Economic Letter from Asia: AI and Data Centres

Summary

• Asia anchors the AI hardware supply chain with Taiwan leading logic fabrication and South Korea leading high-bandwidth memory.
• Southeast Asia previously focused on packaging, testing, and assembly but is now moving to host computing capacity.
• Malaysia's national GDP growth exceeded 5% in 2024 and 2025, while Johor's GDP grew 8.0% in 2025.
• Johor's services sector expanded 9.9% in 2025, accounting for two-thirds of the state's growth.
• Malaysia's FDI position in information and communication tripled from MYR 39.0bn in 2022 to MYR 117.4bn in 2025.
• Johor hosts over 70% of Malaysia's operational data centre capacity.
• Malaysia introduced an ultra-high-voltage tariff in July 2025 and a separate water tariff for data centres in August.
• Thailand's approved FDI in digital industries rose from THB 95.2bn in 2024 to THB 553.0bn in 2025.
• Digital industries accounted for 48.5% of Thailand's total approved FDI in 2025.
• Thailand's Board of Investment paused new data centre applications in April 2026 due to resource strains.
• Singapore's data processing and hosting industry operating surplus rose roughly sevenfold from SGD 1.1bn in 2018 to SGD 7.6bn in 2024.
• Singapore imposed a moratorium on new data centres from 2019 to 2022 due to resource constraints.
• Imported equipment absorbs much of the build phase investment, reducing domestic value added.
• Foreign ownership, depreciation, and thin staffing reduce the portion of gains retained by residents.
• The gap between GDP and national income is largest where facilities are foreign-owned and capital-heavy.