The digital infrastructure sector in Southeast Asia has been undergoing a significant transformation over the last few years. A major part of that historically has been cloud and five gs adoption. However, generative AI is likely to be the most important trend driving digital infrastructure adoption across Southeast Asia over the next ten years.
There are three countries vying for this demand coming from generative AI, Singapore, Malaysia, and Indonesia.
In my prior video, we discussed which generative AI demand profiles are likely to land in which country. Singapore would have been best placed to capitalize the demand generated for generative AI. However, challenges around land and power availability rule them out as a critical player in the market in the short term. Singapore has said they'll make more capacity available, however, the timing is unclear.
Indonesia is also in a good position to win in this market, but it'll come down to their ability to rapidly expand in Vietnam.
Malaysia is the best place to win in this current wave given their expanding footprint of hyperscalers, land and power availability, and most importantly its proximity to Singapore.
If you look at the capacity development plans announced by the three countries, it's very clear why Malaysia is likely to stand out in the medium to long term. Malaysia is forecasting approximately two point four gigawatt of capacity over the next five to seven years. If all these plans are executed they would have grown at circa thirty percent CAGR to twenty twenty seven. Indonesia currently has more capacity than Malaysia under construction, but there are not many announcements yet for future capacity builds. Thailand and Vietnam are not currently in the mix, but that could change in the next few years. As we conclude this three part series, the most important takeaway for investors is to remember that generative AI is a significant tailwind.
However, not all geographies are going to benefit equally from this trend. Australia, Malaysia, Indonesia are the best placed to win in this market in the short to medium term.