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Capitalising on the changing data centre landscape in Thailand

Capitalising on the changing data centre landscape in Thailand

Thailand is heralded as one of the great development success stories, with remarkable progress in social and economic development over the last four decades, according to the World Bank1. Given the strong sustained growth and an internet economy that is growing at a healthy clip2, it is unsurprising that the digital landscape in this Southeast Asian nation is growing rapidly.

Rising data centre market

Despite the rising demand, the amount of colocation capacity in Thailand is low in relation to its population when compared to other countries in the region. According to Q3 2019 figures from a commissioned report by 451 Research titled “Thailand: MTDC Market Assessment3, Thailand has just 400,000 sqft of multi-tenant data centre (MTDC) operational space. In contrast, Malaysia with less than half the population of Thailand has 1,243,000 sqft, while Vietnam with 30 per cent higher population has 1,582,000 sqft.

This indicates a lot of room for growth in Thailand, which is readily evidenced by a five-year CAGR (2016-2022) of 16% for MTDC facilities – double the global average. It is no wonder that local providers are expanding their footprint, and cloud providers such as Amazon Web Services (AWS) has established country offices in Thailand4.

Moreover, the government also has a strong policy of promoting data centre business as part of its Digital Economy initiative. Specifically, Thailand 4.05 seeks to move the country forward by driving growth to its economy and businesses. One key prong of the plan is the development of the technology cluster and future industries, including digital technologies. This not only underscores the growing importance of data centres in Thailand but underscores the opportunities ahead for operators.

The digital landscape

To leverage the demand for digital, public cloud giants have either established a presence in Thailand or have rolled out their cloud platform within the country. In the last three years, eight local providers and two foreign providers have built new data centres or expanded existing ones, illustrating the diversity of the landscape.

To serve the growing presence, retail providers seek to differentiate themselves by offering additional value-added service that ranges from managed services to application hosting. They are offering connectivity-based services between providers within the same facility, or via dark fibre to a carrier hotel are commonly offered.

Interestingly, existing facilities tend to be clustered around Bangkok and are smaller in size, while larger facilities are generally located further away from the city. To be clear, the latter is also built to serve a Bangkok audience, but blends the advantages of cheaper land with slightly higher latency and lower ease of physical access. Regardless of location, demand can only go up with the COVID-19 crisis forcing a faster transition to digital.

Going hyperscale in Thailand

With demand projected to rise, how does the supply side of the equation look like? Can a fast-growing startup or public cloud giant access the capacity they need for rapid growth? According to Research Director Dan Thompson of 451 Research, wholesale data centre providers as a product exists but in limited capacity in Thailand. The majority offers prices based on a per-rack model rather than the power-based pricing or have limited ready capacity – additional space is not built out until it is sold.

This opens the door to hyperscale providers, which are highly scalable facilities that can meet rapid growth or high requirements very quickly. Aside from being built with scale in mind, hyperscale data centres typically also leverage cutting edge technologies and economies of scale for increased energy and cooling efficiency. Crucially, such a facility will be appealing to international cloud providers.

The ready availability of more cloud platforms which provide the speed, scalability, global reach and agility required by businesses will only spur innovation and lead to the creation of more digital services to accelerate digital growth in Thailand. Moreover, a local presence will ensure superior latency and compliance with existing or new data residency requirements. With two major public cloud providers in the country of around 70 million people, there is certainly ample room for additional major players to establish themselves in Thailand.

Poised to meet emerging demand

For now, rapid changes in technology is precipitating structural changes in the global economy. The embrace of digital communication is speeding up in Thailand, even as global mega-trends continue to shape both consumer behaviour and industrial production of new technologies adoption. Figures from before the pandemic estimated that the value of Thailand’s digital economy will surge to US$37 billion.

To support the growth of Thailand’s digital infrastructure and demand for new facilities, STT GDC Thailand is currently constructing Bangkok’s first hyperscale data centre campus with a total capacity of 40 MW. The campus will have a gross floor area of 60,000 sqm when fully fitted out, with the first building, STT Bangkok 1, scheduled for launch in early 2021. This will significantly increase the total capacity in Thailand, providing up to 80% of the total multi-tenant capacity. You can learn more about our upcoming campus at Hua Mak, Bangkok here.

¹The World Bank, Sep 2020, The World Bank in Thailand
²The Business Times, 31 Oct 2019, Thailand's internet economy 'healthy' but lags in digital adoption
³451 Research Special Report, Dec 2019, Thailand: MTDC Market Assessment
⁴Data Center Dynamics, 7 Feb 2017, Positioning Thailand as a data center hub
⁵Royal Thai Embassy, Thailand 4.0

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