Regulation

Thailand puts brakes on 49 data centre projects as it reviews regulations

Thailand puts brakes on 49 data centre projects as it reviews regulations

Thailand reportedly suspended construction of 49 data centres on Friday over concerns of their impact on local communities, making it the second Southeast Asian country after Malaysia to rethink its data centre investment strategy in recent weeks.

According to a report from Bloomberg, Danucha Pichayanan, secretary-general of the National Economic and Social Development Council, said the projects were being halted to give the government time to develop new regulations that establish uniform oversight of data centre development.

Danucha announced the suspensions following the first meeting of Thailand’s Data Centre Policy Committee, led by Finance Minister Ekniti Nitithanprapas, the report said.

Ekniti added that the suspensions are temporary and data centre investment will continue, as a critical component to Thailand’s competitiveness.  “We simply want clear and consistent standards in place to ensure the industry can grow sustainably.”

Thailand is one of several countries in Southeast Asia chasing data centre dollars as demand for AI workloads escalates domestically and regionally. Thailand’s Board of Investment says it has approved 88 projects related to AI and data centres in the first six months of this year. This past May alone, it approved three data centre projects (including one involving TikTok) with a combined investment value of THB913 billion (US$27 billion).

Danucha said there are currently 35 data centres operating in Thailand, with 117 proposed facilities awaiting investment approvals, the report said.

However – as in other countries experiencing a data centre backlash – the impact of data centres on power and water supplies in nearby communities has forced the government to hit the brakes on such projects as it works out a way to regulate them effectively.

The Thai government is looking at items such as higher electricity rates for large data-centre operators and stepping up scrutiny of projects in densely populated areas, the report said.

The latter proposition follows a recent move by authorities in Bangkok to halt approvals for three data centre projects after receiving complaints that one data centre next to a hospital “exposed a regulatory gap that allows such facilities to seek permits as warehouses”, the report said.

In a Facebook post on Saturday, Thai economist and policy advisor Dr Santitarn Sathirathai – who attended the Data Centre Policy Committee meeting on Friday – said the starting place for Thailand should be to create a central database of every data centre project in the country detailing location, size, scale (generic vs hyperscaler, for example) and future demands they will create for electricity, water, and other resources, to get a clear picture of the problem.

After that, he said, officials should think of data centre regulations as similar to those of factories, infrastructure and joint investment, the latter of which would consider the ROI of each data centre project based on its overall value to the community rather than the price tag.

“The return on investment for the country should not be judged solely on the monetary value of the investment,” Santitarn wrote. “But we need to consider whether a domestic supply chain is involved, the extent of Thai entrepreneurship, especially SMEs, and their participation.”

A similar rethink was announced in Malaysia at the end of July, when Treasury secretary general Johan Mahmood Merican said the government’s incentives for the data centre sector to attract foreign investors had perhaps been too successful.

According to The Edge Malaysia, Johan said the government was looking at developing revised metrics for assessing the value of proposed data centre projects in terms of their overall value to the community, to include job creation and revenue generation, rather than simply how much applicants proposed to invest.

The Malaysian government is also reviewing its electricity pricing for data centres in a way that more accurately reflect the value of their resources, but without pricing themselves out of the regional market, the report said.



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