ASEAN is emerging as a leading destination for Foreign Direct Investment (FDI) in Information and Communication Technology (ICT), fuelled by rising investments in data centres, cloud computing, and digital infrastructure. According to the ASEAN Investment Report 2025, ICT FDI inflows increased more than fivefold from US$2.5 billion in 2016 to approximately US$11 billion in 2024, while announced greenfield ICT investment rose 43 per cent to US$30 billion.
This growth reflects a convergence of global and regional trends. As investors seek greater geographic diversification, digital resilience, and alternatives to traditional data centre hubs, ASEAN has emerged as an attractive destination due to its competitive cost structure, improving connectivity, and expanding digital ecosystem. In many ASEAN locations outside Singapore, data centre development costs are estimated to be around 20 per cent below the global average, while power costs can be 20-30 per cent lower.
At the same time, strong domestic demand is reinforcing ASEAN’s attractiveness. The region’s digital economy is projected to expand from US$263 billion in 2024 to around US$600 billion by 2030, driven by growing adoption of cloud computing, artificial intelligence (AI), e-commerce, fintech, and other digital services. This combination of global investment shifts and rapidly expanding digital demand is accelerating investment in data centres and digital infrastructure across the region. Although ICT accounted for only around 5 per cent of total FDI inflows in 2024, its rapid growth underscores its increasing strategic importance and ASEAN’s transition towards a more digital, higher value-added, and knowledge-intensive economy.
Policy Approaches to Attracting Digital and ICT Investment
ASEAN Member States (AMS) are increasingly adopting policies to attract digital investment while advancing broader digital transformation objectives. Through the implementation of national digital economy and digital transformation strategies, such as Malaysia’s MyDIGITAL (2021), the Philippines’ Philippine Digital Strategy 2022-2028, Singapore’s Smart Nation 2.0 (2024), Thailand’s Digital Economy and Society Development Plan and National AI Programme 2025-2027, and Viet Nam’s National Digital Transformation Programme to 2025 with a Vision to 2030, AMS have strengthened ecosystem readiness to support the growth of the digital economy. These frameworks are significant as they incorporate key features such as digital economy targets, digital infrastructure development (including 5G deployment, public Wi-Fi, cloud adoption, and e-government implementation), digital skills development programmes, and enabling regulatory frameworks, including dedicated digital governance bodies, AI strategies, and data-related legislation.
At the same time, data centre-focused investment promotion and facilitation measures, such as Indonesia’s Nongsa Digital Park, the Philippines’ Green Lane for Strategic Investments, and Viet Nam’s Decision No. 2161/QD-TTg on Data Centre and AI Development, demonstrate the region’s growing readiness to attract digital FDI. These measures commonly provide up to 100 per cent foreign ownership, access to renewable energy through mechanisms such as Direct Power Purchase Agreements (DPPAs), dedicated land allocation, fiscal incentives, one-stop investment services, streamlined licensing procedures, long-term land availability, flexibility in employing foreign talent, and ready-to-use infrastructure for data centre and AI-related investments.
AMS are increasingly introducing digital talent development and attraction initiatives to support the growth of digital industries and strengthen their competitiveness in attracting digital FDI. Programmes such as Cambodia’s Digital Skill Development Roadmap 2024-2035, Malaysia’s Golden Pass Scheme, the Philippines’ Digital Nomad Visa (DNV), Thailand’s Long-Term Resident (LTR) Visa and AI talent programmes, and Viet Nam’s Semiconductor Human Resource Development Programme demonstrate the region’s recognition that talent availability is a critical enabler of digital investment. These initiatives commonly combine specialised digital, AI, and semiconductor workforce development programmes with digital talent mobility measures, including digital nomad visas, expedited work visas and employment passes, long-term residency schemes, streamlined immigration procedures, and fast-track work authorisation for highly skilled technology professionals needed to support the growth of data centres, AI, semiconductor, and other digital industries.
Several AMS have also moved ahead in balancing digital infrastructure expansion with sustainability objectives. Examples include Malaysia’s New Investment Incentive Framework (NIIF), Thailand’s BOI High-Efficiency Data Centre Criteria, and Singapore’s Data Centre Regulatory Framework, Green Data Centre Roadmap (GDCR), and Green Mark for Data Centres 2024 (GDMC:2024). These initiatives increasingly align investment incentives with sustainability outcomes by expanding eligibility criteria beyond investment size alone to include contributions to environmental performance, innovation, energy efficiency, skills development, local economic linkages, and the creation of high-value employment.
