Southeast Asia’s (SEA) telecom and technology landscape underwent significant transformation in 2022. During the year, the SEA region also emerged as a hotspot for data centre players, owing to the large scale deployment of new-age technologies and cloud adoption by enterprises. Further, digital payments gained massive momentum and mobile payment wallets became a staple among a wider consumer population, facilitating financial inclusion in SEA. An emerging area of focus among SEA countries was internet of things (IoT). The region registered a surge in IoT deployments as smart city initiatives by governments supplemented market growth. 5G remained the highlight of the year with variable deployment of the network across the region.

A look at the key telecom and technology trends that dominated the SEA region in 2022…

Digital transformation in APAC

Several countries developed and implemented clear road maps towards digital transformation. For instance, Thailand 4.0 is a collection of policies aimed at transforming Thailand into an innovative, value-based industrial model. The intention of Thailand 4.0 is to foster creativity and research and development of advanced technologies within the country. Similarly, Indonesia 4.0 is an integrated road map for Indonesia’s strategy to enter Industry 4.0. The road map is based on an acknowledgement that for Indonesia to remain competitive, it needs to fully utilise ICT in the industrial sector.This is not only in the production process but across the entire industry value chain, promising the creation of new business models and digital innovation.

Malaysia 5.0, on the other hand, is a new vision called for by the Malaysia Digital Economy Corporation (MDEC) for Malaysia to increase its competitiveness in technology. It introduces a designated hub that interconnects companies in Malaysia to the rest of the world, with strong regulatory and strategic oversight and direction from the MDEC.

Proliferation of data centres

There has been remarkable growth in the data centre market in SEA, with massive investments in Singapore, Indonesia, Malaysia, Vietnam, Cambodia and Thailand. The region is fast emerging as a hotspot for large and small data centre players as enterprises rapidly adopt new-age technologies. A recent report by Cushman and Wakefield predicts that the SEA region will be the fastest growing region for co-location data centres over the next five years, with its market size expanding at a compound annual growth rate (CAGR) of 13 per cent between 2019 and 2024. Most of this growth will be in Singapore, Indonesia and Malaysia.

In Singapore, Equinix announced the launch of its fifth data centre, SG5, a greenfield facility built with an initial investment of $144 million. In Indonesia, Edge Data Centre secured credit facilities of up to IDR 2.7 trillion from PT Bank Central Asia Tbk. to fund further expansion. In another major development, the Princeton Digital Group (PDG) announced a new 22 MW data centre, Jakarta Cibitung 2 (JC2), with a total investment of $150 million, which will be built on a 19,550 square metre campus that houses PDG’s existing data centre, JC1.

Uptake in digital transactions

There has been increased adoption of digital financial services and mobile payments in the SEA region. According to the eConomy Southeast Asia Report 2022, double-digit growth is seen across all digital financial services subsectors – payments, remittance, lending, investment and insurance – due to enduring post-pandemic offline to online behaviour shifts. Digibanks are gaining traction among young digital natives. The report reveals that SEA continues to be a hotbed for tech investments, posting a robust growth of 13 per cent in deal value from H1 2021 to H1 2022.

Singapore and Indonesia remained primary investment destinations in 2022, while Vietnam and the Philippines are seeing growing investor interest over the longer term. Digital financial services overtook e-commerce as the top investment sector in the region, with record funding of $4 billion in H1 2022. Rising interest in subsea systems The international bandwidth used by global networks more than doubled between 2017 and 2019. Demand has been growing fastest on links connected to Asia, which recorded a CAGR of 56 per cent between 2015 and 2019. New investments are key to meeting this rising demand, considering the significant capex required to produce and lay cables.

Between 2020 and 2022, $8.1 billion worth of cables were laid, with routes crossing the Pacific amounting to $2.3 billion. One transpacific cable system was brought online each year between 2016 and 2020, and at least eight additional systems are planned through 2024. Within Asia, SEA’s digital economy is growing especially rapidly and, according to industry estimates, could reach $1 trillion by 2030. This is partially attributable to the Covid-19 pandemic, which accelerated the adoption and migration to digital channels. Going forward, 12 new cable systems are slated to begin service in SEA, Australia, and East Asia over the next three years.

Surge in IoT deployments

SEA countries are turning to connected solutions enabled by IoT to make business processes and cities smarter, safer and more efficient. The increasing government initiatives for smart city projects are one of the major drivers supplementing the growth of the IoT market in the region. Thailand and Malaysia are leading the way and have already adopted policy frameworks and strategic road maps to boost IoT adoption.

IoT technology is central to the Thailand 4.0 initiative. Thailand’s dtac launched 5G IoT solutions across three core market segments – smart factory, smart logistics and smart utilities – while National Telecom, WhiteSpace, Delta Electronics, and Chunghwa Telecom signed a memorandum of understanding for collaboration on a 5G private network in Thailand. Thailand aims to use 5G for upgrading IoT to massive IoT and support higher density of connected devices. In another recent move, the Vietnam-based VIoT Group entered into a partnership with KerLink to roll out the country’s first nationwide LoRaWAN IoT network, with 350 Kerlink gateways to be deployed in six cities. Additionally, Vingroup reached a deal with Intel to develop 5G technology for a range of industries in SEA countries. Under the agreement, Vingroup and Intel will work to explore opportunities for 5G-enabled smart solutions.

Commercial launch of 5G

5G is commercially available in several countries of the SEA region. As per reports, 5G connections are expected to reach 430 million by 2025 across the broader AsiaPacific region. Recently, the Authority of Info-Communications Technology Industry of Brunei announced a collaboration with Unified National Networks, Datastream Digital, Imagine and Progresif to conduct a 5G mobile network trial over a period of up to eight weeks, ahead of the commercial launch of 5G technology in the country. In September 2022, Indonesia’s Ministry of Communications and Information announced its plans to auction a spare 2×5 MHz block of frequencies in the 2.1 GHz band in an attempt to accelerate the development of 5G in the country.

Earlier, in March 2022, the Government of Malaysia confirmed its plans to deploy 5G via a single wholesale network, while also revealing that it would offer local telecom operators an equity stake of up to 70 per cent in Digital Nasional Berhad. This public-private partnership approach is expected to facilitate the achievement of DNB’s target to cover 80 per cent of the country’s populated areas with 5G by 2024. „