Asean datacenter hub could prove irresistible

Companies and operators will enjoy streamlined tax and regulatory processes should the Southeast Asian markets collectively create a datacenter hub, but much work still to be done to see this become reality.
Written by Kevin Kwang, Contributor

SINGAPORE--As individual markets, Southeast Asia countries such as Thailand, Indonesia and Malaysia may only have a limited appeal to companies and datacenter operators. However, a collective Southeast Asia datacenter hub could offer a more attractive proposition, and this should be something the region's governments should look to develop.

According to Wong Ka Vin, managing director of CSF Asia, a Malaysia-based datacenter operator and service provider, each market in Southeast Asia has its pros and cons when it comes to hosting a data center. Singapore, for one, might have the technology and government support but it lacks land and the cost to build and maintain these facilities is high.

Malaysia, on the other hand, has the land and cheaper energy prices but falls short in terms of skilled manpower, he said. Wong was speaking at the DatacenterDynamics Converged conference held here Thursday.

As such, there is a unique opportunity for the various emerging markets to pool their resources and collaborate with Singapore to form a Southeast Asia datacenter hub. This vision could be advanced as part of the free trade agreement negotiations the various member states in the Association of Southeast Asian Nations (Asean) are currently having, the executive pointed out.

Wong noted datacenter operators such as CSF could offer multinational companies the opportunity to deploy or host datacenters in various markets in Southeast Asia, and not have to worry about meeting the various compliance and tax regulations in these different economies. It could offer customers a single billing and licensing contract and cut down on the time and administrative hassle otherwise required to build or manage a data center in the region, he explained.

The executive acknowledged the idea is some way from being realized, but he is confident governments in Thailand, Malaysia, Indonesia, Philippines and Singapore do see the value in such a regional hub and will try to make it happen.

Regulations, cloud impacting investments
The proposal of a common datacenter market in Southeast Asia is also timely as more companies in the region and multinational companies (MNCs) with regional outposts will increasingly have to comply with stricter data protection laws.

George Rockett, CEO of DatacenterDynamics, said during the event one of the main drivers for companies to invest in new datacenters or retrofit existing ones this year and in 2013 would be to comply with industry regulations.

Another key push would be the increasing adoption of virtualization and cloud computing services, Rockett noted. This explains why a large proportion of the projected datacenter investments for 2013 is aimed at refurbishing existing facilities, and the technologies they are looking to deploy revolve around system optimization instead of infrastructure and building fabric, he noted.

Research firm Canalys had earlier predicted Asia-Pacific will lead in datacenter expenditure in 2012 and the years ahead. Its study, released in July, stated global datacenter infrastructure investments will grow by 6 percent to reach US$128 billion by end-2012 and this is expected to expand steadily for the next four years.

Asia-Pacific will be the fastest-growing region over the next five years and will account for a quarter of worldwide datacenter infrastructure expenditure by 2016, it added. Businesses in China and India, in particular, are investing heavily in infrastructure to provide online services to their customers, said Alex Smith, senior analyst at Canalys.

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