Singapore’s Data Center Sector
Singapore's Data Centers: Rules, Perks, And Investment Options
Singapore is well-known for its advanced telecommunications industry, characterized by an outstanding network system and exceptional worldwide connectivity. Backed by a strong government commitment to innovation and economic growth, the country has consistently been ranked in the top two positions of the World Economic Forum's Network Readiness Index (NRI) for more than ten years.
Singapore's strong economic performance is evident in its remarkable GDP, which surpasses a staggering US$466.79 billion in 2022. Furthermore, the digital sector in Singapore is projected to achieve an impressive US$30 billion by 2025. A key component of this thriving digital landscape is the flourishing data center industry. Moreover, Singapore boasts an impressive number of telephone subscriptions, with 2 million fixed-line subscriptions and a substantial 8.57 million mobile subscriptions.
The ongoing COVID-19 crisis only intensified these circumstances, leading to a surge in the need for data center services, digitization, and cloud solutions from both the public and private sectors.
With an impressive lineup of 100 data centers, 1,195 cloud service providers, and 22 network fabrics, Singapore's digital infrastructure is truly formidable. Supported by a strong network aided by 24 submarine cables, this city-state has become a dominant force in global cloud connectivity. It is now home to major industry giants like Amazon Web Services, Microsoft Azure, IBM Softlayer, and Google Cloud. Additionally, Singapore has secured its position as one of the few locations chosen for Alibaba's groundbreaking US$15 billion global research program, solidifying its reputation as a center for technological innovation.
In this blog post, we will explore the diverse and complex Singapore data center industry. We will take a deep dive into the various regulations that control data sovereignty, privacy, and security. Additionally, we will analyze the enticing incentives that attract international investors to Singapore. Furthermore, we will discuss the potential for investments and the market trends that contribute to Singapore's appeal in this field.
Energy Efficiency: Optimize Power Supply
In Singapore, data centers consume seven percent of the overall electricity usage, and this figure is expected to rise to 12 percent by the year 2030.
In January 2022, the ban on data centers in Singapore was lifted by the government. This ban, which was put into effect in 2019, was a result of concerns over the significant amount of energy used by data centers.
In the face of worldwide energy difficulties, Singapore's data center scene demonstrates dependable power infrastructure. Despite the fact that the country's contribution to green energy stands at just 2 percent, data center businesses avail of a variety of Power Usage Effectiveness (PUE) measurements, with scores ranging from 1.20 to 1.90. The average PUE for data centers in Singapore stands at an impressive 1.47, demonstrating the industry's commitment to conserving energy.
Furthermore, Singapore's colocation centers have a combined power capacity of over 569.18 MW and provide a diverse range of choices for rack power, ranging from 1.50 kW to 5.40 kW.
Protection Of Data: Sovereignty & Security
The PDPA in Singapore acts as a primary defense for personal data, guaranteeing prudent treatment and safety. Data centers retain, handle, and oversee extensive quantities of personal and delicate data, making adherence to the PDPA vital.
The Personal Data Protection Act (PDPA) covers personal information kept in both digital and non-digital forms. Importantly, it does not apply to individuals acting in a personal or household capacity, employees fulfilling their work responsibilities, and government organizations involved in collecting, using, or sharing personal data. Moreover, the PDPA does not extend to business contact information such as names, job titles, work phone numbers, addresses, emails, and comparable details.
Every kind of company that collects, uses, or shares personal information in Singapore is required to comply with the PDPA's obligations for safeguarding data.
The Cybersecurity Act (2018) puts in place a thorough system for dealing with Critical Information Infrastructures (CIIs) in Singapore's data center industry. This law requires CIIs' owners to fulfill certain obligations, such as reporting any cybersecurity incidents. Additionally, it introduces the position of a Cybersecurity Commissioner, whose responsibility is to supervise and advance the cybersecurity environment of computers and computer systems throughout Singapore.
According to the Cybersecurity Act, the person in charge of cybersecurity has the power to create or support recommendations and rules for handling CIIs. These guidelines provide suggestions on how to protect CIIs from cyber threats. It is important to note that these suggestions are not legally enforceable. At present, the Commissioner has issued the Cybersecurity Code of Practice for Critical Information Infrastructure as one of these guidelines.
Additionally, the Cybersecurity Act includes regulations for licensing cybersecurity service providers. Concerning Singapore's data center industry, service providers who offer managed security operations center (SOC) monitoring services or penetration testing services must comply with this licensing mandate. This measure guarantees a controlled and safe atmosphere for data centers as cybersecurity service providers are held responsible for meeting set standards.
Eco Rules And Green Campaigns
The SS 564 Green Data Centers Standard (SS 564) is an important official measure for eco-friendly and power-saving data centers in Singapore. Created through joint efforts by the IT Standards Committee (ITSC), the Infocomm Development Authority of Singapore (IDA), and SPRING Singapore, this standard, also called the Singapore Standard for Green Data Centers – Energy and Environmental Management Systems, focuses on the crucial task of cutting down carbon emissions related to data center activities.
