Southeast Asia's Data Center Boom Stalls Over Power and Water Limits
Thailand and Indonesia have paused dozens of data center projects as regulators grapple with energy, water, and permitting concerns.
A data center construction wave that swept through Southeast Asia in early 2026 is losing momentum, with governments in Thailand and Indonesia moving to halt projects amid mounting concerns about infrastructure capacity and regulatory gaps.
Thailand's data center sector had appeared poised for explosive growth earlier this year, after the country's board of investment approved projects from TikTok, UAE-based Skyline, and Singapore's Bridge Data Centres — a combined planned investment of $27 billion. That optimism has since given way to a sharp regulatory pullback. In September 2026, Thai authorities paused construction on 49 projects and suspended approval decisions on 117 additional ones, citing insufficient detail for effective regulation and monitoring.
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Indonesia faces similar headwinds. The governor of West Java — the country's most populous province — ordered a halt to at least one data center construction site over missing permits and an incomplete environmental assessment, signaling that regulatory scrutiny is tightening across the region.
The twin pressures of power availability and water consumption are emerging as the central constraints testing the region's ability to absorb large-scale digital infrastructure. Data centers require enormous and reliable electricity supplies as well as significant water resources for cooling systems — demands that regulators in developing markets are increasingly reluctant to approve without detailed impact assessments.
The situation illustrates a broader tension playing out globally between the surging appetite for cloud and AI computing capacity and the physical limits of local grids and natural resources. What had looked like an unstoppable regional buildout just months ago now faces an uncertain timeline. Continue reading at Business | The Guardian.
