has long been the cornerstone of ASEAN's data centre infrastructure, offering robust connectivity, political stability, and a favourable business environment. However, the city-state faces challenges such as land scarcity and stringent energy policies, which limit the expansion of new data centres. In response, Singapore is adapting by focusing on high-value and sustainable developments while fostering innovation in areas such as artificial intelligence (AI) and high-performance computing (HPC).

However, despite these constraints, Singapore remains a critical connectivity hub, with over 600 MW of colocation capacity and 24 undersea cables linking it to global markets. Its competitive edge in the digital economy is maintained with the government's proactive approach in offering tax incentives and supporting AI initiatives.

ASEAN's Emerging Data Centre Hubs

​

As Singapore's growth slows, neighbouring countries are stepping up to meet the region's increasing demand for data infrastructure:

• Malaysia: Positioned as ASEAN's new data centre hub, Malaysia offers lower land and energy costs, a skilled workforce, and government incentives. The country's data centre sector is projected to grow at a 22% CAGR from 2023 to 2029, attracting significant investments from global tech firms.
   

• Indonesia: With a large and growing digital economy, Indonesia is seeing increased investments in data centres, particularly in areas like Batam and Jakarta. The government's focus on talent development and infrastructure improvement further supports this growth.
   

• Vietnam and Thailand: Both countries are implementing data localisation laws and offering financial incentives to attract data centre investments. Vietnam, for instance, provides land rental exemptions and preferential credit for data centre projects.
   

These developments are part of a broader trend of decentralisation, with data centre investments spreading beyond traditional capital cities to tier-1 and tier-2 locations, enhancing regional connectivity and resilience.