$800-M hyperscaler investment seen

Published September 1, 2021, 4:53 PM

by Bernie Cahiles-Magkilat

The Board of Investments (BOI) has identified at least three hyperscalers or giant cloud services firms, one with potential investment of $800 million, with expansion plans in the country and are eligible for incentives as the government made a strong pitch for this next growth engine.

BOI Managing Head Ceferino S. Rodolfo revealed these potential investments but refused to divulge their corporate identities at the virtual Philippines: The Next Strategic Hyperscaler Hub in APAC Media Launch.

Rodolfo, however, said that one hyperscaler has committed investments of $800 million while the two others are from the US and China.

Trade and Industry Secretary Ramon M. Lopez also encouraged hyperscalers to expand in the Philippines because they will not only benefit from strong government support and a favorable regulatory environment.

Hyperscalers are defined as those massive companies like Google, Facebook, and Amazon that are making efforts to not only dominate the public cloud and cloud services industries, but to expand their business into numerous related verticals, as well.

“Hyperscalers can avail of incentives under the country’s Investment Priorities Plan,” said Lopez noting that the government is inviting more investments to expand e-commerce and facilitate new modes of interaction and exchange as Philippines becomes an active participant in the global digital economy.

“We are promoting hyperscalers as the country’s next growth engine in our Make It Happen in the Philippines campaign, for a lot of reasons,” Lopez said.

Hyperscalers act as enabler of various industries and the backbone of digital-native industries such as financial technology and digital banking. Their increased presence will create a multiplier effect, especially with the potential increase in demand for renewable energy and data center developers.

The investments of hyperscalers on tools and intellectual property will result in cheaper access to cloud technology which will extend and enhance the customer’s capabilities. Hyperscale platforms provide the ability to quickly and seamlessly handle immense volumes of activity and data. Their capability for integration with other systems make it cheaper for the customer to implement and integrate the platform.

In addition, Lopez said, hyperscalers create potential investment value in terms of generating foreign direct investments, improving internet connectivity, investment in IT infrastructure, manpower upskilling, and renewable energy. Indirectly, they will result in lower data cost for the country, cheaper cloud services, and improved customer experience for our e-commerce industry.

“The Philippines’ digital landscape makes it an ideal setting for hyperscalers,” said Lopez as he cited the 2021 Digital Report where the Philippines remained the top country in social media and internet usage worldwide.

In addition, e-commerce adoption in the Philippines grew from 70 percent in 2019 to 76 percent in 2020 and 80.2 percent in 2021. Our digital enterprises filled the void left by brick-and-mortar businesses affected by the community lockdowns. Online retail, delivery services, online entertainment, digital services, telehealth, work from home arrangements, digital payments—all of these helped us in the past year and continue to do so until now.

The Philippines is currently the social media capital of the world with 89 million active social media users. As of January this year, according to the Global Social Media Use Ranking, the Philippines ranked 6th in Facebook, 10th in Youtube, 11th in Twitter and 18th in Instagram.

Lopez further reported that based on DTI’s Business Name Registration Next Generation System, the number of online businesses involved in retail trade jumped from 1,848 in the first quarter of 2020 to 88,575 by the end of 2020. Presently, the total number of online business names registered for retail trade is around 109,648.

“Hyperscalers can provide these businesses with scalable applications and storage portfolio of services to meet the growing demand of transactions,” he said.