Hong Kong is ushering in more advanced data centres, backed by government incentives and strong market demand. The campaign is primed not only to entice major multinationals to set up such facilities in Hong Kong, but also large mainland enterprises. Daniel Lai, the city's new government chief information officer, said: 'We expect more data centre projects to support the needs of economic development both in Hong Kong and across the Asia-Pacific region in the years ahead.' The Office of the Government Chief Information Officer, the agency that sets Hong Kong's policies for information and communication technologies, has received about 60 inquiries about the setting up of new data centres and provided assistance to 10 projects in the past six months. 'Our consultant, Frost & Sullivan, has estimated the demand for data centres in Hong Kong will grow by a compound annual growth rate of 9.8 per cent from 2009 to 2015,' said Lai. 'Last year, the growth rate in terms of net demand [for data centre capacity] exceeded 18 per cent.' A data centre is a secure, temperature-controlled facility equipped to house large-capacity server computers and data-storage systems, which are maintained with multiple power sources and have high-bandwidth links to the internet. The financial services, trading and logistics, information technology, telecommunications, and content development and media industries account for more than 84 per cent of the total demand for data centre space in Hong Kong, according to a Frost & Sullivan study. The government is also supporting data centre projects to step up the city's adoption of so-called cloud computing services, which allow the delivery of software, storage and other resources over the internet just like electricity from a power grid. 'Hong Kong is well recognised as an excellent location for data centres because of our conducive business environment, stable government, transparent and independent judicial system, free flow of information, reliable power supply, sound telecommunications infrastructure and low risk of natural disasters,' said Lai. 'So it would be natural for large mainland companies to take advantage of Hong Kong's robust infrastructure, its institutional strengths and geographical proximity to locate their data centres.' Data centre space is measured in terms of raised floor space. An additional 170,000 square metres of such space would be required for such centres by 2015, including 47,000 square metres for high-tier facilities. Lai said the government was committed to facilitate new data centres at key sites, as competition from other Asian nations heated up. According to a Legislative Council brief, at least four international companies and three local firms over the past couple of years were frustrated in their plans to invest in data centres here owing to a lack of suitable sites. Most were relocated elsewhere. Rival markets have offered incentives including tax breaks and streamlined processes to speed up application and licensing approvals to entice data centre operators. A shortage of suitable sites has put Hong Kong at a disadvantage, despite its infrastructure and rule of law. In his 2012-2013 budget, which was announced last week, Financial Secretary John Tsang Chun-wah identified two measures aimed at encouraging the conversion of existing industrial buildings or industrial lots into data centres. One is to assess a lower premium for data centre developers to modify some industrial lots into so-called high-tier data centres. The high-tier data centres being developed in Hong Kong include Google's more than US$100 million facility at a 2.7-hectare site in Tseung Kwan O and NNT Com Asia's HK$3 billion complex in the same district. The other proposed measure would eliminate the fee of 50 cents per sq ft for changing parts of industrial buildings into data centres.
