Unlock Editor’s Digest for free
FT editor Roula Khalaf picks her favorite stories in this week’s newsletter.
Singaporeans are a competitive bunch. One of the essential Singlish words for those living in the city-state is kiasu. The Hokkien Chinese term roughly means fear of loss or loss, and often refers to someone trying to get ahead of others. “Fomo on steroids” is how one Singaporean friend describes it.
One of the best places to see this in action is the lunchtime queues around stalls at the city-state’s popular food markets. Another area to observe kiasu mentality in the Asian financial center is in business like foreign investment.
Singapore surprisingly announced last month that it would free up more energy for data center expansion. The move comes as the CEOs of Nvidia, Google, Microsoft and others have turned to neighboring Malaysia – and other Southeast Asian countries – in recent months to pledge billions in data center investment.
In Malaysia alone, technology groups — three of the four largest global companies by market capitalization — have invested $8.5 billion in new data centers, cloud and artificial intelligence in the past six months. Hence, more than one Malaysian government official joked that Singapore’s decision to court multiple data centers was “typically Singaporean”. kiasu reaction’ to his neighbor’s progress.
Of course, there is some competition between Singapore and its neighbours, particularly Malaysia, from which it gained independence in 1965. However, it is too simplistic to dismiss Singapore’s move as kiasu-ness — even if there is an element at play. The city-state is already hyper-connected and one of the largest data center markets in Asia, a trend that has accelerated as Hong Kong has become a less popular destination for data centers and submarine cables. It is one of the best submarine cable hubs in the world, with connections to 25 active submarine cables and more to come. None of this is going to change anytime soon.
The decision to increase data center capacity last month came as a surprise to many as the government imposed a more than three-year moratorium on new data centers between 2019 and 2022. The proliferation of devices that absorb energy consumed a significant amount of Singapore’s resources. The ban helped push data center companies to nearby Johor, the Malaysian state just across the causeway, and to some extent Batam, a nearby Indonesian island.
The conundrum Singapore now faces – like many other countries – is that it grossly underestimated how the demand for artificial intelligence will expand the global data center market in the coming years. The city-state has made little secret of its desire to be the AI hub for Southeast Asia, if not the top in Asia.
Being such a center brings other economic benefits. For example, as part of Nvidia’s data center investment in Malaysia, the company will partner with local conglomerate YTL Power to develop the country’s fastest supercomputers using Nvidia’s AI chips. Microsoft unveiled significant AI infrastructure investments in Indonesia and Thailand last month.
Singapore realizes that it cannot ultimately compete with its neighbors for land and power. The key is how to complement it. The reason why Johor is popular with global tech giants from ByteDance to Nvidia and Microsoft is because it is just a few kilometers away from hyper-connected Singapore.
“Both Johor and Singapore stand to benefit from the data center boom. They complement each other,” says Rangnath Salgame, chairman and managing director of Princeton Digital Group, an Asian data center company based in Singapore but expanding in Johor. It’s a “symbiotic relationship,” he adds.
And as more and more companies diversify their supply chains outside of China, that puts Singapore at the forefront. One way it can profit from this is by promoting the Singapore + One strategy, where companies set up headquarters in the country to take advantage of its international business environment, free trade agreements and access to professional talent, but then have their manufacturing facilities – or data centers – in the country. places like Johor.
This is already a long-term trend. Singapore was the largest recipient of foreign direct investment flows to Southeast Asia between 2013 and 2022, according to the latest data released by the bloc. In 2022, Singapore attracted US$141 billion in foreign direct investment, more than half of the region’s total. This is what Singapore should really be like kiasu?
mercedes.ruehl@ft.com