Offshoring Singapore Data Centres

Singapore is running out of space and power to supply data centres, but neighbouring Malaysia presents an opportunity for growth.

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‍Singapore is one of the most strategically critical digital hubs in Asia. Through a well-established network of subsea cables and robust networking infrastructure, the Lion City has become the gateway between the East and West. However, with limited land and growing sustainability pressures, the city-state now faces space and power constraints that challenge further data centre development.

Growing demand for digital services, fuelled by artificial intelligence, cloud computing, and data-heavy content platforms – including social media – has put mounting pressure on infrastructure. Singapore has also implemented moratoriums and power usage caps to curb data centre expansion, creating a dilemma for businesses that rely on the country’s connectivity but require more room to grow.

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Malaysia’s Johor: A Natural Extension

For these organisations, the most viable and immediate solution lies just across the border in Malaysia. Neighbouring Johor offers an ideal alternative to in-city data centre expansion. It has land, power, and infrastructure to accommodate the growing needs of operators, while free zones across Malaysia are open to international operators and investors, offering cost advantages and fewer space constraints. One of the most prominent developments is the Equinix JH1 facility. It’s close to the Malaysia-Singapore border and has been designed to serve companies that require proximity to Singapore’s connectivity core. Equinix JH1 has already become an important part of the regional data ecosystem. By redirecting infrastructure-heavy operations across the border, while maintaining tight network integration, organisations can retain the advantages of Singapore’s position without being limited by its physical boundaries.

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Building Cross-border Connectivity

As a networking provider, SG.GS has already established a Point of Presence (PoP) in Johor to support businesses looking to establish – or grow – their reach in APAC. This infrastructure allows organisations to access scalable resources while continuing to benefit from Singapore’s status as a regional gateway.

Our network is designed to offer low-latency, high-capacity links between Malaysia and Singapore, enabling high-performance operations regardless of location, which is particularly beneficial for cloud providers, media platforms, and enterprises with edge computing requirements. 

Moving infrastructure into Malaysian free zones involves more than just building a data centre. There are complex regulatory environments, licensing conditions, and interconnection rules that can complicate the process, especially for telecom providers.

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Navigating Free Zone Complexities

Malaysia’s free zones present opportunities for companies looking to reduce operational costs and streamline their presence in Asia-Pacific. These zones offer tax incentives, simplified customs procedures, and more preferable regulations. However, the frameworks can be difficult to navigate.

Telecoms operators, however, face challenges in establishing services within these zones. Licensing can differ from national requirements, and interconnection with local carriers requires negotiation and compliance. SG.GS’ presence in Malaysia is supported by in-region partnerships, regulatory experience, and a deep understanding of operational requirements to solve typical hurdles faced by businesses.

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Offshoring for strategic advantage

The concept of offshoring data centre infrastructure is becoming increasingly relevant across the globe, and power and space constraints are not just limited to Singapore. Markets such as Hong Kong, Amsterdam, and Tokyo are also experiencing similar limitations, prompting operators to seek expansion opportunities in nearby secondary locations.

A distributed model of data centre development has started to emerge. Markets like Singapore continue to serve as central connectivity hubs, while neighbouring regions offer the scalability and resources needed for future growth. With robust cross-border networking, this model allows businesses to improve performance and reduce costs without sacrificing connectivity or compliance. Johor’s proximity to Singapore makes it particularly well-suited to this approach. The border crossing is short, latency is low, and fibre infrastructure connects the two markets efficiently.

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Planning for the Next Wave

Singapore’s position as Southeast Asia’s primary connectivity gateway is secure. With dozens of submarine cable landings, cloud on-ramps, and high-speed regional links, it will continue to anchor digital activity in the region. However, its limitations in space and power require a more strategic, regional approach to long-term infrastructure planning.

Malaysia, and Johor in particular, offers the most natural and efficient extension to Singapore’s capabilities. By pairing the two markets, businesses can design infrastructure strategies that are resilient, scalable, and future-proof.

The future of data centres in APAC will be defined by balance: the balance between performance and sustainability, proximity and scale, and regulation and innovation. Offshoring data centre operations from Singapore to Malaysia offers a practical, forward-thinking way to meet challenges while preparing for the next wave of opportunities.

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To explore how SG.GS can support your regional infrastructure needs, talk to our team.

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