Editor's note:Over the past few months, we have participated in consulting work for a number of Southeast Asian data centre investments and project-implementation matters. The countries in which these projects are located and the stages they have reached vary, but the issues have been broadly similar: the investment structure and business model still need to be clarified; industrial parks may indicate that they can coordinate land and power, while key resource conditions have not yet been reflected in formal documents; and investment promotion, project licences and actual operating conditions are often not clearly distinguished. Based on these common issues, Zhongxin Legal News has organised the relevant practical experience into the series “Southeast Asian Data Centre Investment and Operations”, covering pre-investment review, implementation structures, resource contracts and operating responsibilities after launch.
Singapore has completed the selection of projects in the second round of data centre capacity allocation, with each of the four selected projects provisionally allocated 50 MW, for a combined total of 200 MW. Malaysia's investment announcement for the first half of 2026 also stated that the Data Centre Task Force would screen projects with secured power, water and green-compliance conditions, while prioritising operators capable of supporting local supply chains. For companies preparing to enter Southeast Asia, a data centre is no longer a simple investment project involving only the acquisition of land and registration of a company.
On 8 September 2026, Singapore's Ministry of Digital Development and Information (MDDI) introduced the Digital Infrastructure Bill for its first reading in Parliament. The Bill proposes two new licensing regimes, one concerning the security and resilience of major data centres and major cloud service providers, and the other concerning the environmental sustainability of data centre operations above a certain scale. According to publicly available information, the Bill has not yet been passed. The proposed licensing thresholds and operating requirements should therefore be understood only as the content and regulatory direction of a Bill, and should not be treated directly as statutory obligations under current law.
This article focuses on an earlier decision point: how a company should determine whether a project has a sufficient basis for further investment before paying a land deposit, applying for power capacity, incorporating a project company or signing financing documents. The detailed terms of resource contracts and the handling of incidents after launch will be discussed later in this series.
01 Data Centre Business Models and Regulatory Classification
“Data centre project” is usually a commercial expression, not a sufficiently precise legal classification. A group-owned facility, third-party colocation, cloud services, data processing, network connectivity and disaster-recovery services may differ in their sources of revenue, customer groups, system functions and data responsibilities.
To determine the nature of a project, it is advisable to answer four questions first: Who are the customers? Is the company providing space, equipment, computing capacity or data processing? Does the system provide services to the public? Does the project company have access to, or make decisions about the processing of, customer data? If a project provides colocation, cloud services and data processing at the same time, its business classification, registrations and operating responsibilities must be checked separately.
Indonesia's OSS has included data processing, hosting and related activities in its KBLI business classifications, while Komdigi's PSE regime focuses on whether an electronic system must be registered. These regimes illustrate the method of analysis: it is not enough to exclude the project company's compliance responsibilities merely because “the servers are operated by a third party”; nor is it enough to confirm all registrations and licences merely because the project is called a “data centre”.
As to the proposed security and resilience licence, the Bill would cover data centres with a critical IT load of at least 10 MW, third-party colocation data centres and cloud data centres; facilities used only internally by an operator would not fall within that licensing threshold. The proposed environmental sustainability licence would apply to data centre operators with a critical IT load of at least 3 MW. These distinctions currently belong to the framework of the Bill. A formal project assessment must still follow the final Bill and implementing rules.
Before preparing the investment model, first set out the service offering, customer groups, data flows and the project company's actual functions in a one-page business description. Without this description, later access, licensing and contract reviews can easily end up assessing different versions of what “the data centre” actually is.
02 Investment Entities and Project Access
Only after the business model has been established does it make sense to discuss who will invest and operate the project. A Chinese company may invest directly in a local entity, enter through an offshore holding platform, establish a new local project company, acquire an existing operator or form a joint venture with a park or industrial-estate enterprise. Different routes affect onshore and offshore investment procedures, the flow of funds, equity control, local foreign-investment access and future financing arrangements.
The functions undertaken by the project company should not be described merely as “responsible for local business”. If it only holds land and equipment, operating licences, customer contracts and data-processing responsibilities may be undertaken by another entity. If it will also sign power, water, EPC, operating and customer contracts, it must have the corresponding authority, personnel, licences and capacity to perform.
Indonesian projects often require PT PMA, KBLI and PSE status to be analysed on one diagram: who is the foreign-investment entity, who operates colocation or data processing, who operates the electronic system, and who provides cloud services to customers. Singapore, Malaysia and Thailand have different regimes, but “the local company has already been registered” cannot replace an assessment of the specific business and licensing path.
Investment-promotion applications should also be considered separately. Obtaining coordination support, investment incentives or entry into a capacity-allocation process shows that the project has received policy support at a particular level. It does not mean that land, construction, environmental, power, communications and formal operating conditions are all in place.
03 Land, Energy and Network Conditions
At a minimum, a data centre site review should cover land use, power capacity, connection timing, water and cooling conditions, network routes and disaster-recovery arrangements at the same time. Land prices, park rents and tax incentives may explain why a project is attractive, but they do not prove that it can go live on schedule.
