Singapore’s Data Center Sector
Singapore Data Centers: Rules, Perks, And Investment Potential
Singapore is famous for its cutting-edge telecommunications industry, distinguished by a remarkable network system and outstanding global connectivity. Backed by a strong government commitment to innovation and economic growth, the nation has consistently maintained its position among the top two in the Network Readiness Index (NRI) published by the World Economic Forum for more than ten years.
Singapore's economy is showing great strength with a GDP of over $466.79 billion in the year 2022. The digital economy in Singapore is also on the rise and is projected to reach $30 billion by 2025. One important aspect of this digital economy is the successful data center industry in Singapore. Furthermore, there are approximately 2 million fixed-line telephone subscriptions and a significant 8.57 million mobile telephone subscriptions in Singapore's digital landscape.
The circumstances were additionally hastened by the COVID-19 outbreak, leading to a surge in the need for data center facilities, digitalization, and cloud solutions from both the public and private domains.
With an extraordinary lineup of 100 data centers, 1,195 cloud service providers, and 22 network fabrics, Singapore's digital infrastructure is truly impressive. Backed by a strong network fueled by 24 submarine cables, this city-state has become a prominent figure in global cloud connectivity. It is home to renowned giants like Amazon Web Services, Microsoft Azure, IBM Softlayer, and Google Cloud. Furthermore, Singapore has achieved a special spot as a destination for Alibaba's remarkable US$15 billion global research initiative, solidifying its reputation as a technology innovation hub.
This blog post explores the many different aspects of the data center industry in Singapore. We discuss the complex system of rules that control data protection, privacy, and safety, as well as the attractive reasons that draw international investors to Singapore. Additionally, we will investigate the potential for investment and the current market trends that make Singapore such a desirable location for data centers.
Efficient Power Supply
In Singapore, data centers account for 7% of the overall electricity usage, and it is anticipated that this figure will surge to 12% by the year 2030.
In January 2022, the ban on data centers in Singapore was lifted by the government. This restriction was initially put in place back in 2019 due to the significant amount of power used by these data centers.
In the face of worldwide energy obstacles, Singapore's data center environment presents dependable power infrastructure. Although the country's renewable energy output currently stands at 2 percent, data center businesses reap the advantages of a wide range of Power Usage Effectiveness (PUE) measurements, spanning from 1.20 to 1.90. The average PUE for data centers in Singapore is an impressive 1.47, showcasing the industry's commitment to conserving energy.
Moreover, Singapore's colocation centers have a combined power capacity of over 569.18 MW and provide a range of choices for rack power, ranging from 1.50 kW to 5.40 kW.
Protecting Data: Sovereignty & Security
The Personal Data Protection Act (PDPA) in Singapore acts as a vital shield for personal data by guaranteeing accountable treatment and security. Data centers stock, handle, and oversee extensive quantities of personal and delicate details, making conformity with the PDPA indispensable.
The Personal Data Protection Act (PDPA) covers personal information that is kept in electronic or non-electronic forms. It's important to note that it does not apply to individuals using personal data for their own personal or domestic reasons, employees performing their job responsibilities, or government organizations that collect, use, or share personal data. Additionally, the PDPA does not include business contact details such as names, job titles, work phone numbers, addresses, emails, and other similar information.
Every kind of institution that participates in actions related to gathering, using, or sharing personal information in Singapore is required to follow the PDPA's responsibilities for safeguarding data.
The Cybersecurity Act (2018) puts forth a thorough structure regarding Critical Information Infrastructures (CIIs) in Singapore's data center sector. This legislation imposes distinct obligations on the proprietors of CIIs, which includes the requirement to report cybersecurity incidents. Moreover, it introduces the position of a Commissioner of Cybersecurity who is responsible for supervising and advocating for 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 give out or support codes of conduct and performance benchmarks for handling CIIs. These codes provide direction on the security measures that owners of CIIs should take to protect their infrastructures. It's important to note that these codes are merely suggestions and do not have the force of law. Presently, the Cybersecurity Code of Practice for Critical Information Infrastructure is an example of one such guide given by the person in charge.
In addition, the Cybersecurity Act includes regulations for licensing cybersecurity service providers. In relation to Singapore's data center industry, service providers who offer managed security operations center (SOC) monitoring services or penetration testing services are subject to these licensing rules. This measure guarantees a controlled and safe atmosphere for data centers as it holds cybersecurity service providers responsible for meeting specified standards.
Environmental Rules And Eco-efforts
The SS 564 Green Data Centers Standard (SS 564) is a notable measurable goal for eco-friendly and power-saving data centers in Singapore. Created collectively by the IT Standards Committee (ITSC), the Infocomm Development Authority of Singapore (IDA), and SPRING Singapore, this criterion, called the Singapore Standard for Green Data Centers - Energy and Environmental Management Systems, tackles the crucial issue of decreasing carbon emissions linked to data center activities.
