The Emerging Market of Data Centers in Cambodia
Cambodia’s long-term vision is to become an upper-middle-income country by 2030 and a high-income country by 2050. Part of fulfilling this goal is to implement the transition into a digital economy.
With the Cambodian government support in the industry and paired with the country’s relatively lower labor and employment costs, it is developing into a Mecca for data center operators. At the core of this digital transformation are these advantages, improved connectivity, attracting foreign investors, and supporting tech startups.
Cambodia’s tech startup ecosystem has experienced tremendous growth since its inception in the early 2010s. It was estimated that there were under 50 in 2013 and in 2018 it flourished to about 300. Leading the charge is the fintech industry, followed by media and advertising, e-commerce, development services and digital marketplaces. A surprising trend is in a marked departure from traditional markets that reign supreme and transiting to buying online from social networks through social media. This is due to the rise of social media influencers.
National policies like the ‘National Strategic Development Plan’ show commitment to boost the country’s rapid socio-economic development. Cambodia’s strategic location of being centered in the east-west corridor of the Greater Mekong Sub-region coupled with the country’s historically positive relationship with foreign investments makes it an appealing destination for multinational corporations. With steady economic growth and as government initiatives advance, the need for data centers will continue to rise.
Cambodia has been on an impressive growth trajectory in recent years, out of the many economic sectors, digital technology has made a steep ascend. Youth (under age 30) in Cambodia makes up 65.3% of its population. They are tech-savvy and internet penetration has boomed as a result of the pandemic. There are 17.8 million internet subscribers, exceeding the country’s population of 16 million. E-commerce, digital services, and remote working are triggers for the acceleration. Digital literacy is constantly improving with evolving IT courses provided by universities and academies.
In this photo released by China’s Xinhua News Agency, Cambodian Prime Minister Hun Sen, left, shakes hands with Chinese President Xi Jinping during a meeting on the sidelines of the CPC (Communist Party of China) in Dialogue with World Political Parties High-Level Meeting in Beijing, Friday, Dec. 1, 2017. (Rao Aimin/Xinhua via AP)[/caption]
With Cambodia’ openness to foreign investment and trade, it has attracted an influx of multinational corporations looking to establish a foothold in the region. Participation in China’s Belt and Road Initiative alone has resulted in bilateral trade of $10 billion in 2022. The digital infrastructure needs to keep up with the accelerated growth in trade and digital technology. This is where the importance of data centers comes in, besides reliable internet connectivity, the storage and flow of data is pivotal for digitalization.
Data centers provide the backbone for digital services and applications. They ensure reliable access to data and applications, fostering a conducive environment for businesses, government agencies, and individuals to thrive in a digital economy. Data security, scalability, and disaster recovery are key features that are required for a robust and healthy network.
The data center market shows tremendous promise, but it is not without challenges.
Developing world-class data center infrastructure requires significant investments. Establishing clear and favorable regulations for data center operations is crucial. Building and managing data centers requires specialized skills and expertise. Investments in training programs and education to develop a local workforce with the necessary knowledge and skills are needed. Ensuring a stable and reliable power supply is essential for data center operations. Cambodia is prone to monsoons and seasonal floods; mitigation and flood prevention is needed to maintain uninterrupted power supply.
The Cambodian government is aware of these challenges, and they are poised to tackle them head on with a top-down approach, starting with the various government agencies. With policies like ‘Cambodian Digital Government Policy 2022 – 2035), they aim to build a digital government to improve the quality of life and confidence of the people through better public service.
Despite the challenges, Cambodia’s data center market holds immense potential. With Cambodia’s strategic location in Southeast Asia positions it as a gateway to neighboring countries, including Thailand, Vietnam, and Laos. This geographic advantage makes Cambodia an attractive location for regional data centers.
Cambodia’s journey into the digital age is marked by ambition and promise. The emergence of data centers in the country is a testament to its commitment to digital transformation. While challenges exist, the role of data centers in Cambodia’s growth cannot be understated, as they provide the essential foundation for a thriving digital economy. With the right investments, regulatory support, and talent development, Cambodia is positioned to become a significant player in the regional data center landscape.
Now with the introduction of the BYTEDC Tier III Data Center, it created a milestone to boost Cambodia’s leap into achieving her 2050 goal.