Based on the ISO 50001 Energy Management Systems (EnMS), SS 564 creates a strong structure to systematically improve how efficiently and effectively energy is used in data centers. This structure is based on the Plan-Do-Check-Act (PDCA) method, carefully designed to find and address any risks of wasted energy and make the best use of energy in data centers.
By adopting SS 564, companies can effortlessly incorporate eco-friendly and renewable methods into their data center activities, resulting in a significant decrease in yearly energy usage.
Benefits For Investing In Data Centers
The Pioneer Certificate Incentive (PC) is a scheme created to motivate firms to improve their abilities and participate in innovative or extended endeavors within Singapore. This offer also includes companies involved in worldwide or regional headquarters (HQ) tasks, which involve supervising, coordinating, and governing business operations for a cluster of companies.
The table provided below contains the main points to take note of.
Reward for being a pioneer: Important points to remember
Businesses that have been given the green light to receive the PC incentive can enjoy certain benefits when it comes to paying taxes. These companies can be exempted from corporate taxes entirely or may be subject to a lower tax rate, which can be either 5 percent or 10 percent. This applies specifically to the income they earn from activities that meet the eligibility criteria.
The incentive will only last for five years. If the company continues to expand, there is a chance that it could be extended.
Throughout the duration of the incentive period, it is necessary for the company to uphold a distinct account designated specifically for activities that do not meet the qualifying criteria. Any profits derived from these non-qualifying activities are not eligible to contribute towards the incentive program.
Businesses operating in Singapore's data center industry have a chance to avail themselves of this incentive, which has been specifically designed to encourage substantial investments in the economy and promote progress in globally dominant sectors. This initiative is in line with the qualities and potential of the data center industry.
In order to be eligible for the PC, businesses need to bring in innovative technology, expertise, or knowledge that goes well beyond the existing norms in Singapore. They should also actively participate in breakthrough initiatives that significantly contribute to the growth of the economy.
Assessing Data Center Carbon Footprint Program
In July 2022, the Singapore authorities implemented an initial trial phase of rewards referred to as the Data Center Carbon Footprint Assessment (DC-CFA) scheme, indicating a strategic change towards privately-driven endeavors to construct eco-friendly data centers. This undertaking follows a sequence of initiatives led or financed by the government, with the objective of attaining sustainability in Singapore, a country that has limited access to renewable energy resources because of its compact size and climatic conditions.
The DC-CFA effort highlights the importance of private industry's creativity and dedication to preserving the Earth, particularly in reducing carbon dioxide levels. They are inviting ideas for using renewable energy sources or developing novel energy methods to counterbalance carbon emissions.
The requirements for eligibility are outlined in the table provided.
Requirements for Singapore's DC-CFA Pilot Program
Top-notch and streamlined data center
Applicants are required to present a detailed strategy for operating a data center that is highly efficient and stands out from the competition in terms of quality.
The primary objective in design, construction, and operation should be to achieve maximum efficiency and effectiveness.
Data Center awarded highest level of certification — Platinum Certification
Applicants who are chosen need to verify their recently established or expanded capacity data center according to the BCA-IMDA Green Mark for New Data Centre (GM-NDC) standards. Subsequently, they have the opportunity to achieve the prestigious Platinum Certification for their environmental sustainability efforts.
is a metric that measures the energy efficiency of a data center. It is calculated by dividing the total energy consumed by the data center by the energy consumed by the IT equipment within the data center. A lower PUE value indicates higher energy efficiency, as it means that a smaller proportion of energy is being wasted on non-IT activities, such as cooling and lighting. Reducing PUE is a goal for many data center operators and owners. By improving energy efficiency, data centers can not only save on operating costs, but also reduce their environmental impact. There are various strategies and technologies that can be employed to reduce PUE, such as optimizing cooling systems, implementing virtualization, and using energy-efficient equipment. Monitoring PUE is important for data center operators to understand their energy usage and identify areas for improvement. By regularly measuring and analyzing PUE, operators can take targeted actions to increase energy efficiency and reduce energy waste. Additionally, PUE can be a useful benchmarking tool to compare the energy efficiency of different data centers and highlight best practices in the industry. In conclusion, PUE is a crucial metric for data center operators to assess and improve the energy efficiency of their facilities. By prioritizing energy efficiency and implementing appropriate measures, data centers can contribute to a more sustainable and cost-effective operation.
Candidates are required to create, construct, and maintain a highly efficient data center.
To meet the required standards, a Power Usage Effectiveness (PUE) of 1.3 (when operating at maximum IT load) or higher is necessary.
PUE calculates the yearly energy consumption of the data center in relation to the yearly energy consumption of the IT equipment.
Proven enhancement of energy efficiency in the IT sector.
Equipment must meet or exceed the highest standards for energy efficiency in the IT industry.
Execution of tactics in partnership with users to optimize equipment utilization.
Candidates must provide proposals that outline tactics for attaining sustainability objectives.
Strategies are being developed to allocate funds towards groundbreaking approaches in energy generation, like hydrogen or incorporating photovoltaic systems into buildings, in order to counterbalance the release of carbon gases into the atmosphere.
