Data centers: Philippine’s new investment magnet

When we opened the new year, the country celebrated significant gains in foreign direct investment (FDI) in 2023 and recognized the imperative to fortify its appeal to global investors. In a statement by Philippine Economic Zone Authority (PEZA) director general Tereso Panga, it was highlighted that the country was able to surpass our conservative 10 percent growth target this year, with investment approvals reaching P173 billion, 23 percent higher than the 2022 performance of P140 billion.

In fact, in the first 10 months of 2023, the Board of Investments (BOI) recorded a substantial surge in foreign investments, totaling P757.33 billion, representing a 567-percent surge from the previous year’s P113.49 billion. Noteworthy, indeed, as per Panga, this achievement stands out “despite encountering headwinds and economic challenges” that the country had to navigate.

At the core of this economic story is the growing data center industry, becoming a key factor for the Philippines’ economic revival. In a forum organized by the European Chamber of Commerce of the Philippines, extensive discussions unfolded, highlighting the nation’s appeal, driven by investment-friendly policies, a robust information technology talent pool, and the potential for leveraging renewable energy in data center operations.

Projections for the Philippine data center market are nothing short of ambitious, with a 2022 study by Quisumbing Torres estimating a worth of $535 million by 2026, marked by a compound annual growth rate of 11.4% between 2021 and 2026. The Department of Information and Communications Technology (DICT) is also bullish on the future, anticipating a fivefold increase in data center capacity by 2025, reaching around 300 megawatts.

Yet, a note of caution resonated – addressing the challenges intrinsic to data centers, including ensuring a dependable power supply, fortifying telco infrastructure, and enhancing the ease of doing business, emerges as an imperative for fostering sustainable growth.

Data centers have evolved into a cornerstone supporting businesses that expedited their transition to the online realm amid the pandemic. Serving as the bedrock of the digital economy, these facilities facilitate the integration of artificial intelligence, remote work, and online transactions. The current surge in hyperscale deployment is actively redefining the data center landscape in the Philippines, emphasizing a growing demand for considerable space and power resources.

Hyperscale data centers, exemplified by VITRO, the flagship data center network in the Philippines owned and operated by the PLDT Group’s ICT arm, ePLDT, play a pivotal role in shaping a resilient digital ecosystem. Offering direct connections to a multitude of carriers and cloud providers, these centers foster collaboration among power providers, telecommunication companies, cloud service providers, and enterprises.

The data center is not merely a facility; it is a convergence point where diverse stakeholders meet to shape the future of the digital landscape.

To translate the benefits of power into the digital realm, Meralco, as the partner of ePLDT VITRO, ensures the resilience and redundancy of the IT infrastructure. Cooling powerful servers that process information is a critical aspect, highlighting the meticulous attention given to every detail in the data center ecosystem.

Similarly, the connectivity aspect cannot be overstated. The data center is where all network connectivity and fiber converge, ensuring that hosted IT infrastructure is accessible for customers. The value of a data center goes beyond being a physical space; it is a strategic enabler that dictates the creation, expansion, and enhancement of the overall ecosystem and digital infrastructure powering the nation’s digital aspirations.

The pivotal role of data centers extends to attracting big cloud and tech companies to invest in the Philippines, thus fueling economic growth. With world-class hyperconnected data center facilities like VITRO, the Philippines can offer these tech giants not only economic gains, but also an improved customer experience for Filipinos.

According to Gary Ignacio, chief commercial officer of VITRO Inc., the Philippines stands a strong chance of becoming a hyperscale hub. The nation’s large population and strong digital consumption habits to its appeal.

From the enterprise point of view, there is very robust adoption in terms of digital. Amidst the ongoing wave of digital transformation, businesses are actively exploring the myriad benefits offered by cloud technology. This trend is poised to fuel increased consumption, consequently drawing the attention of major tech players towards the Philippines as a potential market expansion destination.

Likewise, as global connectivity providers seek alternative transit hubs amidst ongoing geopolitical concerns, the Philippines emerges as a prime choice.

Visualizing the roadmap ahead, ePLDT has built a compelling case for the Philippines as the next hyperscale hub in the Asia-Pacific region, with the imminent launch of VITRO Santa Rosa. The facility, the country’s first true hyperscale data center, reflects a commitment to innovation and resilience. Notably, it features a dedicated Meralco switching station to cater specifically to its power needs, underscoring the dedication to reliability.

The future holds even more promise, with a 12th VITRO data center, a 100MW hyperscale facility, in the pipeline. ePLDT’s strategy of building more reliable and secure facilities aligns with its vision of helping the Philippines secure a larger market share in serving the information and communications technology (ICT) needs of global customers while continuing to support the digital transformation journey of different sectors locally.

This strategic expansion not only positions the Philippines as a competitive player in the digital arena, but also solidifies its role as a key economic force in the region.