The Asia-Pacific data center landscape is on the brink of a monumental transformation, poised to attract an estimated USD $100 billion in investments within the next half-decade, to bolster a 3.6 GW of hosting capacity. India, China, Japan, and South Korea have been identified as prime revenue generators, and new developments in Southeast Asia are rapidly propelling the region into the global spotlight, too.

EdgeConneX, a global data center operator with regional headquarters in Singapore, is firmly set on catalyzing this shift. By deploying edge data centers across key markets in the Asia-Pacific region and forming strategic partnerships with local industry leaders, the company will establish a robust network infrastructure that aligns with recent escalating data demands through cloud and Artificial Intelligence (AI).

The APAC data center market is fit to burst

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Kelvin Fong, EdgeConneX’s Managing Director for the APAC region, said: “Cloud technology and the increasing adoption of AI, are likely to lead to significant expansion into markets beyond the traditional APAC markets of Singapore and Hong Kong.” These new markets are developing now in India and Indonesia due to burgeoning digital transformations in their economies and throughout the region.

Mr. Fong noted that governments in Southeast Asian countries are also being more proactive and supportive towards digital infrastructure development. Leaders have picked up on how digital advancement can lay the foundation for exponential economic growth in the coming years, by attracting new skill sets, creating employment opportunities, and fostering innovation and global competitiveness.

Fiber investment has also worked as a data center investment driver. Don MacNeil, EdgeConneX’s Chief Revenue Officer, said: “Investments in fiber optics hold great significance, both domestically and across the wider region. They are notably simplifying the challenge of connectivity and adding essential network diversity.”

How EdgeConneX is reaching APAC

Malaysia

Government digitalization in Malaysia has spurred interest in expanding its data center infrastructure. Mr. Fong said: “The local government is playing a catalytic role by facilitating land sales, ensuring power availability, and streamlining administrative processes. These efforts are attracting data center operators and end-users to the area.”

Malaysia was also taking advantage of the data center moratorium in Singapore, which was only lifted in 2022, and attracted much of the country’s outbound traffic. As a result, the industries in Johor and Kuala Lumpur have seen significant growth and are now key markets.

He added that there are new opportunities for “mega-campuses” in Greater Kuala Lumpur rather than just the center, where limitations on space and power availability make it expensive. Mr. Fong said: “In fact, they have already opened up some of the technology parks just to cater to the hyper-scalers.” Last year, EdgeConneX unveiled its plans to build data centers in downtown Kuala Lumpur, Bukit Jalil in Greater Kuala Lumpur, and Cyberjaya, with nearly 300 MW of total capacity. Malaysia’s dense network connectivity, power availability, multiple port cities, and connections to 22 submarine cables position it as a strategic data center destination.

Indonesia

Indonesia is Asia’s third most populous country, and its population is still growing, so data demands are likely to continue escalating in parallel. In 2022, EdgeConneX acquired the GTN data center, which allowed the company to gain an initial foothold in its ninth market in Asia. In September this year, it secured $403.8 million in investment to support the growth of a 120 MW hyper-scale data center campus in Jakarta. As well as the capital, Mr. Fong says that Eastern Java and Batam are becoming key data center markets in Indonesia. He said: “They’re not just drawing in international demand, but also experiencing substantial domestic interest. With a thriving community of e-commerce and fintech enterprises in Indonesia, there’s a significant surge in locally-driven demand.”

China

In December 2021, EdgeConneX unveiled its new strategic partnership with leading Chinese data center provider Chayora to help expand its solutions throughout the mainland, including in Tianjin and Greater Shanghai. Tech Wire Asia recently spoke with Chayora CEO James Wei, to discover his insights on how China can sustain a thriving data center landscape going into 2024.

Philippines

In 2022, EdgeConneX forged a partnership with Aboitiz InfraCapital to capitalize on its extensive local market knowledge, as well as its land and power assets in the Philippines. Presently, discussions are underway with potential customers about breaking ground.

Mr. Fong noted: “Aboitiz brings a wealth of essential components to the table for success in the market. With ownership of power resources and real estate, as well as involvement in the construction industry, they offer crucial assets. These complement our [EdgeConneX] global data center platform, build, and operational capabilities, which is why we’ve partnered with Aboitiz.”

India

EdgeConneX has partnered with Adani Enterprises, India’s largest multi-infrastructure organization, since 2021. The joint venture ‘AdaniConneX’, has already set up a data center in Chennai and aims to build out 1 GW of data center capacity by 2030.

Mr. MacNeil stated: “Adani not only brings just the local infrastructure expertise of the Adani Group but, more importantly, the infrastructure supporting power transmission and generation. Adani Group has a similar goal for renewable, sustainable energy; to be at 25 GW by 2025, and it’s well underway. So, in many cases, India has the advantage of significant, fresh investment on all aspects – not only digital infrastructure but also the broader infrastructure requirements.”

Challenges faced by the APAC data center industry

One of the main challenges of expanding the data center industry in Asia is doing so sustainably. Getting access to renewable energy directly, rather than via carbon offsetting, can be difficult in certain countries like Malaysia, Indonesia, and Singapore. Mr. Fong said: “The region’s commitment to sustainability is evident, with countries like Indonesia and Malaysia planning to significantly ramp up their renewable energy generation in the coming years. These initiatives will eventually power the burgeoning data center industry, ensuring a greener and more sustainable digital future for Southeast Asia.”

EdgeConneX is making significant strides in sustainable data center development, even in countries where it is less straightforward. For example, the deal struck for the hyper-scale data center campus in Jakarta was explicitly for ‘sustainability-linked senior facilities’, meaning it will be equipped with sustainability capabilities. Adjustments will be made to the financing terms when EdgeConneX meets certain Key Performance Indicators (KPIs) concerning the Power Usage Effectiveness (PUE) of data centers, the use of renewable electricity, and achieving safety goals.

Looking to the future

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As Mr. MacNeil noted, “Over the next 24 months, we will see the impact of the next wave of data center expansion, driven by AI, building on the already healthy pace of growth of Cloud. All of that also driving the virtuous infrastructure expansion in connectivity through terrestrial fiber optics and submarine cable expansion – it’s exciting to be a part of this wave.”

According to the Asia-Pacific Trade and Investment Report 2023-2024, the region posted a 9 percent growth rate in digitally deliverable exports from 2015 to 2022, outpacing the global average of 6.8 percent. Now, the continuation of this growth is paired with ambitious sustainability and net-zero goals, pledged by many APAC countries including China, Japan, South Korea, and Singapore.

EdgeConneX’s strategic vision and collaborations aim not only to meet the burgeoning demands of Cloud and AI but also committed to contributing to growth in a responsible and sustainable manner across the Asia-Pacific data landscape.

Mr. Fong said: “This sets the momentum for our investments in Indonesia and Malaysia. We aim to seize this market opportunity as it begins to rise. Therefore, pinpointing the optimal locations and timing is crucial for our success in this endeavor.”

To explore EdgeConneX’s comprehensive array of cutting-edge data centers throughout the Asia-Pacific region, and to inquire about tailored data center solutions for your business, visit the EdgeConneX website today.