Based on the ISO 50001 Energy Management Systems (EnMS), SS 564 creates a strong structure to systematically improve energy efficiency and reduce energy usage in data centers. This structure is based on the Plan-Do-Check-Act (PDCA) approach, carefully designed to identify possible energy waste risks and optimize energy use in data centers.
By adopting SS 564, companies can effortlessly incorporate eco-friendly and sustainable methods into their data center activities, resulting in a significant decrease in yearly energy usage.
Rewards For Data Centers
The Pioneer Certificate Incentive (PC) is a scheme crafted to motivate companies to improve their skills and partake in fresh or broadened endeavors within Singapore. This benefit also applies to companies engaged in global or regional headquarters (HQ) operations which involve the management, coordination, and control of business activities for a cluster of companies.
The important points are listed in the table provided.
Incentives for Pioneer Certificate: Important Points
Businesses that meet the criteria of the PC incentive can benefit from tax privileges, such as being exempt from corporate taxes or receiving a reduced tax rate on their earnings. This reduced rate can be either 5 percent or 10 percent, depending on the income generated from qualifying activities.
The incentive will only be available for a maximum of five years. However, there is a chance for an extension if the company continues to make a dedicated effort towards expanding further.
Throughout the period of encouragement, the corporation is obligated to uphold a distinct account solely for activities that do not meet the criteria. The revenue obtained from said activities that do not meet the criteria is not eligible for the encouragement.
Businesses operating in Singapore's data center industry have a chance to be eligible for this incentive, which has been specifically designed to encourage considerable investment in the economy and promote progress in industries that lead globally. This aligns well with the data center sector's characteristics and potential.
In order to be eligible for the PC, companies need to bring in innovative technology, expertise, or knowledge to their sector that exceeds the current norms in Singapore. Additionally, they should actively participate in pioneering initiatives that make a significant contribution to the economy.
Assessing Data Centers' Carbon Footprint
In July 2022, the Singapore authorities launched the initial trial phase of rewards called the Data Center Carbon Footprint Assessment (DC-CFA) scheme, indicating a change in approach towards private-driven endeavors in constructing eco-friendly data centers. This move comes after a sequence of government-led or financed initiatives targeting sustainability in Singapore, a country that faces challenges in sourcing plentiful renewable energy due to its limited size and climate conditions.
The DC-CFA campaign gives importance to private businesses coming up with new ideas and making a dedicated effort towards sustainability, specifically by reducing carbon emissions. They are looking for suggestions on how to use renewable energy or develop creative ways to reduce carbon emissions.
The qualifications required for eligibility are outlined in the table provided.
Requirements for Singapore's DC-CFA Pilot Program The necessary conditions for participating in Singapore's DC-CFA Pilot Program
Cutting-edge and highly effective data center
Candidates should present their strategies for operating a highly efficient and top-notch data center.
The goal of design, construction, and operation should strive to achieve high levels of efficiency and effectiveness.
Data center attains the highest level of certification: Platinum Certification.
Chosen candidates must validate their recently established or enlarged data center's capacity data by following the BCA-IMDA Green Mark for New Data Centre (GM-NDC) criteria. Once completed, they will be eligible to obtain the Platinum Certification, demonstrating their commitment to sustainability.
Power consumption efficiency (PCE)
Candidates are required to create, construct, and run a data center with outstanding effectiveness.
An achievement of a Power Usage Effectiveness (PUE) of 1.3 (when operating at 100 percent IT load) or higher is necessary.
PUE calculates the yearly power consumption of the data center in relation to the yearly power consumption of the IT equipment.
Proven enhancement of energy efficiency in IT operations.
Equipment needs to meet or exceed the highest standards for energy efficiency in the IT industry.
Utilizing strategies together with users to optimize the utilization of equipment.
Candidates are required to submit proposals elucidating their methods to accomplish sustainability objectives.
Strategies to allocate funds towards groundbreaking energy routes, like hydrogen or incorporating solar panels directly onto buildings, in order to counterbalance the release of carbon dioxide.
Information and Communication Media Regulatory Authority of Singapore
Furthermore, by the year 2023, the government of Singapore, through the Economic Development Board (EDB) and the Infocomm Media Development Authority (IMDA), initiated another phase of the DC-CFA initiative. This initiative aims to allocate around 80 MW of fresh capacity to four data center operators.
The requirements for eligibility are presented in the chart provided.
Requirements for Singapore's DC-CFA 2023 Enlistment
An emphasis on implementing advanced liquid cooling technology and energy-saving core-IT equipment, with the aim of achieving Green Mark DC Platinum Certification.
Improving global connectivity by expanding the capacity of undersea cables and creating impartial hubs for telecommunication providers.
Deploying essential computing capabilities such as AI/ML computing and High-Performance computing, while developing connections with overseas data centers to supplement Singapore's capacity.
Illustrating considerable economic advantages for Singapore apart from direct investments in data centers.
