With the global surge in AI and cloud computing, Thailand is swiftly positioning itself as a significant hub for data centers, attracting both local and international tech companies keen to capitalize on its favorable business environment. This growth is fueled by rising demand for cloud-based applications, rapid digitalisation across various industries, and the growing need for data storage. Government initiatives like the Thailand 4.0 policy further support these developments. The country’s advanced infrastructure and appealing incentives also contribute to such market’s growth, with 5G technology expansion expected to further boost demand.
Challenges remain, particularly with operational costs and significant energy consumption. Despite these obstacles, the outlook for Thailand’s data center market is favorable. The escalating demand for digital transformation and AI across various sectors continues to drive the need for such facilities. This transition into data centers is critical to Thailand’s strategy to modernize its industrial sector and enhance value creation.
Thailand’s appeal as an investment destination for data centers and cloud services is built on five key advantages: strategic location, secure environment, high-quality infrastructure, a growing domestic market, and attractive incentives from the Board of Investment (“BOI”). The BOI has outlined eligibility criteria and investment incentives for data centers. Eligible data centers must offer complementary services like server co-location, customer data backup, data hosting, etc., while maintaining high-speed telecommunication systems and uninterrupted client service during maintenance, and ensure continuous power supply, backup systems such as UPS and cooling, 24-hour security, and ISO/IEC 27001 certification.
The BOI offers substantial tax incentives, including up to 8 years of corporate tax exemption, exemptions from machinery and raw material import duties, etc. Non-tax incentives include permits for foreign nationals to explore investment opportunities, permits for skilled workers, land ownership rights, and favorable remittance terms. Additionally, any data centers investing over 1% of revenue or over THB 200 million in research and development within the first three years will receive up to 13 years of corporate tax exemption. Thailand is launching a pilot project enabling data centers to directly purchase renewable power, recognizing the need for clean energy policies to attract investment. The government has expedited this initiative, by ordering the creation of support measures for direct power purchase agreements (“PPAs”). Direct PPAs offer benefits like stable long-term pricing and reduced carbon footprints. Addressing the absence of a policy framework for direct green power purchases is crucial, as it poses challenges to energy-intensive industries committed to decarbonization.
