Asia has very quickly become a digital powerhouse, with countries across the continent attracting strong investment from the data centre industry. However, as these economies scale, storing, processing and securing data is becoming a sovereignty issue.
Capacity hears from industry experts about how businesses are changing data centre strategies across Asia to match the current geopolitical landscape.
Data sovereignty concerns in APAC markets
With lots of conversations over digital sovereignty and access currently happening in Europe, amid the AI boom, are data centre markets in Asia following suit?
Being discussed at ITW Asia 2025 this week is the convergence of data sovereignty, AI infrastructure demand and geopolitical risk – which is resulting in operators, hyperscalers and investors to rethink site selection, capital deployment and public-private partnerships.
Currently, data sovereignty in Asia isn’t uniform, which leaves the market still quite unique. In fact, several countries like China and India leaning into localisation – seeing data processing as strategic and tied to national security.
“Each market is finding its own balance between national control, openness to investment and digital ambition,” Dr Thomas King, CTO at DE-CIX, told Capacity.
“Despite different strategies, each country is driven by the same underlying recognition that data has become critical infrastructure. The more digital economies grow, the more sovereignty becomes a baseline for participation.”
Countries like Indonesia and Malaysia for instance have already enacted laws to enforce localisation for the data of critical sectors like financial services and the public sector.
“Data sovereignty has shifted from compliance tick-box to boardroom priority. There’s no uniform regional approach – it’s a patchwork of national strategies,” explained Piyush Gupta, vice president, India, APAC & Middle East at Vultr. “The trajectory is clear: national sovereignty is reshaping digital infrastructure, even if enforcement varies wildly.”
Such a push for sovereignty is being driven by national security concerns, as countries around the world are eager to be self-reliant amid the current geopolitical landscape.
Regulatory market reaction
As data sovereignty becomes more in demand across Asia, the regulatory landscape inevitably is having to shift quickly in response. Coinciding with regulation is cloud adoption as, according to the IDC, nearly 90% of Asia-Pacific (APAC) enterprises now run multi-cloud workloads.
“Providers delivering proven data controls without sacrificing agility will win,” Gupta said.
Within regulation, the focus is shifting from privacy to a broader framework of digital governance and national security, including Vietnam’s Draft Personal Data Protection Law and the amendments to Singapore’s PDPA.
Over the past few years, the industry has seen plenty of new or updated frameworks that all indicate a more ‘sovereignty-first’ mindset.
“These laws often introduce or strengthen data localisation and cross-border data transfer restrictions. Additionally, governments are increasingly recognising data centres as critical national infrastructure and introducing regulations accordingly,” said Jonathan Wright, chief product officer at GCX Managed Services. “For example, Singapore has introduced its Green Data Centre Roadmap and updated its Cybersecurity Act.”
As the regulatory landscape in Asia evolves, the executives we spoke to said it’s becoming clear that it’s more about keeping data within borders – particularly focusing on resilient digital ecosystems that can survive cyber or geopolitical incidents.
King added: “What’s particularly notable is how these laws increasingly bear resemblance to standards in other parts of the world, such as Europe’s NIS2 Directive – holding leadership accountable for preparedness and resilience.
“In other words, regulations are pushing organisations to treat business continuity as a compliance issue and many are responding by adopting multi-vendor, redundant network strategies that limit dependency on single providers.”
Finding the ‘middle ground’
Across Asia, governments are looking to strengthen national control over data and digital infrastructure, while also needing to attract global investment to power economic growth. This requires finding a strong middle ground.
This is being reflected in how infrastructure is being built, with governments now encouraging multi-location data centre designs that lower risk and meet local control requirements.
“Partnerships between national operators and international cloud providers are common,” King added. “Rather than seeing sovereignty and openness as competing forces, Asia’s leading digital economies are beginning to treat them as complementary, building resilient, sovereign-ready ecosystems that welcome outside capital but keep control over critical data flows firmly within their borders.”
As larger regional governments benefit from such a surge in data centre investment, smaller and less commercially attractive geographies could pose a challenge. Therefore, to attract global investment, enterprises are focusing on scale and secure frameworks.
“This middle ground often takes the form of certified local deployments, sovereign cloud zones and public–private partnerships designed to allow hyperscalers to bring capacity, expertise and advanced services to market under clearly defined national guardrails,” Gupta said.
“The result is a regulatory and investment environment that fosters both digital trust and competitiveness, a balance essential to the region’s continued digital growth.”
Geopolitical competition is also prompting greater national efforts to build sovereign AI ecosystems. Export controls, supply chain tensions and even tariffs continue to prompt governments and businesses to invest in AI infrastructure.
King noted: “The tension between global cooperation and digital self-reliance is certainly shaping how Asia approaches AI. In markets like India and Malaysia, this is prompting investment in domestic data centre capacity, sovereign cloud frameworks, and resilient interconnection, all designed to keep critical AI workloads close to home.”
Shaping the future of data sovereignty
In Asia, sovereignty is the catalyst that is making AI and cloud strategies smarter. Notably, that data sovereignty is reshaping how enterprises think about the cloud, driving a strategic shift from “cloud-first” adoption to more sophisticated hybrid and multi-cloud architectures.
“There is an increase in sovereign cloud offerings, dedicated services hosted domestically that are fully compliant with local laws on data residency, governance and access control,” Wright explained. “Many companies that have localised their data at rest may still rely on networks that traverse other countries, however, meaning their data may not be truly sovereign.”
Gupta added: “The hybrid approach allows businesses to keep sensitive workloads and datasets within national jurisdictions while leveraging the public cloud for less regulated operations.
“The competitive advantage comes from infrastructure that’s globally scalable and locally accountable, built for sovereignty from the ground up.”
However, data sovereignty also acts as a constraint for cloud adoption, with tighter controls over where and how data is stored forcing businesses to think carefully. Particularly in markets like India, Singapore and Malaysia, regulations and national cybersecurity frameworks are leading organisations to prioritise redundancy and direct interconnection across data centre locations.
“Like elsewhere in the world, we’re seeing control catch up to convenience: Assurance is now just as important as agility, knowing that services remain available and compliant even if one route, provider, or jurisdiction fails,” King said. “For enterprises, this has effectively redefined what ‘resilience’ means in terms of the cloud.”
He added: “Sovereignty is accelerating – not stalling – the evolution of the cloud, turning it from a utility into part of each nation’s critical infrastructure.”
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