How Asia’s Data Center Boom is Reshaping Emerging Markets
A seismic shift is underway in the digital infrastructure of emerging Asia. As artificial intelligence and cloud computing fuel unprecedented demand for data storage and processing power, nations like India, Malaysia, and Thailand are rising as global hotspots for data centre investment.
The global hunger for cloud services and AI-driven computing is pushing hyperscalers to look beyond the crowded, costly landscapes of the US and Western Europe, according to a new report by banking giant Barclays.
In their search for affordable land, scalable energy, and supportive regulation, investors have increasingly turned their gaze eastward. The Asia-Pacific region now attracts 36 percent of global data centre Foreign Direct Investments (FDI), up from 29 percent a decade ago.
India and Malaysia lead this charge. Malaysia’s Johor region, strategically located near Singapore, has seen capacity skyrocket from 10MW in 2021 to 1,500MW in 2024. India, meanwhile, has doubled its capacity to 1.2GW since 2020, underpinned by rapid digitalisation and government incentives.
New Digital Hubs: Winners Emerge
Barclays' analysts segment the emerging markets into three blocs: mature (e.g., Singapore), upcoming (India, Malaysia, Thailand), and emerging (Indonesia, Philippines). While Singapore remains a leader in capacity, its previous moratorium on new data centres has nudged investment towards its neighbours, especially Malaysia.
By 2030, India is projected to hold 3.4GW of capacity, with $19 billion in FDI flowing into the sector. Malaysia follows closely with an estimated $12 billion, or roughly 2 percent of its GDP, the largest relative share in the region. Thailand is catching up quickly, but its benefits are likely to accrue closer to the decade’s end.
Powering Growth Without Draining Resources?
The economic upside is substantial. The report forecasts that data centre-related service exports, such as cloud computing, could more than double by 2030. These inflows are expected to offset any increase in goods imports (like servers and cooling systems), thus cushioning current account balances.
Still, the energy and water demands of high-density server farms are raising concerns. AI workloads require up to five times more electricity than traditional computing, pushing countries like Malaysia and India to rethink their renewable energy strategies and grid investments. Data centres could consume up to 4 percent of Malaysia’s national electricity by 2030.
Sustainability and Strategy Go Hand-in-Hand
Governments are responding. Malaysia has introduced guidelines around Power Usage Effectiveness (PUE) and water efficiency. India and Thailand, however, are still playing catch-up in terms of green regulation. Meanwhile, corporate players — from Amazon to Tencent — are being called upon to bridge gaps in environmental performance.
For countries looking to attract investment while staying green, challenges remain: grid bottlenecks, limited water infrastructure, and fossil fuel dependencies. Yet with strategic reforms and cross-sector collaboration, the emerging data centre capitals of Asia may be able to achieve both growth and sustainability.
The Road Ahead: Green Power or Growing Pains?
Barclays’ analysts are cautiously optimistic. Despite potential headwinds from more efficient AI models like DeepSeek, the region’s appetite for data infrastructure shows no signs of slowing.
With the right mix of policy, investment, and innovation, EM Asia may not just be the next frontier for data centres, but the engine room of the global digital economy.
