Southeast Asia’s data center market is expanding rapidly with multiple investments and has been recognized as one of the fastest-growing digital markets worldwide. Triggered by the pandemic, the increase in household internet usage, booming of e-commerce, the standardization of cashless transactions, and the accelerating shift to the digital transformation of companies in the various sectors have heightened the demand for data centers in Southeast Asia, particularly the Philippines.
Our country has a growing tech-savvy population with a stronger digital appetite and adoption of technology. According to Data Reportal, the Philippines has 73.91 million internet users who spend 10 hours and 56 minutes online per day, the longest across the globe.
Peter Maquera, SVP for Globe Business, Enterprise Group, said that the Philippines continues to be the region’s earliest digital adopter, spending the most time on the Internet than any other country. As a result, total data traffic per capita grows by 55-60% annually and is expected to reach 40,903 petabytes (PB) by 2025, up from 473 PB in 2015. Data consumption per person every month, on the other hand, is expected to rise from 0.4 GB in 2005 to 28.9 GB in 2025.
According to Maquera, these three major developments are driving demand for data centers: (1) increased data traffic and consumption, (2) increased demand for edge computing, and (3) the possibility of the Philippines becoming a regional hub for cloud providers because of its strategic location.
“The data center is one of the foundations of digital infrastructure that enables the Internet to happen. This is a high growth, high potential area, and it’s something we’re very committed to. It is an important infrastructure that the Philippines needs to provide as it becomes digitalized,” he added.
UBS, a global financial services firm, sees the Philippines as an underserved market with tremendous opportunity, with strong demand from domestic and international operators due to data localization and consumer & enterprise demand for lower latency. Overall, the country is an ideal destination for meeting the hyperscale data center requirements of cloud and content providers.
Demand for Data Centers
With evident growth in online gaming, the emergence of the BPO industry, increasing use of cloud, big data, and IoT, as well as cybersecurity which will drive the market over the next few years, the Philippines is a remarkable market in Southeast Asia. The country’s data center market size will witness investments of USD 535 million by 2026, growing at a CAGR of 11.40% from 2021-2026.
The majority of data center service demand also comes from ICT companies, followed by fast-moving consumer goods (FMCG) companies, banking, financial services & insurance (BFSI), with the rest coming from hospitality, education, travel, and other industries.
With the numerous technological opportunities available in our country, tech giants have expressed their interest to build data centers, and Manila is their most preferred location followed by Mindanao and Cebu.
This year, Alibaba announced that it will launch a new data center facility in the Philippines by the end of 2021. Elastic Compute Service (ECS), database, global network solution, Content Delivery Network (CDN), and storage services, will be provided by the facility. Due to the anticipated demand for data centers by enterprises and cloud service providers looking to consolidate their workloads, the market is likely to see the entry of Stratus DC Management, which plans data center development in Manila.
Converge ICT Solutions reported to invest more than USD 20 million in the construction of a new data center in Mandaue, Philippines. The facility (P1) will be a six-storey building and will initially have 300 racks.
Meanwhile, PLDT Inc. announced to develop the Philippines’ largest and most powerful data center in an effort to attract global technology giants and cloud service providers. The new data center, according to PLDT, will be telco-neutral and will use “green technology” to make operations more sustainable.
Recently, GLOBE Telecom, Inc. is looking at expanding its data center capacity in order to meet more of the country’s latest demand for data center services.
Beyond the Data Center growth
More investments in data centers will help boost related jobs in the country, as these firms may seek people with skills in data science, machine learning, artificial intelligence, and business incubation.
According to Asian Institute of Management economist John Paolo R. Rivera, while there are ASEAN economies with superior infrastructure to operate data centers, there is an opportunity for the Philippines to participate in this emerging undertaking if we can harness the strengths in our human resources and existing knowledge capital. As a key step, more schools across the country are offering data analytics, artificial intelligence, and data science in their curricula. “This is a good starting point in signaling to investors that we have the skills, talents, manpower to supply the requirements of data centers,” he said.
An increase in the construction of hyperscale data center facilities will increase revenue for the country’s contractors and subcontractors. However, in order to attract data center investors, the Philippines must address “weak spots,” such as the high cost of electricity, power outages due to insufficiency of power supply, and the reliability of its infrastructure.
The government and regulators can start by imposing adequate competitiveness and incentives to encourage more players to invest in the development of sustainable green power generation and facilities, as well as by accelerating landmark legislation to promote the lower costs of doing business in the country.
“AVISO is a real estate consultancy firm that provides Valuation and Comprehensive Site Selection (CSS) services for the Data Center investors. Our team assists in the process of securing a new location for clients through a comprehensive approach that includes several criteria with consideration for technical, economic, social, and environmental aspects. For inquiries and property requirements, you may send us an email at brokerage@askaviso.com, or call us at (02) 8 570 6535 and 0917-629-8396.”
Written by: Mary Grace Ladringan and Angelo Gandia
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References:
https://datareportal.com/reports/digital-2021-philippines
https://mb.com.ph/2021/11/13/globe-business-to-expand-data-centers-to-serve-more-ph-enterprises/
https://business.inquirer.net/332780/pldt-to-lure-global-tech-giants-with-largest-data-center-in-ph
https://mb.com.ph/2021/06/01/ph-poised-to-be-asias-data-center-hub/
https://www.bworldonline.com/growth-in-countrys-data-centers-seen-to-boost-jobs-investments/
