In back-to-back announcements, Google revealed its plans to build data centers and cloud regions in Thailand and Malaysia, an investment totaling more than $3 billion over the next six years.

With the growth of local data consumption and the need to adopt technologies such as AI and cloud computing, there has been a surge in data center and cloud region construction across Southeast Asia in recent years.

The Alphabet subsidiary joins global rivals AWS and Microsoft in investing in data center and cloud infrastructure in Southeast Asia, as local and regional data companies such as Singtel and ST Telemedia Global Data Centers also increase their presence in the region.

Google's investment in the two Southeast Asian countries is in line with the company's plan, outlined in 2022, to launch local cloud regions to make it easier and faster for public sector organizations, small businesses, startups and large enterprises to benefit from Google Cloud's on-demand compute and AI and machine learning (ML) resources.

The local cloud region provides customers with key controls that enable them to maintain high standards of security, data residency and compliance, including specific data storage requirements.

$1 billion investment in Thailand

The company said on Monday it will spend $1 billion (36 billion Thai baht) to build its first data center in Thailand's Chonburi province and its Google Cloud Region in Bangkok to meet growing demand for AI and cloud services.

Related:Johor in Malaysia consolidates its place as a data center hotspot

According to a Deloitte study, Google's latest investment has the potential to add $4 billion to Thailand's GDP by 2029 and support an average of 14,000 jobs per year from 2025 to 2029.

"Google's investment in its data center and cloud region in Chonburi and Bangkok, respectively, coupled with growing Thai expertise in cloud computing and AI, are perfectly aligned with our national Cloud First Policy," said Thai Prime Minister Paetongtarn Shinawatra in a statement.

The technology giant also pledged to continue supporting the development of AI skills in Thailand, in partnership with local organizations, to empower 150,000 more Thais by 2026. For the past five years, Google has been running training programs to help Thais update their digital skills. In 2023, the company launched an AI skills program for teachers, which has so far trained 20,000 people on how to use AI safely.

$2 billion expansion in Malaysia

Google on Tuesday held a groundbreaking ceremony for its first data center and cloud region in Malaysia's Elmina Business Park located in Selangor.

The company said its $2 billion investment is expected to generate more than $3.2 billion in positive economic impact by 2030. It will also create 26,500 jobs.

"These facilities will not only empower our manufacturing and service-based industries – particularly the small and medium businesses (SMBs) – to leverage advanced technologies like AI and cloud computing, but also enhance our industries' capacity to move up the global value chain," said Utama Zafrul Aziz, minister of Investment, Trade, and Industry, in a statement.

The news about Google's investment in data center and cloud infrastructure in the country came a day after the company announced its partnership with Dagang NeXchange Berhad (DNeX) to offer next-generation sovereign cloud solutions in Malaysia, targeting organizations in regulated industries such as public services, healthcare and energy.

Google says its new data center in Malaysia will use water-cooling technology, which uses about 10% less energy than air-cooled facilities, resulting in 10% fewer carbon emissions.

"We will continue our responsible stewardship of natural resources by improving community watershed health and ecosystems in Malaysia and helping to drive local adoption of renewable energy sources," said Ruth Porat, president and chief investment officer of Alphabet and Google, in a statement.

Data center development in Southeast Asia

In a recent analysis published in July, Hong Kong-based investment banking firm ARC Group noted that the surge in data center construction in Southeast Asia is being fueled by the region's expanding digital economy, increased Internet penetration, and growing need for robust digital infrastructure.

"Countries like Singapore, Malaysia, Thailand, and Indonesia are leading this transformation, positioning SEA as a global digital hub," the article said.

Citing figures from the World Economic Forum, ARC Group said the region's data center market attracted $10.23 billion in investments in 2023, with projections reaching $17.73 billion by 2029. Meanwhile, the data center construction market is expected to grow at a CAGR of 11.18% to reach $5.29 billion by 2029.

"The future of data centers in Southeast Asia looks promising, but foreign companies will face several complex challenges. These include navigating diverse regulatory requirements across different regions, managing high energy consumption, and meeting increasing demands for sustainability and energy efficiency," the article said.

The push for greener and more efficient facilities will lead to stricter environmental regulations, which will influence the development and location of data centers, it pointed out.

"Additionally, companies must deal with land acquisition issues and varying infrastructure quality across the region," the article added.