The Philippines could attract more data center investments
and strengthen its position in Southeast Asia by requiring businesses to store
certain digital information within the country, industry leaders said.
A proposed data residency law could provide investors with
greater confidence in the country's long-term commitment to digital
infrastructure while encouraging more companies to establish local data
centers. Industry representatives also believe such legislation could support
the growth of the sector's capital market, particularly as VITRO Inc. prepares
for its planned initial public offering (IPO).
Colliers Philippines research director Joey Bondoc said
legislation would demonstrate the government's long-term support for data
center development. He noted that a law approved by Congress and signed by
President Ferdinand Marcos Jr. could help establish a stronger policy
foundation for the industry amid growing concerns over its environmental
impact.
Data centers require substantial amounts of electricity and
water to operate. The International Energy Agency estimated that these
facilities accounted for approximately 1.5% of global electricity consumption
in 2024. Large facilities can also consume up to five million liters of water
daily to cool their computing equipment.
These resource requirements have prompted concerns about the
expansion of data centers, making government policy and long-term
infrastructure planning increasingly important.
The Philippines currently has Executive Order No. 119, which
requires government agencies to store classified information locally. However,
the policy does not extend to privately held data.
VITRO president and CEO Victor Genuino said the executive
order provides an adequate starting point for government data. Expanding the
requirement to private companies, however, would require legislation to
establish a broader legal framework.
Regional developments highlight the potential economic
implications of such a policy. Countries including Vietnam, Indonesia and
Malaysia have introduced regulations requiring certain categories of personal
and sensitive information to be stored within their borders.
Vietnam requires domestic storage of citizens' personal data
under its data localization framework, while Indonesia and Malaysia impose
local storage requirements on specific sectors, including finance, healthcare
and telecommunications.
These policies form part of a broader regional push to
develop digital infrastructure and strengthen domestic control over data.
The differences in infrastructure capacity are already
evident. According to Cushman & Wakefield, Malaysia's Johor region had 111
gigawatts of data center capacity as of June, while Jakarta had 356 megawatts.
Manila, by comparison, had only 90 megawatts.
The disparity is also reflected in vacancy rates. Manila
recorded a data center vacancy rate of 43.6%, significantly higher than
Jakarta's 20.4% and Johor's 0.7%.
Despite the capacity gap, the Philippines is preparing for a
potential expansion of its data center industry, with VITRO set to become the
country's first publicly listed data center operator.
The PLDT Inc. subsidiary plans to offer up to 48.95% of its
shares to the public, targeting proceeds of as much as ₱24.2 billion. The funds
are intended to support future expansion projects and debt repayment.
A data residency law could provide an additional policy
foundation for these investments by creating domestic demand for data storage
services. It could also signal the government's commitment to developing the
infrastructure needed to support the country's growing digital economy.
As businesses and consumers increasingly depend on cloud computing, online platforms and digital services, data centers have become essential to the country's technological infrastructure. Balancing their economic potential with concerns over electricity and water consumption remains a central challenge as the Philippines seeks to expand its capacity.
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