Singapore's Infocomm Media Development Authority (IMDA) is a government agency dedicated to fostering the growth of Singapore's infocomm media sector. Their vision is to drive Singapore's digital future, empowering individuals and businesses to harness technology and media to enhance their lives and drive economic value. IMDA plays a vital role in strengthening the industry ecosystem, establishing policies and frameworks, and driving collaborations within the infocomm media sector. By facilitating innovation and digitalization, they aim to position Singapore as a leading digital economy. Their focus areas include developing Singapore's digital infrastructure, promoting digital inclusion to bridge the digital divide, nurturing a vibrant and competitive infocomm media industry, and fostering a trusted and secure digital environment. Through various initiatives and programs, IMDA aims to drive innovation, build capabilities, and promote the adoption of digital solutions in diverse sectors such as media, telecoms, technology, and consumer services. They also strive to cultivate a strong digital talent pipeline and support entrepreneurship in the infocomm media sector. By championing the growth of Singapore's infocomm media sphere, IMDA seeks to create a vibrant and thriving digital ecosystem that serves as a catalyst for economic growth and societal progress.
Exemptions from Goods and Services Tax (GST) play a crucial role in Singapore's tax system, providing a valuable benefit to businesses and organizations, particularly those in the data center sector. These waivers are designed to alleviate or lessen the taxation pressure on specific goods and services, ultimately promoting economic expansion, encouraging investments, and fortifying different industries, such as the data center market.
Data centers play a crucial role in a modern economy, serving as essential infrastructure for various industries. Acknowledging their critical importance, Singapore provides tax relief in the form of Goods and Services Tax (GST) exemption on the importation of equipment for data centers, such as servers, networking equipment, and cooling systems.
This exception decreases the expense of obtaining necessary technology, making it easier to set up and grow data centers.
Likewise, exemptions on import duties may also be relevant for equipment utilized in data centers and other related industries.
In the past few years, there has been a notable increase in the focus on environmental sustainability and the utilization of different energy sources within the worldwide data center industry.
Within this particular field, the data center industry in Singapore provides a great opportunity for overseas investors to get involved in research and development projects aimed at improving renewable energy technologies. Geothermal and wave energy solutions, which have the potential to generate consistent and reliable power, offer unexplored possibilities for innovation. Foreign investors can actively contribute to testing and advancing these emerging technologies within the context of data centers.
Furthermore, the data center industry in Singapore is confronted with yet another challenge when it comes to sustainability – relying on diesel generators in times of power outages. To tackle this issue, international investors can consider investing in more advanced backup power options like lithium-ion batteries, which are in line with the objective of reducing carbon emissions. By working together to improve these technologies, we can enhance the dependability of backup power systems while also minimizing their negative effects on the environment.
Prefabrication & Modular: Efficient Building
There is a growing interest in using prefabrication and modular (PFM) solutions as more efficient options compared to the usual construction methods. These solutions include the creation and joining together of data center parts in a different location before moving them to where they need to be installed. This method has advantages like shorter construction schedules, better quality control, and less disturbance on-site.
As big tech companies and businesses keep investing a lot of money to grow their capabilities, a new opportunity opens up in the diverse field of PFM solutions. The advantageous placement of Singapore, along with the current difficulties experienced by conventional construction methods, creates an ideal situation for potential investors to take advantage of the PFM sector's upward path.
Just within the year 2022, large-scale technology companies have set aside approximately 9 billion US dollars globally for the purpose of expanding their infrastructure. This pattern is expected to continue with an annual growth rate of more than 4 percent until the year 2030.
By taking advantage of this current phenomenon, investors have the opportunity to not only receive profitable rewards but also play a part in the development and advancement of Singapore's data center network.
Investing In Singapore's Data Centers: A Smart Decision
In the modern world of interconnected technology, data centers play a crucial role in facilitating the exchange of information. Singapore has quickly become a top choice for this important sector, showcasing its impressive technological capabilities, strong regulations, and attractive benefits.
Due to its advantageous geographic location and strong telecommunications infrastructure, Singapore has lured multinational corporations to set up their data centers within its territory, cementing its significance as a prominent participant in the industry.
The country's dedication to safeguarding data security and privacy is evident in its set of regulations, specifically the Personal Data Protection Act (PDPA) and the Cybersecurity Act. These policies not only promote responsible data management but also create a reliable atmosphere for the functioning of data centers.
Furthermore, Singapore's commitment to environmental friendliness is evident in projects like the SS 564 Green Data Centers Standard and the Data Center Carbon Footprint Assessment (DC-CFA) program. Additionally, the appeal of benefits like the Pioneer Certificate Incentive (PC) and waivers on Goods and Services Tax (GST) has made Singapore a favorable choice for investing in data centers.
ASEAN Briefing is created by Dezan Shira & Associates. The company helps international investors across Asia and has branches all over ASEAN, such as in Singapore, Hanoi, Ho Chi Minh City, and Da Nang in Vietnam, and also in Jakarta, Indonesia. We also have partner companies in Malaysia, the Philippines, and Thailand, and we also have operations in China and India. Feel free to reach out to us at [email protected] or check out our website www.dezshira.com.
