At the start of 2026 Thailand’s data-centre sector appeared to be accelerating, with the Board of Investment clearing projects from TikTok, a UAE-based Skyline operator and Singapore’s Bridge group, together promising about $27 billion of spend. The surge was part of a broader regional trend driven by rising artificial-intelligence workloads that pushed investors toward the relatively low-cost markets of the Asia-Pacific south-east corridor.
By September the Thai government had put a stop to construction on 49 sites and suspended decisions on another 117, citing insufficient regulatory detail and concerns over monitoring capacity. Officials warned that the facilities would draw large quantities of electricity generated from costly imported gas, prompting calls for a new, higher-tariff user class for datacentre operators.
Indonesia’s response echoed Thailand’s caution. The governor of West Java halted a datacentre project after discovering that required permits were missing and that the environmental impact assessment was incomplete. The decision underscored the difficulty of meeting local licensing standards in a region where demand for compute capacity is outpacing regulatory preparedness.
Despite these setbacks, Southeast Asia still dominates new-build activity in the Asia-Pacific. A 2026 Cushman & Wakefield analysis showed the sub-region accounts for roughly half of all under-construction capacity, with Malaysia and Thailand contributing the largest shares. In Malaysia’s Johor state, operational power rose from 94 MW in 2023 to more than 1,100 MW in 2026, and an additional 3,088 MW is either under construction or planned, attracting about $40 billion of investment.
The rapid expansion is straining local utilities. Wood Mackenzie estimates that datacentres already consume 24 percent of Johor’s total electricity, a share that could climb to 40 percent by 2035. Research analyst Alvin Tan warned that such growth may create localized grid bottlenecks and force costly upgrades to transmission networks and new power-generation capacity.
Water demand presents a parallel challenge. Operational sites in Johor are estimated to require roughly 675 million cubic metres of water each day, while Thailand’s Eastern Economic Corridor faces pressure on the shallow Khlong Luang reservoir. Research director Somnuck Jongmeewasin of EEC Watch described the reservoir as “under strain” yet still being tapped for industrial estates, highlighting the competing needs of communities and data-centre developers.
Public opposition is emerging. In February, protesters gathered in Johor to block a construction site for China’s ZData Technologies, citing dust and potential water-supply impacts. In response, some operators have announced sustainability measures: Bridge Datacentres is installing a water-reclamation system in Johor, and AirTrunk has partnered with Johor Special Water to recycle wastewater. Microsoft, however, continues to rank among the least energy-efficient operators in the Asia-Pacific, according to its own Power Usage Effectiveness data.
Policy makers are tightening approval processes. Singapore now links new licences to strict power-efficiency and carbon-emission criteria. Malaysia has created a datacentre taskforce to vet projects for energy and water security, while Johor has stopped granting permits for Tier 1 and Tier 2 facilities that would consume up to 50 million litres of water daily. Thailand introduced a framework that evaluates energy and water use, mandates power-guarantee provisions and applies higher tariffs. Tan-Soo, a regional policy analyst, argues that “integrated policy frameworks” are needed so operators bear the full social cost of the resources they consume.