Microsoft has announced plans to build an AI cloud region and data centre infrastructure in Thailand to capitalise on growing demand for cloud services. The investment has the potential to attract more foreign data centre investors across the value chain to accelerate Thailand's strategic ambitions in the technology sphere, according to research by BMI, a Fitch Solutions company.
The Thai enterprise sector's strategic shift towards generative AI and external data storage management is precipitating a marked increase in data centre capacity requirements. Our data indicates a substantial projected uptick in expenditure on cloud services across both private and public domains.
Between 2023 and 2030, BMI expects the value of the local cloud market to expand from $1.22 billion to $7.28 billion. This trajectory is further bolstered by government initiatives like "Ignite Thailand 2030", which is designed to position the country as a key digital economy hub within the region by 2030, enhancing innovation and research and development infrastructure.
However, we believe that sustained cloud market growth and an IT market value of $19.1 billion in 2028 may not necessarily provide sufficient grounds to attract foreign investors in data centres.
The government's engagement with key players in the industry, such as Microsoft, for potential investments underscores the need for strong regulatory action in order to grow the data centre ecosystem in emerging markets.
We view the investment as beneficial, particularly as the bulk of Thailand's future data centre capacity, which totals 165.75 megawatts, relies on a 150MW campus planned by CtrlS, Asia's largest data centre operator, and National Telecom.
According to our estimates, the current capacity offered by the Thai data centre industry is approximately 72.4MW. Peer markets like Indonesia already boast live capacity of 144MW and are seeking to greatly expand their infrastructure due to the sizeable computing requirements imposed by AI applications.
Under our core view, initiatives such as the Thai Data Centre Alliance have been proposed to better compete against regional peers, as the country's pipeline of future data centres hinges on a single project still in the MoU phase.
We expect that Microsoft's investment will greatly boost the planned capacity figures, although neither the capacity of the new data centres nor their locations have been disclosed.
Overall, we expect the key drivers of future data centre partnerships and future investments, beyond the evident demand for additional capacity, will be fierce regional competition in Southeast Asia to become the next tech hub after Singapore. This will be complemented by a proactive government stance to attract industry players through favourable regulatory intervention.