Table 1: ASEAN Member States Policy Approach to Digital and Data Center FDI
| Policy Area | Selected Initiatives | Main Features |
| National Digital Economy and Digital Transformation Strategies | MyDIGITAL (Malaysia, 2021); Philippine Digital Strategy (Philippines, 2022-2028); Smart Nation 2.0 (Singapore, 2024); Digital Economy and Society Development Plan and National AI Programme 2025-2027 (Thailand); National Digital Transformation Programme to 2025 with a Vision to 2030 (Viet Nam) | Promote digital infrastructure, AI adoption, digital services, innovation ecosystems, and digital talent development. |
| Investment Promotion and Facilitation Measures | Nongsa Digital Park and Special Economic Zones (Indonesia); Green Lane for Strategic Investments (Philippines); Decision No. 2161/QD-TTg on Data Centre and AI Development (Viet Nam) | Facilitate digital investment through streamlined approvals, one-stop services, fiscal incentives, land access, and dedicated digital investment zones. |
| Digital Talent Development and Attraction Programmes | Digital Skill Development Roadmap 2024-2035, TVET 1.5M Programme and Skills Development Fund (Cambodia); Golden Pass Scheme (Malaysia); Digital Nomad Visa (DNV) (Philippines); Long-Term Resident (LTR) Visa and AI talent programmes (Thailand); Semiconductor Human Resource Development Programme (Viet Nam) | Support digital, AI, and semiconductor industries through specialised workforce development and digital talent mobility measures, including upskilling and reskilling programmes, digital nomad visas, expedited work visas and employment passes, long-term residency schemes, and streamlined work authorisation for highly skilled technology professionals. |
| Quality- and Sustainability-Oriented Investment Incentives | New Investment Incentive Framework (NIIF) (Malaysia); BOI High-Efficiency Data Centre Criteria (Thailand); Data Centre Regulatory Framework, Green Data Centre Roadmap (GDCR), and Green Mark for Data Centres 2024 (GDMC:2024) (Singapore) | Encourage investments that support sustainability, energy efficiency, innovation, workforce development, technology transfer, local linkages, and high-value economic activities. |
Source: ASEAN Secretariat, compiled from publicly available information
At the regional level, ASEAN continues to advance digital transformation and economic integration through initiatives such as the ASEAN Digital Masterplan, the ASEAN Connectivity Strategic Plan (ACSP), and the forthcoming Digital Economy Framework Agreement (DEFA), which aim to deepen digital integration, enhance cross-border cooperation, and support a more seamless regional digital economy. ASEAN also continues to strengthen its overall investment environment through continuous follow-up works and improvements in the ASEAN Comprehensive Investment Agreement (ACIA), ASEAN Trade in Services Agreement (ATISA), ASEAN Investment Facilitation Framework (AIFF), and ASEAN Services Facilitation Framework (ASFF), which contributes to enhanced market access, transparency and ease of doing business, including growing digitalisation of investment-related procedures. More recently, ASEAN has reinforced the sustainability dimension of investment policymaking through initiatives such as the Regional Investment Policy Action Plan (RIPAP) and the ASEAN Sustainable Investment Guidelines (ASIG), which encourage the integration of sustainability consideration into investment policy and promotion efforts.
Opportunities and Challenges
The continued expansion of digital FDI presents a major opportunity for ASEAN. Global investment in data centres is projected to approach US$7 trillion by 2030, while ASEAN’s data centre market is expected to grow from US$10 billion in 2023 to US$18 billion by 2029, outpacing global growth. Beyond capital inflows, digital investments generate spillovers across construction, energy, telecommunications, and digital industries, while supporting AI adoption, productivity growth, and technological upgrading. The Asian Development Bank (ADB) estimates that AI adoption could increase GDP growth in developing Asia by 0.2-1.8 percentage points by 2030.
However, at the same time, competition for digital FDI is intensifying as investment becomes increasingly dominated by a small number of global technology firms and megaprojects. Geopolitical considerations, including data sovereignty, cybersecurity, AI governance, export controls, and access to advanced technologies, are also becoming more influential in investment decisions. In addition, the growing complexity of the digital infrastructure ecosystem including different data center type which serves different group of customers, requires stronger coordination among stakeholders such as operators, equipment manufacturers, investors, and regulators to ensure digital resilience, energy security, sustainability, and effective data governance.
Energy reliability and sustainability are also emerging as important determinants of FDI location decisions, particularly for energy-intensive digital infrastructure such as data centres and AI facilities. Global data centre electricity demand is projected to reach 219 GW by 2030, with AI expected to account for 50-70 per cent of computing demand. As hyperscalers increasingly prioritise renewable energy and low-carbon infrastructure, ASEAN’s ability to expand renewable energy deployment, strengthen grid infrastructure and cross-border power connectivity, and facilitate mechanisms such as Direct Power Purchase Agreements (DPPAs) will be critical to attracting the next generation of digital and AI-related investments.
