13 July 2018
With scores of different providers within a small area of 700 square kilometres, Singapore is well-established as a data centre hub in Asia. How did the tiny city-state growing into a veritable digital powerhouse though, and what are the various drivers expected to fuel further growth into the next decade?
A recent market forecast published earlier this year by reputable industry analyst firm 451 Research sheds some light into how an active supply pipeline, demand and high-quality facilities all play a part.
The Singapore hub
Quality facilities aside, an undeniable part of Singapore’s success story would undoubtedly be its global connectivity through an extensive submarine cable system. Singapore serves as a connection hub for much of Asia, and is a landing point for cables that reach throughout the globe. Indeed, the report pointed to the more than a dozen active submarine cable systems here, with new cable systems such as the 100Gbps Indonesia Global Gateway (IGG) system coming online this year.
Industry insiders in Singapore may have observed an apparent slowdown in the growth of data centres of late. While the figures tally with this observation: A lower 12% supply growth in 2017 compared with 19% the previous year, 451 Research says there is an explanation for it. The reduced builds in 2017 followed two years of heavy investments into expansion and new facilities. As existing facilities fill up, expect the construction of new facilities to quickly gain momentum.
Singapore and Hong Kong are inevitable compared, given their similarity and the virtual tie in terms of operational space. The drivers behind both cities couldn’t be more different, however. Hong Kong is often seen as the digital gateway both into and out of China, while Singapore is ideal as a launchpad into the rest of Southeast Asia. Their disparate roles mean that multinationals are more likely to deploy data centres at both locations.
Financial and cloud
Several various standards have been developed in Singapore over the years to establish common baselines for compliance and to help organizations better understand the capabilities of providers. This ranges from the Multi-Tier Cloud Security (MTCS) standard for cloud providers to the BCA and IMDA Data Centre Green Mark standards for the efficient use of resources within data centres.
To regulate the adoption of proper risk management for financial institutes, the Monetary Authority of Singapore (MAS) have established a set of guidelines known as “Technology Risk Management” for financial institutes operating in Singapore to comply with. Pertaining specifically to data centres would be the Threat and Vulnerability Risk Assessment (TVRA), which establishes guidelines in hardening areas such as perimeter fencing against forcible entry or terrorism.
The appeal of TVRA is such that even non-financial firms have voluntarily adopted the TVRA criteria – including some data centres outside of Singapore. And while the report noted that demand growth in both Hong Kong and Singapore have shifted from the financial services, securities, and insurance verticals to large-scale cloud and content providers, the high adoption rate means that TVRA is here to stay.
Moving into the future
There is no question that Singapore grew into a data centre hub by accident. Part of the success stems from a supportive government that rolled up its sleeves to lay the groundwork required for digital transformation. Indeed, while the report noted that Singapore’s power prices have been relatively high in the past, this was recognized by the government which has made ongoing efforts to reduce electricity prices since 2015.
Another evidence of strong government support in the sector can be seen from the establishment of Tanjong Kling (Formerly known as Singapore Data Centre Park). A substantial plot of land was set aside for the development of data centres, and shored up with the requisite power sub-stations, roads, utilities and fibre ducts for the rapid establishment of new facilities (Our purpose-built Telin-3 data centre is located at Tanjong Kling).
For now, 451 Research is optimistic about Singapore’s colocation and wholesale data centre market. It predicts that Singapore’s will see a CAGR of 8% and reach S$1.42bn (US$1bn) in revenue by 2021, up from S$1.06bn (US$739m) in 2017, which is higher than the revenue figure of US$900M for Hong Kong.