Data centres in Thailand: powering the digital future

The United States leads in data centre development, boasting around 3,000 data centres that consume between 16 and 18 gigawatts of power. This power consumption is projected to double or even triple in the next three to four years, posing significant challenges in terms of sourcing adequate electricity.

Thailand currently has around 43 data centres and has emerged as the third-largest data centre market in the ASEAN region, following Singapore and Malaysia. This ranking is attributed to Thailand’s strategic location, which offers access to Southeast Asia and proximity to China and India, a reliable power supply, and a burgeoning digital economy. It is estimated that Thailand’s data centre market will expand by 31% over the next four years, attracting USD 7.8 billion in investment from now to 2027. Major tech companies such as Amazon Web Services, Google, and Microsoft have made substantial commitments to building cloud and AI infrastructure in Thailand. Recently, Nvidia's CEO, Jenson Huang, visited Bangkok to establish a partnership with Siam.AI Cloud.

The rising demand for data centres presents numerous opportunities. These include data centre construction and maintenance, cloud services, IT infrastructure such as servers and networking equipment, renewable energy solutions, cooling systems, cybersecurity, and consulting services.

Power Consumption and Cost of Electricity

1. Thailand:

• Electricity cost: The average cost of electricity in Thailand is around USD 0.10 to USD 0.12 per kilowatt-hour (kWh).
• Renewable energy: Thailand has been actively promoting renewable energy, with a goal to increase the proportion of renewables to 30% of total energy consumption by 2037. The country has significant investments in solar, wind, and biomass energy.

2. Singapore:

• Electricity cost: Singapore has one of the highest electricity costs in the region, averaging around USD 0.20 to USD 0.25 per kWh.
• Renewable energy: Due to limited land, Singapore focuses on solar energy and innovative solutions such as floating solar panels.

3. Malaysia:

• Electricity cost: The cost of electricity in Malaysia is relatively low, averaging around USD 0.07 to USD 0.10 per kWh.
• Renewable energy: Malaysia is investing in solar and hydropower, aiming to increase the share of renewables in its energy mix.

4. Vietnam:

• Electricity cost: Vietnam has one of the lowest electricity costs in the region, around USD 0.07 per kWh.
• Renewable energy: Vietnam is rapidly expanding its renewable energy capacity, particularly in solar and wind power.

Thailand's focus on renewable energy makes it ideal for sustainable data centres. Solar, biomass, biogas, and hydropower are key renewable options.

In 2024, Thailand’s Board of Investment updated its list of promoted activities to include data hosting, which is listed as “Activity 8.2.4, Data Hosting Services”. Qualifying data hosting services are eligible for an exemption from corporate income tax for eight years, an exemption from withholding tax on the payment of dividends, along with other tax and non-tax incentives, such as an exemption from duties on imported machinery to be used in the project, the right for foreign entities to own land, and expedited work permits for foreigners.

As the demand for data centres grows, opportunities to enter the data centre value chain are increasing, with significant investments of all sizes being made across various segments. Investors should prioritize legal structuring and the maintenance of financial records to ensure compliance with the Thai Revenue Department.

At Forvis Mazars, we specialize in providing comprehensive legal, tax, and accounting outsourcing services tailored to the needs of businesses in the data centre industry. Our team of experts can help you navigate the complexities of compliance, optimize your financial records, and ensure that your investments are structured for success.