Asia is fast becoming a global data centre powerhouse, driven by the rapid growth of its digital economies, surging internet penetration, and increasing demand for cloud services and AI infrastructure. Governments across the region are investing in digital infrastructure, while global tech giants and regional players are establishing large-scale data centres to meet both local and international demand.

From India to Indonesia and Japan to Malaysia – and all points in-between - countries across Asia are competing to attract data centre investment. Many are succeeding and this digital infrastructure boom is now see as reflecting upon Asia’s technological rise whilst also signalling major economic benefits for host economies in terms of job creation, energy investments, and digital sovereignty.

Southeast Asia's digital ascendancy

Southeast Asia, in particular, has emerged as one of the fastest-growing data centre markets in the world. According to Structure Research, the region’s colocation and hyperscale data centre capacity is expected to more than double by 2027.

Singapore is a case in point. Despite its land constraints, the city state remains a top regional data hub due to its robust connectivity and pro-business environment. Being one of the most politically stable states in Asia helps too. Singapore had previously imposed a moratorium on new data centres due to environmental concerns, but has since reopened with new sustainability-focused regulations. Because of this, Microsoft and Google recently announced multi-billion dollar investments to expand their existing facilities in Singapore, incorporating AI-ready infrastructure and renewable energy commitments.

However, high demand and space limitations have prompted companies to look beyond Singapore and just across the northern border to Malaysia which has emerged as an attractive alternative. Johor, on the border across from Singapore, is now seeing a surge in data centre investments. In April 2024, Google unveiled plans to invest $2bn to build its first data centre and cloud region in Malaysia. This follows earlier announcements by Microsoft, which pledged to establish a new data centre region in the country to support its Azure services.

Indonesia, Southeast Asia’s largest economy and on Singapore’s southern border, is also witnessing a rapid data centre expansion. Amazon Web Services (AWS) is developing a major cloud region in the current capital Jakarta, while Tencent and Alibaba Cloud have already set up data centres to tap into Indonesia’s 270mn-strong population and growing e-commerce market. How the siting of these facilities will play out when the capital moves to Nusantara is still years away but a questions worth pondering early.

India meanwhile is nothing short of an emerging giant in having positioned itself as a global digital infrastructure hub. With its burgeoning internet user base – already the second largest globally – and strong government support under the Digital India initiative, the country is seeing significant data centre activity.

In 2024, Google Cloud opened a new region in Delhi-NCR, while Microsoft has announced plans for a third cloud region in Hyderabad. Indian conglomerates are also heavily involved.

Reliance Jio, through its partnership with Microsoft Azure, is building a network of data centres across the country, and Adani Group, another major player, has committed to building several hyperscale facilities, including a data centre park in Visakhapatnam on the Bay of Bengal coast

The Indian government’s data localisation regulations and the rising demand for sovereign cloud services are fuelling this momentum. States like Maharashtra, Tamil Nadu, and Uttar Pradesh are actively offering incentives such as land subsidies and fast-track approvals to attract investment.

Up in North Asia, countries like Japan and South Korea continue to lead in data centre development due to their advanced digital economies and technology sectors.

Japan has been a long-standing leader in IT infrastructure and in 2023, Amazon invested over $13bn to expand its AWS data centres in Tokyo and Osaka. Meanwhile, NTT Communications is expanding its own facilities to support AI and 5G applications. Japan’s stable power grid, skilled workforce, and demand for AI compute make it a key strategic hub in the Asia-Pacific region.

South Korea being home to tech giants like Samsung and LG, is also stepping up with Incheon and Seoul both seeing new investments, including recent plans by Oracle and IBM Cloud to boost their cloud infrastructure. The South Korean government has already launched smart city initiatives and is encouraging green data centres to power its future digital economy.

Taiwan too now hosts a Google data centre spread across 15 hectares in the centre of the country, and is already home to almost 30 other such sites - albeit many smaller in scale.

Economic benefits

The rise of Asia as a data centre hub is also bringing considerable economic benefits. Data centres create both direct and indirect employment from construction and engineering to IT services and facility management. According to a 2023 report by Deloitte, each hyperscale data centre could create up to 1,000 full-time equivalent jobs during the build phase and hundreds more during subsequent operations.

Moreover, data centres catalyse broader digital ecosystems. They attract cloud service providers, fintech firms, e-commerce platforms, and AI startups, contributing to the growth of local tech industries; in Malaysia, Johor’s data centre growth has spurred demand for fibre connectivity, logistics services, and renewable energy projects.

Energy is another key driver. Many companies are committing to carbon neutrality, prompting investments in green power. India’s Adani Group is known to be linking its data centres to solar farms, while Singapore and Japan are exploring data centre cooling innovations to help reduce emissions.

Beyond economics, digital infrastructure also has significant implications. Governments increasingly see data sovereignty and secure cloud storage as national priorities. Hosting domestic data onshore improves cybersecurity, regulatory compliance, and resilience against cross-border political risk.

Yet, while challenges remain such as accommodating energy demands, guaranteeing land availability, and environmental impact, the benefits are compelling. Asia’s data centre boom is not just a story of technological progress, but one of economic empowerment, digital sovereignty, and global rebalancing.