Colliers says data centre investment in Thailand has seen substantial growth since 2022.

Thailand's data centre investment has the potential to grow 15%, giving it the third-largest industry in Southeast Asia, if the government provides more attractive incentives and enhances infrastructure.

Phattarachai Taweewong, director of the research department at property consultant Colliers Thailand, said the existing incentives from the Board of Investment (BoI) are insufficient to attract overseas data centre investments.

"Attracting investment in the data centre business is an opportunity to drive Thailand's digital economy and add value to various industries," he said. "There should be more appealing incentives to attract large investors from overseas."

Mr Phattarachai said these measures should include tax policies, regulations and infrastructure. Corporate income tax exemptions should be extended for longer periods because such tax benefits can help reduce operating costs.

Personal income tax reductions for executives or specialists working in data centre companies could also attract skilled professionals to Thailand, who could eventually become residential buyers.

Promoting investment through specific incentives for large-scale data centre projects that are critical to the national economy could further attract significant investment, he said.

According to Colliers, data centre investment in Thailand has seen substantial growth since 2022.

In terms of leasable area for data centres among Southeast Asian countries, Thailand ranks fourth, following Singapore, Malaysia and Indonesia.

Thailand's data centre business is expected to grow 26% this year and 24% next year, driven by increasing technology usage in various business sectors and rising demand for consumer data analytics.

"The current investment incentives from the government are not as effective as those offered by neighbouring countries," said Mr Phattarachai. "If improvements are made, we could see additional growth of 15% on top of that projection."

In the co-location services market, growth of 14% is projected as large organisations increasingly opt to lease server space in data centres through private cloud systems rather than maintaining on-premises servers.

This shift helps reduce operating costs, such as electricity, internet fees and the expense of hiring experts for 24/7 maintenance.

"There should also be incentives supporting the private sector to use data centre or cloud services located in Thailand by exempting value-added tax and providing tax benefits," he said.

Mr Phattarachai said the government should expedite improving regulations related to establishing data centres, making them clearer and more streamlined to reduce the procedures and time required to obtain permits.

"It is essential to establish data security and information system standards that align with international norms to build investor confidence," he said.

Ensuring robust data protection will help attract more foreign investment by addressing concerns over data privacy and security, according to Colliers.

The development of communication infrastructure is also crucial. Upgrading and expanding high-speed telecom networks across the country will support the large data volumes required by data centres, said Mr Phattarachai.

Development of power supply infrastructure is also vital, while providing locations with adequate utilities and infrastructure, such as industrial estates or special economic zones, can offer ideal environments for setting up data centres, he said.