MPs back tighter data centre regulations but raise questions on competitiveness, sustainability

A new law passed in parliament in Singapore on October 7, 2023, requires operators of data centres with a critical IT load of at least 3 megawatts (MW) to obtain a license. The Digital Infrastructure Bill introduced two new licensing regimes aimed at enhancing security, resilience, and environmental sustainability of major cloud services and data centres in Singapore. However, MPs raised concerns about the sector's competitiveness and sustainability during the debate.

Senior Minister of State for Digital Development and Information Tan Kiat How highlighted practical concerns regarding competitiveness, sustainability, resource scarcity, jobs, and skills. He emphasized that Singapore should plan ahead and grow data centre capacity in a disciplined manner, ensuring clear and proportionate regulation is not the opposite of competitiveness. Singapore's limited land, power, water, and carbon budget necessitate a focus on creating greater value from the capacity hosted.

MPs, while supportive of the new regulations, cautioned that they should not compromise Singapore's competitiveness. MP Sharael Taha emphasized that regulation should raise standards without making the country uncompetitive, focusing on how the energy consumed by data centres creates the greatest economic and strategic value. MP Edward Chia argued that higher standards could serve as a competitive advantage for Singapore, offering trusted, resilient, and resource-efficient compute powered by a predictable regulatory environment.

Tan acknowledged the cost of compliance but stressed that Singapore's role is not to offer the cheapest land or electricity, as other markets have more of both. Instead, Singapore aims to be a trusted, connected, and high-value hub for workloads, prioritizing reliability, security, resilience, connectivity, and proximity to enterprise activities.

He also agreed with Chia's observation that regulatory quality could be Singapore's competitive edge, emphasizing the importance of setting clear but appropriate rules and gradually raising the floor as needed.