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Furthermore, the Singapore government, specifically the Economic Development Board (EDB) and the Infocomm Media Development Authority (IMDA), initiated another iteration of the DC-CFA program in 2023. As a result, four data center operators can anticipate the allocation of around 80 MW of additional capacity.
The requirements for eligibility are shown in the table provided.
Requirements for Participating in Singapore's DC-CFA 2023 Program
An emphasis on implementing cutting-edge liquid cooling technologies and energy-saving core-IT devices, with the objective of achieving Green Mark DC Platinum Certification.
Improving global interconnection by expanding the capacity of undersea communication cables and creating hubs that are open to all telecommunication carriers.
Ensuring the essential abilities of computing such as AI/ML computing and High-Performance computing are firmly established, while also developing connections with overseas data centers to enhance Singapore's capabilities.
Showing noteworthy economic contributions to Singapore beyond direct investments from Data Centers (DCs).
Infocomm Media Development Authority of Singapore has published a section on their website dedicated to blogs. In this section, individuals can find a wide range of articles discussing various topics related to technology, media, and communication. These blogs aim to provide insights and updates on the latest trends, developments, and initiatives taking place in the industry. By perusing these informative blog posts, readers can stay informed and engaged with the rapid advancements in the world of infocomm and media.
GST exemptions in Singapore play a crucial role in the country's tax system, providing a valuable benefit to businesses and organizations, particularly those involved in the data center sector. These waivers are designed to relieve or lessen the tax obligations on specific goods and services, ultimately promoting economic development, encouraging investments, and strengthening different sectors, such as the data center industry.
Data hubs are essential parts of a digital economy, acting as crucial infrastructure for various sectors. Acknowledging their crucial importance, Singapore provides tax exemption on the importation of data hub machinery, such as servers, network equipment, and cooling systems.
This exception decreases the expense of procuring vital technology, making it easier for data centers to be set up and expanded.
Likewise, exemptions on import duties may be relevant for equipment used in data centers and industries closely associated with them.
In recent times, the worldwide data center sector has been increasingly prioritizing ecological sustainability and the implementation of alternative energy options.
Within this field, Singapore's data center industry provides a perfect opportunity for international investors to get involved in research and development projects aimed at improving renewable energy technologies. Geothermal and wave energy solutions, which offer the potential for reliable and uninterrupted power generation, present promising avenues for innovation. International investors can actively take part in testing and advancing these up-and-coming technologies within the framework of data centers.
In addition, the reliance on diesel generators when there are power failures poses another sustainability issue that Singapore's data center industry must confront. Overseas investors have the opportunity to consider investments in innovative alternative power options, like lithium-ion batteries, that are in line with carbon-neutral goals. By working together to improve and perfect these technologies, we can strengthen the dependability of backup power while reducing its negative effects on the environment.
Prefab & Modular Solutions
Prefab and modular (PFM) solutions are becoming increasingly popular as efficient substitutes for conventional construction techniques. These solutions entail constructing and putting together data center parts in a factory instead of on-site. Afterward, these components are transported to the designated location for installation. This method brings various advantages like shorter construction schedules, ensured quality, and less disturbance at the actual site.
As big tech companies and large businesses continue to invest a lot of money in expanding their operations, a new opportunity arises in the diverse world of PFM solutions. Singapore's advantageous location, combined with the difficulties faced by conventional construction methods, presents a chance for investors to take advantage of the PFM sector's potential growth.
In just 2022, major companies invested approximately $9 billion globally to enhance their infrastructure. This pattern is expected to continue growing at a rate of more than 4 percent every year until 2030.
By taking advantage of this phenomenon, investors have the opportunity to not just earn profitable returns but also actively participate in the expansion and advancement of Singapore's data center ecosystem.
Investing In Singapore's Data Centers: Worth It?
In the current interconnected digital world, data centers play a crucial role in the exchange of information. Singapore has quickly become a top choice for this important industry, showcasing its technological expertise, strong regulations, and attractive benefits.
Thanks to its advantageous location and strong telecommunications network, Singapore has successfully drawn in major international companies to set up their data centers within its territory. This has firmly established Singapore as a significant player in the industry.
The country's dedication to safeguarding data privacy and security can be seen in its regulatory structure, particularly in the Personal Data Protection Act (PDPA) and the Cybersecurity Act. These regulations not only guarantee the proper management of data but also create a reliable setting for data center activities.
Furthermore, Singapore's commitment to sustainability is evident in the SS 564 Green Data Centers Standard and the Data Center Carbon Footprint Assessment (DC-CFA) program. Moreover, the attractiveness of benefits like the Pioneer Certificate Incentive (PC) and exemptions from Goods and Services Tax (GST) have positioned Singapore as a highly appealing location for investments in data centers.
The ASEAN Briefing blog is made by Dezan Shira & Associates. This company helps international investors across Asia and has offices in various ASEAN countries, such as Singapore, Hanoi, Ho Chi Minh City, and Da Nang in Vietnam. They also have a presence in Jakarta, Indonesia and work with partner firms in Malaysia, the Philippines, and Thailand. Additionally, they have operations in China and India. For further information, please reach out to them at [email protected] or visit their website, www.dezshira.com.
