edgeconnex-White Created with Sketch. close menu
Asia Pacific region

Philippines: A new frontier in data center demand

December 8, 2022

EdgeConneX recently announced our partnership with Aboitiz InfraCapital (AIC), the infrastructure arm of the Aboitiz Group, to jointly build a network of data centers across the Philippines. The country is a prime destination for the next wave of digital infrastructure deployments and investments, supported by government incentives to attract large hyperscale internet companies to invest and deploy digital infrastructure within the country.

I sat down for a chat with Aboitiz InfraCapital President & CEO Cosette Canilao, to get her views on her firm’s foray into the data center market and the sector’s growth potential in the Philippines:

Why did Aboitiz InfraCapital (AIC) choose to partner EdgeConneX, and how will this partnership support the demand for digital infrastructure in the Philippines?

The Philippines has one of the fastest growing digital economies in Asia. We are well-known for being the world’s top Internet users, with around 74 million Filipinos averaging 10.5 hours online daily. Despite the growing dependence on digital technology, the country remains to be an underserved market with rising demand for data.

As a company that is strongly committed to addressing the country’s infrastructure gaps, Aboitiz InfraCapital partnered with EdgeConnex to help meet the growing data usage in the country, which is anticipated to exponentially grow in the next few years. Businesses are increasingly turning to cloud service providers for cost efficiency and scalability, and hence the urgent demand for data centers. We believe through our partnership with EdgeConneX, we can seize the opportunities in this burgeoning sector and support our goal of helping strengthen the country’s digital ecosystem. This, by the way, is also very much aligned with the Aboitiz Group’s Great Transformation journey into becoming the Philippines’ first ‘techglomerate’.

This is your first foray into the data center market. How will the capabilities of the Aboitiz group, especially in the area of real estate and utilities, benefit the data center space in the Philippines.

We have the local market experience and assets to carry out our digital infrastructure projects. Our sizable landbank of prime industrial real estate across the country offers the ideal location for data center development. Our expertise in managing economic estates and utilities will likewise benefit the data center venture in establishing the country’s first hyperscale campus. We will tap into the synergies and resources of the entire Aboitiz Group, including power. Aboitiz Power, one of the Philippines top power producers and the largest owner and operator of renewable energy in the country, can deliver the dependable power supply needed by data centers.

How do EdgeConneX and Aboitiz aim to build on each other’s strengths? What are the synergies that can be created from the partnership?

The Aboitiz Group has over a decade-long of market experience that the partnership can benefit from. Aboitiz Infracapital has the local know-how and supporting infrastructure, such as prime industrial land in major city centers such as Manila and emerging economic hubs like Batangas.Our sister company, Aboitiz Power, complements the partnership through their extensive power assets and network across the country.

Together with EdgeConneX’s build and operational capabilities, and your experience working with hyperscalers, I believe this partnership has all the attributes needed to pave the way for the development of hyperscale data centers across the Philippines.

The Philippine government has been pushing to accelerate digitalization in the country. Do you see a strong push by the government to attract investments in data centers?

The Philippine government continues to champion the country’s digital economy with the Cloud First Policy that promotes closed computing as the preferred technology for government and the delivery of government services. The current administration has already mandated the Department of Information and Communications Technology to transform the government into an agile bureaucracy that is responsive to the needs of the public using digital technologies. This offers a range of investment opportunities relating to digitization, such as data centers.

The recently passed Corporate Recovery and Tax Benefits for Enterprises (CREATE) Law offers advantages to data center developers, including lower taxes on imported capital goods and raw materials. Furthermore, the Board of Investment’s Strategic Investment Priority Plan or SIPP includes data centers in the list of industries eligible for tax advantages.

In 2021, the Philippine government launched the National Broadband Program to hasten telecom construction projects to improve the country’s digital connectivity and even cover those unserved and underserved areas. Several bills have also been submitted to promote and speed up the nation’s digital transition. One of which is the Better Internet Act, aiming to provide consumers with minimum download speeds.

What are the key industries driving demand for data centers in the Philippines?

It is anticipated that the data center market in the Philippines will exponentially grow in the coming years. The main driving force behind this is the growing number of businesses and organizations that will shift their data and crucial information to the cloud as a result of the continued work-from-home and hybrid work arrangements. Aside from cloud technology, other corporate IT infrastructure such as colocation, 5G connectivity, and other internet services will increase the demand for more data centers. The growth of e-commerce, streaming and gaming, and cashless transactions will also fuel the expansion of this digital infrastructure. Finally, the country’s data center ecosystem will continue to develop and diversify as a result of rising smart city trends and the government’s push for digitalization.

What are some key challenges that have to be addressed to facilitate the growth of the data center industry in the Philippines?

Similar to other infrastructure projects, data centers demand large investments. To encourage the private sector to work with the government in transforming the Philippines into a digital nation, it is crucial to create a strong digital policy environment with aligned and consistent policies on the ease of doing business and incentives.

Enhancing internet access is also essential to promote the expansion of the Philippines’ data center sector. Currently, the nation’s median internet speed of 60 mbps is still slower than that of other Southeast Asian nations.

Lastly, as the Philippines become an attractive site for data centers, we must also invest in improving the current digital skills and know-how of our human resources to meet the demands of the fast-evolving digital sector.

EdgeConnex has an employee book club and is always on the lookout for good reading material. Which three leadership books would you recommend?

For those looking to hone their critical thinking skills, I recommend Adam Grant’s Think Again as it talks about the value of the benefit of the doubt and how to accept uncertainty to bring success and happiness. I also highly recommend Deep Purpose: The Heart and Soul of High Performance Companies by Dr. Ranjay Gulatu as well as Principles for Dealing with The Changing World Order by Ray Dalio.