Prime Insight
Prime Insight

Singapore – The Hub of Data Centres in Asia

Posting date: 26 February 2020
Sylvia McCoy our consultant managing the role

Why Are Companies Flocking to Singapore in a Data-Driven World?

Global companies rely on flow of data globally, and Singapore is fast becoming a global data centre giant. Could this be why IBM is intensifying its approach in Singapore? Are there any challenges that need to be overcome? 

Singapore – Asia’s Top Data Centre

In a recent report published by Cushman & Wakefield (C&W), Singapore is named as the only mature data centre market in South East Asia, and the third most competitive in the world. 

The C&W Data Centre Competitiveness Index scores countries and cities on factors that include ease of doing business, energy, security, and corporate tax rates. Between the latest report and the 2017 report, Singapore has risen by four places on the global list, and retained its top ranking in South East Asia. Pushing Singapore up the list is its performance in areas such as improving high-speed connectivity, its political stability, and relatively low risk of natural disasters. 

Singapore has a great geographical position for organisations serving the Asian markets, especially clients in Thailand, Malaysia and Indonesia. It also has a highly robust infrastructure. 

High-Tech Companies Are Flocking to Singapore

Such advantages have attracted many high-tech companies to Singapore. Companies such as ST Telemedia, Equinox and Digital Reality have bought plots in Singapore, but Facebook’s US$1 billion investment is the one that has attracted the most attention. 

Facebook plans to open its first Asian data centre in Singapore in 2022. It will be powered by renewable energy and a state-of-the-art cooling system to cope with Singapore’s temperatures, to enable the company to host its servers and centralise its IT operations. 

Facebook will join other global giants with data centres in Singapore – Google has two, and is working on a third. As the rollout of 5G continues, demand for data centres will grow. The sheer speed of 5G will lead to an explosion in the consumption of data as the ecosystem of smart devices expands. Singapore is ahead of the game in 5G, and should rollout 5G mobile networks by 2020. This makes it even more attractive as a data centre location to companies Alibaba and Amazon Web Services.

Singapore to Lead the World’s Leading Data Centre Region

C&W has forecast that South East Asia will be the fastest region for co-location data centres during the next five years, with a CAGR of 13%. The Asia Pacific region looks set to surpass North America as the world’s largest co-location data centre by 2021/2. It could grow to US$28 billion by 2024, compared to North America’s expected US£23.4 billion. 

In South East Asia, Thailand, Indonesia and Vietnam are attempting to make inroads into Singapore’s standing as the region’s lead data centre. However, Singapore is some way ahead and likely to remain so as global companies seek a sophisticated infrastructure, stable political environment, and the geographical location to support their own expansion plans in the Asian region.

Data Integration or Fragmentation?

There are more than 80 colocation data centres in Singapore. IBM opened its first there in 2011, with a $38 million investment in an Asian Pacific cloud computing data centre. These data centres serve regional customers. 

However, speaking at IBM’s Think Singapore Conference in August 2019, Singapore’s Trade and Industry Minister Chan Chun Sing has questioned the willingness of countries to integrate. He said that companies that rely on cross-border data flow might be at risk of a fragmented industry because of this challenge. 

Responding, IBM’s Asia Pacific CEO Harriet Green said that there is a difference between “securing your data and being open about your data”. She noted that IBM would continue to recruit skills and talent from around the world, as it grows its diverse workforce and continues to “keep free trade and global trade alive and kicking”. 

IBM is committed to Singapore. Green highlighted Singapore’s open economy, regulatory system and ecosystem as strong reasons for being there. IBM is intensifying its investment and dedication in Singapore. 

The different industries and technologies in Singapore have encouraged IBM to consider Singapore operations as stand-alone market, rather than part of the Asean group. Does this mean fragmentation? Green thinks not. As she points out, IBM has experienced many different levels of globalisation during its 108-year history. Throughout, the company has remained committed to open and fair trade. 

Perhaps IBM’s strategy will be replicated by other high-tech and innovative companies as they expand their operations in the Asian regions. Select the most advantageous location for their data centres, ensure security of data, and then integrate across markets to keep global trade alive and kicking. To make this happen, Green says that an organisation should focus on three factors to build competitive advantage: 

• Enhancing customer experience through the implementation of intelligent workflows using AI 

• Infrastructure must be modernised, and focused on a hybrid cloud environment 

• Reskilling and ensuring trust 

Talented employees are going to be key to making every organisation’s goals a reality. To take advantage of the rapid growth in Asian data centres, and to secure your next exciting opportunity, contact the team at Prime Insight for a confidential discussion about your future in data.

data analytics graph on laptop

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