Table 2: Illustration on Ecosystem of Digital Investment
| Stakeholder Group | Role in Digital FDI Ecosystem | Example Companies |
| Investors & Capital Providers | Provide funding for land acquisition, construction, equipment procurement, and expansion. Often include infrastructure funds, REITs, sovereign funds, private equity, and strategic investors. | GIC, Temasek, KKR, Blackstone, DigitalBridge, Equinix REITs |
| Data Center Operators | Develop, own, and operate data center facilities. Responsible for uptime, cooling, power, security, and leasing capacity to customers. Core recipient of digital FDI. | Equinix, Digital Realty, CyrusOne, ST Telemedia GDC, Princeton Digital Group |
| Cloud Service Providers (Hyperscalers) | Drive demand for large-scale digital infrastructure. Lease substantial data center capacity or build their own facilities to support cloud services. | AWS, Microsoft Azure, Google Cloud, Alibaba Cloud, Oracle Cloud |
| Equipment Manufacturers | Supply critical hardware such as servers, networking equipment, cooling systems, power systems, and storage technologies. | Dell Technologies, HPE, Cisco, Schneider Electric, Vertiv |
| Network & Telecommunications Providers | Ensure connectivity through fiber networks, submarine cables, internet exchange points, and telecom infrastructure. Critical for regional integration. | Singtel, Telekom Malaysia, Telkom Indonesia, AIS, Viettel |
| Engineering, Construction & Facility Providers | Design, build, retrofit, and maintain data center facilities, including power, cooling, and security infrastructure. | AECOM, Arup, Turner & Townsend, Jones Lang LaSalle (JLL) |
| Energy Providers | Supply electricity and increasingly renewable energy for data center operations. Energy availability is often a key investment factor. | PLN (Indonesia), Tenaga Nasional Berhad, SP Group, regional renewable developers |
| Enterprise Customers | Lease infrastructure for business applications, data storage, cybersecurity, and digital transformation initiatives. | DBS Bank, Grab, AirAsia, Petronas, regional enterprises |
| Digital Platforms & Technology Firms | Create demand for scalable digital infrastructure through e-commerce, streaming, AI, fintech, and digital services. | Sea Group, Grab, GoTo, ByteDance, Netflix |
| SMEs & Startup Ecosystem | Consume cloud and colocation services without making large infrastructure investments, contributing to digital economy growth. | ASEAN startups, fintech firms, SaaS providers |
| Governments & Regulators | Establish investment rules, data governance frameworks, cybersecurity standards, land-use approvals, and incentives impacting FDI decisions. | Investment promotion agencies, telecommunications regulators, data protection authorities |
| End Users | Indirect stakeholders whose demand for digital services drives investment in infrastructure, cloud, and connectivity. | Consumers using e-commerce, digital banking, AI, streaming, and online services |
Way Forward
Develop a coordinated ASEAN digital investment strategy. ASEAN should position itself as a trusted, reliable, and neutral hub for data centres, cloud services, AI, semiconductors, and other digital industries, while leveraging complementarities among ASEAN Member States (AMS). The strategy should adopt a whole-of-ecosystem approach to investment facilitation, taking into account the different requirements of digital infrastructure projects, including site selection, talent, energy, and other supporting infrastructure. It should also encourage the dispersion of investments beyond major metropolitan centres by promoting investment-ready locations and digital growth corridors across the region, while taking into account the different development needs and comparative advantages of AMS.
Key elements could include the development of special economic zones (SEZs) for digital industries, the identification and promotion of investment-ready locations, regional digital skills programmes, stronger public-private cooperation on energy supply and renewable energy deployment, targeted investment promotion measures, and the utilisation of the Regional Investment Policy Action Plan (RIPAP) as a platform for a more coordinated regional approach towards sustainable digital investments, including green data centres, and streamlined incentives such as land availability, permitting processes, and investment incentives. On the latter, AMS should also adding objectives to maximise its broader economic and sustainability benefits, such as adding additional criteria such as efficiency, technology transfer, research and development (R&D), skills development, local supplier linkages, and high-value job creation.
This strategy should be supported by the gradual development of ASEAN as a single digital economy, investment, and energy area. This includes advancing ASEAN as a more integrated digital economy through the implementation of the ASEAN Digital Masterplan and the conclusion of the Digital Economy Framework Agreement (DEFA), while continuing ASEAN Economic Community (AEC) initiatives that reduce barriers to the movement of capital, services, talent, data, and digital business activities, thereby creating a more seamless regional market for digital investments. On the energy front, ASEAN should accelerate the implementation of regional sustainability initiatives and the ASEAN Power Grid to strengthen cross-border electricity connectivity and facilitate access to reliable and renewable energy, which is increasingly critical for digital transformation, data centre development, and AI-related investments.
Main References
- ARC Group. 2025. Southeast Asia Data Center Whitepaper 2025. Singapore: ARC Group.
- Asian Development Bank (ADB). 2026. Asian Development Outlook April 2026: Special Topic – AI Readiness and Economic Impacts in Asia and the Pacific.
- ASEAN Secretariat and United Nations Conference on Trade and Development (UNCTAD). 2025. ASEAN Investment Report 2025: Foreign Direct Investment and Supply Chain Development. Jakarta: ASEAN Secretariat and UNCTAD.
- Google, Temasek, and Bain & Company. 2025. e-Conomy SEA 2025: From Digital Decade to AI Reality. Singapore: Google, Temasek, and Bain & Company.
- Maybank Research. 2024. ASEAN Data Centre: Ride the Multi-Year Data Centre Wave. Singapore: Maybank Investment Bank Research.
United Nations Conference on Trade and Development (UNCTAD). 2025. World Investment Report 2025: International Investment in the Digital Economy. Geneva: United Nations.
