Singapore cautiously moves forward on new data centre development

The Singapore government embarked on a review of its data centre industry in 2019.

After a lengthy moratorium on new data centre developments, Singapore is poised to once again open the doors to new development proposals, albeit under a more selective framework.

The Singapore government embarked on a review of its data centre industry in 2019, establishing a moratorium on new developments and engaging industry in the process.

From the government’s perspective, the review was a necessary step because, although data centres are important enablers for the city-state's digital economy, they are also intensive users of resources.

“We had to find a way to manage the growth of DCs [data centred] in a sustainable manner consistent with our climate change commitments,” said Singapore Minister for Trade and Industry Gan Kim Yong in a written reply to Parliament question time, published 11 January.

Gan also noted that, as of 2021, Singapore claimed more than 70 operational data centres, with a total available IT capacity of about 1,000 megawatts (MW).

According to Gan’s reply, the government’s review into new data centre developments has now come to its completion, with the Singapore Economic Development Board (EDB) and the country’s Infocomm Media Development Authority (IMDA) soon to engage industry.

“EDB and IMDA will engage the industry soon to share more details and seek their feedback,” Gan said. “While we continue to welcome DC investments, we intend to be more selective of which DCs we can accommodate.  

“In particular, we seek to anchor DCs that are best in class in terms of resource efficiency, which can contribute towards Singapore’s economic and strategic objectives. We will also put in place measures to raise the efficiency of existing DCs over time,” he added.

Early last year, Chan Chun Sing, who was at the time the country’s Minister for Trade and Industry, detailed the government’s sustainability goals associated with energy and water-hungry data centre infrastructure.

“Singapore’s political stability and reliable infrastructure are conducive for operating DCs. However, DCs are intensive users of water and electricity,” Chan said at the time. “We will thus need to manage the DC ecosystem to ensure that it is environmentally sustainable, while supporting our business needs.

“We will strive for quality, not quantity – this means we seek to anchor a range of DCs that can meet both industry and society’s needs, are best in class in terms of resource efficiency, and that continuously innovate to push the boundaries of resource efficiency of DCs in a tropical climate,” he added.

Despite the moratorium, Singapore has remained one of the prime targets for new data centre developments in Southeast Asia, with many of the big players looking to establish or broaden their respective footprints in the country.

As reported in November last year, it is expected that Singapore will see further demand for data centre and hosting services in the next few years as cloud adoption and remote working trends continue to rise.

The total addressable market size of data centre and hosting services in Singapore, in terms of spending opportunity, is expected to increase at a compound annual growth rate (CAGR) of 6.1 per cent between 2020 and 2025, according to the latest figures by analyst firm GlobalData.

“The presence of [a] large number of technology-focused businesses, coupled with the government’s focus on adoption of cloud technology for disbursement of various public services will help drive data centre and hosting spending in Singapore to reach US$2.1 billion [S$2.87 billion] in 2025,” said Saurabh Daga, technology analyst at GlobalData.