The Philippines In The Ascendant
The digital landscape of Asia is in a dynamic flux, with the relentless growth of online services, e-commerce, and cloud computing fuelling an insatiable demand for data storage and processing capabilities.
For years, Singapore has reigned supreme as the region’s pre-eminent data centre hub; its strategic location, robust infrastructure, and business-friendly environment attracting global hyperscalers and enterprises alike. However, the city-state’s very success is now presenting a significant challenge: the scarcity of land and resources is increasingly limiting its capacity for further expansion. Similarly, neighbouring Malaysia, another key player in the Southeast Asian data centre market, is reportedly nearing the limit of its operational capacity. This confluence of factors has created a unique window of opportunity for a nation brimming with potential: the Philippines.
With a dynamic digital economy, a burgeoning online population1, and growing support from its government, the Philippines is positioning itself strategically as the compelling alternative data centre hub in Southeast Asia.
The groundwork has already been laid. Several global hyperscalers, including Google Cloud Platform (GCP), Amazon Web Services (AWS), and Tencent2, are establishing their operational presence within the archipelago. These leading providers recognise the Philippines not merely as a consumer market, but as a pivotal growth engine within the Southeast Asian digital ecosystem. Cloud data solution providers echo this sentiment, viewing the Philippines as a key territory for expansion and investment.
Cloud computing is growing in Asia3 with several reports estimating that the region is one of the fastest growing in the world. As demand is primarily from online or e-retail, application development, business operations services, digital financial services and smart government projects, global hyperscalers see the potential that is an underdeveloped Philippines.
The fundamental drivers for this burgeoning demand are deeply rooted in the Philippines’ unique digital profile. As one of the fastest-growing social media and online content markets in Asia, the nation exhibits an ever-increasing appetite for digital services, online content consumption, and services. This organic growth in digital activity necessitates a robust and scalable data centre infrastructure to support the seamless delivery of digital services. Furthermore, the ambitious digital government programmes championed by the Marcos administration will significantly amplify this demand. Initiatives aimed at digitalising government services, streamlining processes, and enhancing government to citizen engagement will invariably lead to a surge in data generation, collection, transactions, storage, inevitably outstripping the current supply of available computing power, data storage and cloud infrastructure.
Beyond these overarching trends, specific government agendas are further catalysing the need for advanced data centre capabilities. The Bureau of Internal Revenue’s (BIR) Tax Reform for Acceleration and Social Inclusion (TRAIN)4 launched in 2018 is now pushing for mandatory e-invoicing for all taxpayers and transaction, which means the digital storage and processing of vast amounts of transactional data. Similarly, the Department of Information and Communications Technology’s (DICT) National Cybersecurity Plan (NCSP)5 cybersecurity initiatives necessitate secure, resilient data storage processing facilities to mitigate threats by anonymising and safeguarding critical data and infrastructure.
The transformation of the Business Process Outsourcing (BPO) sector, a cornerstone of the Philippine economy, from labour-intensive operations to a digital automated industry is driven by evolving client demands and a tightening talent pool. The growing dependency on Artificial Intelligence, automation tools, analytics and an enhanced cybersecurity posture, are all escalating demand for robust data centre infrastructure in the country.
The thriving application development and mobile wallets ecosystem as well as the exponential growth of online and social media content creation further underscore the insatiable demand for modern digital infrastructure in the Philippines.
However, realising the country’s ambition of becoming a premier data centre hub is not without its challenges. The nation’s data cloud and networking infrastructure, including the telecommunications networks, requires significant modernisation. Data centre operations and the seamless flow of digital information will will be hampered with the current infrastructure and spotty connectivity6. While showing progressive development, the telecommunications infrastructure necessitates immediate, substantial, and sustained investment to scale up to the robust connectivity, low latency, and high bandwidth essential for supporting the digital economy and services. Addressing these infrastructure gaps is paramount to attracting further investment and ensuring the reliability and efficiency of future data centre deployments.
Despite these hurdles, the momentum is building. Recognising the immense potential of this sector, key players have announced significant investment plans, signalling a strong vote of confidence in the Philippines’ future as a data centre destination.
A notable number of new data centre facilities are anticipated to come online within the next 12 months7, representing a substantial increase in capacity and a tangible step towards realising the nation’s aspirations. This influx of investment and the development of state-of-the-art facilities will only address the immediate demand but any foundation for long-term growth and innovation of the digital economy requires investment from the government, the private sector and people (talent).
The Philippines possesses a unique combination of factors that makes it an increasingly attractive alternative to established data centre hubs. Its strategic geographic location offers connection to North Asia and the rapidly growing Southeast Asia region. Its young and tech-savvy population provides a readily available talent pool, although there is a serious need for talent re-skilling and development8 to support the running of these complex facilities.
In conclusion, the Philippines stands at an inflection point. The limitations faced by established hubs like Singapore and Malaysia have opened a door of opportunity, and the Philippines is actively stepping through it. The convergence of a rapidly growing digital economy, government initiatives, and the potential makes the nation a prime candidate to become Asia’s next data centre powerhouse. While significant investments in telecommunications and energy infrastructure as well as continued focus on creating a favourable regulatory framework are crucial, the momentum is undeniable.
The Philippines is not just pitching to be an alternative; it is actively building the foundations to become a vital and dynamic hub in the evolving digital landscape of Asia. The coming years will be crucial in solidifying this position, and all signs point towards a future where the Philippines plays a central role in powering the region’s digital growth.
Over the last decade of operating in the Philippines, we have participated and seen at first hand the exhilarating development of this space. With the advent of the Internet and digital transformation, we recognise that there is significant potential for growth but education is required.
The private sector as well as international investors need to hear about the innovation, the hunger and desire of the population for next generation digital services and solutions. We have seen how education – working through the media/press, influencers, regulators and industry has enabled the growth and development of sectors in the Philippines. This has been the most effective approach for successfully enabling our international clients to engage in the Philippines.
With 40 years of experience partnering with clients across the Asia Pacific, Priority Consultants specialises in crafting public relations (PR) campaigns that address key decision-makers’ critical concerns and challenges. Our business (B2B) communications and PR practice is designed to engage and educate senior leadership.
Speak with us today to discover how we can support your journey and help you and your organisation achieve your business objectives to tap on this exciting growth as well.
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