Partner Bangkok
"With rising cloud adoption, a booming digital economy and an increasing demand for secure data storage, the country is strategically positioning itself as a leading data hub in Southeast Asia."
Market overview and Trends
Thailand is rapidly becoming a key player in the data centre industry. With rising cloud adoption, a booming digital economy and an increasing demand for secure data storage, the country is strategically positioning itself as a leading data hub in Southeast Asia.
Key market drivers include:
- explosive internet growth: ASEAN’s internet users surged from 360 to 400 million in 2020, with Thailand reaching 63.21 million users by early 2024, intensifying the demand for data infrastructure and processing capacity;
- rising data traffic and cloud adoption: businesses and consumers are increasingly reliant on cloud computing, driving demand for scalable, secure and high-performance data centres;
- strategic location and connectivity: positioned as a key regional hub, Thailand facilitates cross-border data traffic for Vietnam, Cambodia, Laos and Myanmar, reinforcing its competitive advantage within ASEAN;
- government support and investment incentives: the Thai Board of Investment (“BOI”) has greenlit nearly 50 projects worth THB730bn, including two hyperscale data centres, underscoring the country’s ambition to become a regional data powerhouse; and
- sustainability and green energy focus: with forward-thinking policies such as the Utility Green Tariff (“UGT”) and Direct Power Purchase Agreements (“PPAs”), Thailand is proactively addressing the data industry’s growing need for renewable energy solutions.
With the Thai data centre market valued at US$652m in 2023 and projected to reach US$1.54bn by 2030, its growth trajectory is undeniable. However, sustaining this momentum will require Thailand to go beyond policy frameworks, delivering robust infrastructure, competitive energy solutions and a regulatory environment that instils investor confidence.
Analysis
1. Policy developments
"To establish Thailand as a ‘Digital Innovation Hub’, the Thai government has introduced progressive policy developments."
To establish Thailand as a ‘Digital Innovation Hub’, the Thai government has introduced progressive policy developments. A cornerstone of this strategy is the Cloud First Policy, to transition government operations into a digital framework with cloud-based infrastructure. Aligned with the Thailand 4.0 economic model, the policy supports industries within the digital economy. Whilst this initiative enhances public sector efficiency and cybersecurity, it also expands market opportunities for private-sector data centre operators looking to serve government contracts.
To fully capitalise on this shift, key challenges must be addressed. Cybersecurity readiness, interoperability between public and private systems, as well as data localisation concerns could either accelerate or hinder the policy’s intended impact.
2. Investment incentives
Thailand is positioning itself as an attractive destination for data centre investment through a mix of tax and non-tax incentives:
- up to eight years of corporate income tax exemption with no cap on exempted amounts;
- exemptions on import duties for machinery, raw material used in research and development and in export-related production; and
- non-tax incentives, including land ownership rights, foreign fund remittance privileges and the ability to hire skilled international talent.
With other ASEAN nations offering competitive incentives, investors must assess Thailand’s long-term viability. Infrastructure scalability, power supply reliability and operational costs will ultimately determine whether Thailand remains a top-tier investment destination.
3. Cost efficiency and strategic infrastructure
Thailand’s cost advantages are a critical selling point. The country boasts lower setup and operational costs than Singapore and Indonesia, making it a more financially viable option for operators looking to scale efficiently.
Moreover, Thailand’s infrastructure is rapidly evolving to support the data economy:
- robust network connectivity via submarine cable networks ensures high-speed data transfer across global markets;
- the Eastern Economic Corridor (“EEC”) provides a strategic investment zone dedicated to high-tech industries, including data centre development; and
- its central location within ASEAN makes Thailand an ideal base for serving regional data needs with minimal latency.
"Thailand is taking decisive steps to integrate renewable energy into its data centre landscape."
4. Renewable energy sources access
As data centres account for an increasing share of global energy consumption, sustainability has become a key investment driver. Thailand is taking decisive steps to integrate renewable energy into its data centre landscape through:
- Utility Green Tariff (“UGT”): a mechanism enabling operators to procure renewable energy with certified green electricity verification; and
- Direct Power Purchase Agreements (“Direct PPAs”): allowing data centre operators to buy up to 2 GW of renewable power directly from producers, facilitating cost-effective, long-term sustainability commitments.
Whilst these initiatives are promising, challenges remain. Investors must scrutinise the availability and scalability of renewable energy sources, as well as the regulatory landscape governing Direct PPAs. The Energy Regulatory Commission’s upcoming 2025 policy announcement will be a key milestone in determining the success of Thailand’s sustainability push.
Regulatory regime
Licences
Business operators may be subject to different licence requirements depending on their corporate and operational structures. However, data centre operations specifically in Thailand fall under the telecommunications sector, requiring compliance with regulations set by the National Broadcasting and Telecommunications Commission (“NBTC”). As regulations continue to evolve, businesses must stay ahead of licensing requirements and anticipate future compliance shifts.
Personal data protection
Thailand’s Personal Data Protection Act (“PDPA”) imposes strict obligations on data centre operators. Modeled after the EU’s GDPR, the PDPA mandates strong cybersecurity measures and data-handling protocols. Operators must ensure compliance not only to avoid penalties but also to bolster customer trust and competitive positioning.
Challenges and Opportunities
Developing Regulatory Framework
Whilst Thailand has made strides in policy development, regulatory uncertainties still pose challenges. Key areas requiring clarity include:
- Land Ownership Post-BOI Incentive Expiration: how will foreign investors navigate land rights after incentives lapse?; and
- Foreign Business Restrictions under the Foreign Business Act B.E. 2542 (1999): are reforms on the horizon to make investment more accessible?
Future Outlook and Key Considerations for Investors
"The next five to ten years will determine whether the country can successfully leverage its strategic location, cost advantages and sustainability commitments to outpace its ASEAN competitors."
- ASEAN’s Data Centre Race: though Thailand is making bold moves, Singapore’s entrenched leadership, Malaysia’s rising incentives and Indonesia’s scale create a highly competitive environment;
- Energy Strategy as a Differentiator: reliable and scalable renewable energy access will determine which markets attract the largest hyperscale data centre investments; and
- Regulatory Consistency and Investment Confidence: transparent, long-term regulatory frameworks will be crucial in attracting and retaining investment.
Outlook
Thailand has all the ingredients to become a major data centre hub, but execution is key. The next five to ten years will determine whether the country can successfully leverage its strategic location, cost advantages and sustainability commitments to outpace its ASEAN competitors. Investors and industry players must remain vigilant, proactive, and strategic in navigating Thailand’s evolving digital infrastructure landscape.
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