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PHL data center prospects deemed promising due to digitalization push

THE PHILIPPINES is viewed as a promising market for data centers due to its digitalization efforts and surging use of e-commerce, according to firms providing real estate and legal services to potential locators.

Monica Gonzales, lead data center officer for real estate consultancy Santos Knight Frank, said in a recent forum organized by the European Chamber of Commerce of the Philippines that the Philippines is also viewed positively because of its investment-friendly policies, strong information technology and engineering talent pool, and the potential for tapping renewable energy in data center operations.

She said hyperscalers such as Amazon Web Services, Inc., Microsoft Corp., and Alibaba Group are considering investing in the Philippines.

“As we expand the amount of activities that require us to store and process data, as we continue to move more functions to the internet and to the cloud from business to our personal lives, there will be a continuing demand for data center space and investment,” Ms. Gonzales said.

“The Philippine digital economy was worth P1.87 trillion in 2021 and contributed 9.6% to the (overall) economy. (It is a) key part of the economy and is worth supporting, and data centers are key and necessary for nurturing that growth,” she added.

Alain Charles J. Veloso, a partner with the Quisumbing Torres law firm, said potential locators are also encouraged by the regulatory environment following the passage of laws such as amendments to the Foreign Investment Act, the Public Service Act, and the Retail Trade Liberalization Act.

Under the amended Public Service Act, foreign nationals are now allowed to own up to 100% of capital in a firm providing telecommunications services.

Mr. Veloso also cited incentives available under the Corporate Recovery and Tax Incentives for Enterprises Act as attractive to data center investors.

“This development will drive the country’s already aggressive forecast for the data center market,” Mr. Veloso said.

The Philippine data center market is projected to be worth $535 million by 2026, with a compound annual growth rate of 11.4% between 2021 and 2026, according to a 2022 study by Quisumbing Torres, “Developing and Operating Data Centers in the Philippines.”

“The Philippines and regulators (must) meet the challenges that come with data centers such as ensuring a reliable supply of power, strengthening telco infrastructure, and improving the ease of doing business,” Mr. Veloso said. — Revin Mikhael D. Ochave