The Philippines lags behind Thailand, Indonesia, and Malaysia in attracting hyperscalers and global companies for their data center needs.
According to Megawide chairman and CEO Edgar Saavedra, these countries are more appealing due to their lower power costs and attractive incentives, such as tax breaks.
Power in Thailand, Indonesia, and Malaysia is 20% to 30% cheaper than in the Philippines, a significant factor for data centers, particularly those supporting artificial intelligence, said the construction magnate and engineer.
“The government must take action, or we will truly be left behind,” said Saavedra, whose Megawide Corp. has a data center venture with Singapore’s Evolution Data Centres in the Philippines. “The big players, the hyperscalers, are heading to Malaysia, Indonesia, and Thailand.”
Saavedra, along with several bilyonaryos such as the Sy family, Jaime Augusto Zobel de Ayala and Manuel Pangilinan, has been building data centers in anticipation of growing demand driven by digitization, cloud adoption, IT industry expansion, and the rise of artificial intelligence.
The Philippine data center market’s revenue is expected to reach $638.70 million this year and forecast to grow 6.2% annually from 2025 through 2029, according to Statista.
Still, despite being among the first in the region to enter the data center market, the Philippines is being left behind by Thailand, Indonesia, and Malaysia.
Colocation revenues in Indonesia and Malaysia are expected to reach $675.1 million and $710 million this year, respectively, and are projected to grow to $1.89 billion and $1.87 billion by 2030, according to Mordor Intelligence.
Thailand is expected to generate $509.3 million in colocation revenue this year, with growth projected to reach $1.20 billion by 2030. Over the same period, Philippine colocation revenue is expected to grow from $392 million to $1.16 billion.
Thailand is very aggressive in marketing its data centers, with government officials joining marketing roadshows of Thai private companies to attract data center clients.
To be competitive, the Philippine government would need to provide incentives for data centers similar to those former President Gloria Arroyo extended to call centers, which helped boost the local BPO industry into the largest after India, according to Saavedra.
Aside from the higher cost of power, internet connectivity in the Philippines is also not as reliable as in Thailand, Indonesia, and Malaysia, according to an executive of a company providing outsourced business services.
‘The Philippines needs to address power and interconnectivity issues if it wants to be a regional leader in data centers,’ the BPO executive said.
Evolution Data Centres Philippines Inc., the joint venture between Megawide and Singapore, is in talks with prospective locators, but nothing has been signed yet, according to Saavedra.
Under a 2023 deal, the joint venture will design, build, and operate a carrier-neutral 69-megawatt colocation data center in Cavite. The first phase, covering a 23-MW deployment over five years on a four-hectare property, will cost $300 million.