As AI takes the world by storm, Asia stands to benefit

Prof. Syed Munir Khasru

South China Morning Post
October 16, 2024

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Driven by industries ranging from finance to healthcare and manufacturing, worldwide demand for artificial intelligence infrastructure is rapidly increasing. Global AI spending is projected to reach US$632 billion by 2028. This rise is particularly evident in Southeast Asia, where governments and the private sector are embracing AI and cybersecurity to secure digital assets, improve automation and boost economic resilience.

Cybersecurity is becoming a critical focus in the region. Global cybercrime costs are estimated to be as high as US$10.5 trillion next year, creating a pressing need for enhanced security frameworks.

Southeast Asia is becoming a key player in the global digital infrastructure landscape, driven by a booming demand for AI and cybersecurity. Major technological firms are increasingly choosing to host their data centres in the region, fuelling the growth of digital services, cloud computing and AI capabilities.

This trend is contributing to economic growth, particularly through job creation and the development of skilled labour in fields such as data centre engineering, AI development and cybersecurity.

Southeast Asia has quickly emerged as an ideal destination for data centres, thanks to the lower operational costs, access to renewable energy and political neutrality. Singapore, Malaysia, Thailand, Indonesia and Vietnam are leading the way with digital infrastructure enhancements. Demand for data centres is expected to grow by 20 per cent annually in Southeast Asia over the next few years, largely driven by the need to support AI innovations and cloud computing services.

Singapore remains the top destination for data centres, offering superior infrastructure and a stable regulatory regime. Despite a moratorium between 2019 and 2022 due to environmental concerns, Singapore now houses around 1.4 gigawatts (GW) of data centre capacity and expects to add 300 megawatts in the coming years. Recent projects include those by Microsoft, Equinix and ByteDance.

Malaysia is emerging as a regional competitor, attracting investments from tech giants such as Amazon Web Services (AWS) and Microsoft. With plans to reach around 1.6GW of data centre capacity, Malaysia’s market is set to grow rapidly. AWS alone has pledged US$6 billion towards establishing cloud regions and data centres across the country.

Thailand and Indonesia are also receiving significant attention. AWS has announced a US$5 billion investment in Thailand to set up a new cloud region, while Indonesia is becoming a major player with its push for digitalisation across industries.

The rest of Asia is also seeing significant advances, albeit at a slower pace. Countries such as India, China, Japan and South Korea are expanding their digital infrastructure to tap into the global demand for AI and cybersecurity.

China, Asia’s largest economy, has a massive data centre footprint, primarily driven by its tech giants, which include Alibaba Group Holding (owner of the Post), Tencent and Huawei Technologies. The country is investing heavily in AI development and cybersecurity capabilities, with the government pushing for digital sovereignty and localised data storage.

Japan and South Korea are also leaders in AI and cybersecurity research, driven by strong government policies and established tech ecosystems. Japan’s focus on AI and robotics has made it a global leader in AI applications, while South Korea’s cybersecurity market is expected to grow significantly, with the value of the digital forensics market alone reaching US$3.52 billion by 2031.

India is at the forefront of South Asia’s digital revolution. Power demand for its data centres is estimated to reach as high as 15GW by 2030, and the value of its data centre market is expected to grow to US$21.87 billion by 2032. Investments from companies such as Google, which has pledged US$10 billion to India’s Digitisation Fund, and AWS, which plans to invest US$12.7 billion in data centres in the country, are positioning India as a key player in the AI and cybersecurity space.

Growing demand from Western countries, led by the United States, is a key driver of investments in Southeast Asia and the rest of the region. Google, Microsoft and AWS have been instrumental in expanding Asia’s digital infrastructure. Cybersecurity demand from the US and Europe is also driving investments in South Asian countries. India, in particular, is becoming a cybersecurity hub, with companies such as Palo Alto Networks and IBM investing in local research and development.

As global cyber threats increase, Western companies are seeking to outsource cybersecurity services to South Asian nations where operational costs are lower and talent is abundant.

Despite Southeast Asia’s rapid progress, challenges remain for individual countries. Singapore’s high operational costs, especially in data centre construction (US$11.40 per watt compared to US$8.40 per watt in Malaysia), may push companies to look at alternatives such as Johor in Malaysia. As sustainability becomes a key consideration for data centre operators, the energy dependency of some Southeast Asian countries is another issue, especially with growing emphasis on the use of green energy.

China, on the other hand, embroiled in a tech stand-off with Western powers, is concentrating on self-sufficiency in AI innovation instead of attending to global demand. Meanwhile in India, challenges such as unreliable power supply, internet connectivity issues and a shortage of skilled talent are more pronounced.

Southeast Asia’s data centre boom is positioning the region as a digital powerhouse, attracting significant investments from global technology firms. The region’s ability to offer lower costs and its geopolitical neutrality makes it an attractive destination for AI and cybersecurity infrastructure. As Western demand for digital services continues to grow, Asian economies stand to benefit, though the pace and scale of development will vary based on each country’s unique challenges and opportunities.

Link:

https://www.scmp.com/opinion/asia-opinion/article/3282348/ai-takes-world-storm-asia-stands-benefit