Power must be distinguished among “power is included in the plan”, “capacity can be applied for”, “a power-supply agreement has been signed” and “power can be switched on by the agreed date”. Water must be assessed together with the cooling technology, local climate, water-source stability, discharge conditions and recycling plan. For networks, the review should continue to confirm international connectivity, multiple carriers, multiple routes and a disaster-recovery centre, rather than merely confirming that the facility can connect to one line.
Singapore's DC-CFA2 links capacity allocation with project commitments concerning green energy, liquid cooling, IT-equipment efficiency and Green Mark. MIDA's 2026 announcement in Malaysia identified secured power, water, green compliance and local supply chains as matters of focus in project screening. These public policy signals show that resource conditions should appear in the pre-investment review, but they do not replace the power, water, land or communications documents for a particular project.
Before moving to the contract review in the third article, the project team should at least confirm: which party will issue the capacity document; whether the connection date can be verified; whether there is a process and priority for expansion; who will confirm water and discharge conditions; and whether network providers can provide a written redundancy plan.
04 Project Licences and Investment Incentives
Project licences can be organised into three layers: investment, construction and operations.
The investment layer covers the foreign-investment entity, funding route, investment application, project company and incentives. The construction layer covers land-use planning, environmental matters, construction, fire safety, energy connection, equipment importation and communications connectivity. The operating layer requires further checks on data processing, cloud services, PSE registration, personal-data protection, cybersecurity, energy efficiency, reporting and audits.
Different authorities are responsible at different levels. Singapore's DC-CFA is a capacity-allocation mechanism and cannot replace construction and operating licences. MIDA and the DCTF provide investment coordination and project-screening entry points, but cannot replace approvals from state authorities, local construction authorities or power and water authorities. Thailand BOI promotion conditions may address PUE, backup systems, ISO certification, communications connectivity and local contributions, but do not automatically amount to construction or operating licences. PT PMA, KBLI and PSE registrations in Indonesia must likewise be checked separately against the actual business.
The PUE, WUE, green-energy, liquid-cooling and certification requirements appearing in Malaysia's MITI sustainable data centre guidelines, Thailand BOI promotion conditions and Singapore's green data centre policies do not all have the same legal effect. They may be design targets, government evaluation criteria, incentive conditions, certification requirements or contractual commitments. In formal drafting and project review, these terms must not all be rewritten as “statutory thresholds”.
05 Boundaries for Investment Decisions
The goal of a first-round review is not to complete the rules of every country in one exercise. It is to give the company a clear view of whether the next payment can be made, what documents remain outstanding and who must close each gap.
| Project status | Existing basis | Current action |
|---|---|---|
| Proceed | The business model, investment entity, land use, key resources and licensing path are substantially clear, and the key resources are supported by formal documents | Move into structural design, resource contracts and construction preparation |
| Further investigation required | The project direction is clear, but the power date, water arrangements, business classification, PSE status or partner capacity lacks documentary support | Postpone substantial investment and assign responsible persons and deadlines for the missing documents |
| Structural adjustment required | The existing project company or equity arrangement cannot carry the relevant licensing, resource or customer responsibilities | Compare joint-venture, leasing, colocation or cooperative-operation structures |
| Postpone substantial investment | The main conditions still depend on oral assurances, or the resource and construction schedules conflict | Resolve the land, energy, business-classification and licensing paths first |
Before paying a land deposit, applying for power capacity, or signing financing and EPC documents, the project's “policy support” should be rewritten as documentary conditions capable of being submitted, tested and enforced. Only then is a decision to proceed based on project evidence rather than promotional language.
Conclusion:
The purpose of a pre-investment review for a data centre project is not to determine whether a company can be registered. It is to determine whether, after the company has invested in land, equipment and financing costs, the project has a realistic chance of entering construction and operating sustainably.
Before paying a land deposit, confirm the business model, land use and project entity. Before applying for investment incentives and power capacity, verify capacity, connection timing, water, networks and the licensing path. Before signing financing and EPC documents, check again whether the key resources are supported by formal documents. The project team can then decide whether to proceed, conduct further investigation, adjust the structure or postpone substantial investment.
Key References
- MDDI: New Digital Infrastructure Bill To Strengthen The Foundations For Singapore's Digital Economy (8 September 2026; Bill introduced for first reading and not yet in force)
- EDB/IMDA: Four data centre proposals selected as part of second DC-CFA (21 August 2026; DC-CFA2 capacity-allocation announcement)
- MIDA: Malaysia Secures RM218.5 Billion in Approved Investments In 1H 2026 (28 August 2026; investment announcement)
- Indonesia OSS: KBLI 2025 (data processing, hosting and related business classifications; former 63111/63112 classifications converted to 63101/63102 respectively; the actual business of the project must be checked)
- Komdigi: Private Sector ESO Registration
- Thailand BOI: Investment Promotion Guide 2026 (July 2026; investment-promotion guide)
Disclaimer: This article does not constitute legal advice, investment advice or a commitment to provide professional services in relation to any specific project or transaction. Data centre projects involve multiple areas, including investment access, land, power, water, communications, data protection, energy efficiency, engineering and construction, operations and financing. Specific matters should be separately assessed by the relevant professional advisers or lawyers in light of the project location, business model, transaction documents and the latest official rules.
This article is general information and not legal advice. Specific matters require assessment by appropriately qualified professionals.