DIGIVESTASI - Google announced plans to build new data centers in Bangkok and the Chonburi industrial zone to meet the growing demand for cloud computing in Southeast Asia, following Microsoft's recent investment in Thailand. Microsoft had earlier announced the construction of its first data center in Thailand in May 2024 to enhance its cloud and artificial intelligence (AI) infrastructure.

According to Ruth Porat, President and Chief Investment Officer of Google and its parent company Alphabet, this investment is expected to help businesses, innovators, and communities in Thailand leverage cloud and AI technologies.

Details of Google’s investment were disclosed following a meeting between Porat and Thailand’s Prime Minister, Paetongtarn Shinawatra, who emphasized that Thailand is becoming a major digital hub in Southeast Asia. Google’s data center will be built in Chonburi, while its cloud facility will be located in Bangkok.

Economic Impact on Thailand

A Deloitte report estimates that Google’s expansion will add around $4 billion, or approximately IDR 60.81 trillion, to Thailand’s GDP by 2029, while also creating 14,000 jobs between 2025 and 2029. This investment comes a year after former Prime Minister Srettha Thavisin sought to attract U.S. tech companies like Google, Microsoft, and Tesla during his visit to New York.

Although Thailand is the second-largest economy in Southeast Asia, its technology sector lags behind Singapore and Indonesia, historically focusing more on manufacturing, agriculture, and tourism. The Thai government hopes that investments from Google and Microsoft will help modernize the economy and diversify income sources.

Thailand’s Office of the National Digital Economy and Society Commission aims to have the digital economy contribute up to 30% of GDP by 2027.

Digital Investments in Southeast Asia

In addition to Thailand, other Southeast Asian countries like Vietnam are also vying for tech investments from U.S. companies. Vietnam, traditionally known for producing goods such as shoes and clothing, is now focusing on advancing its high-tech sector. Recent reports suggest that Elon Musk’s SpaceX is planning to invest $1.5 billion in Vietnam to reduce reliance on China.

Microsoft has also announced significant investments in Southeast Asia. In May 2024, CEO Satya Nadella revealed that Microsoft would invest $2.2 billion in Malaysia over the next four years to support digital transformation. In Indonesia, Microsoft is investing $1.7 billion to strengthen its cloud and AI services, including building data centers and training 2.5 million people in the region by 2025.

AI Potential in Indonesia

Indonesia is seen as a country with significant potential for attracting AI and digitalization-related investments. The Indonesian Chamber of Commerce and Industry (Kadin) recommends focusing on AI and energy transition to achieve the 8% economic growth target set by President-elect Prabowo Subianto. Pandu Sjahrir, Head of Kadin Indonesia’s Economic and Financial Technology Agency, emphasized the need to simplify digital investments and infrastructure development.

Kadin estimates that Indonesia needs $20 billion (IDR 313 trillion) to build data centers capable of supporting AI. In comparison, Malaysia, with a much smaller population, has an infrastructure backlog of 1.5 gigawatts, while Indonesia is expected to require 2 gigawatts to meet its digital needs.

A recent report shows that 49% of businesses in Indonesia’s financial sector have prioritized the use of AI to improve customer service, and 51% of financial institutions are utilizing this technology in their daily operations.

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