Microsoft plans to open a data center region on New Zealand’s North Island.

The investment comes as the country considers stringent data residency laws.

Government backing

The country's Prime Minister, Jacinda Ardern, said that the announcement "serves as a signal to the world New Zealand is open for business and quality investment."

Microsoft president Brad Smith added on Twitter: "Last year, I spent some time in New Zealand and met with Prime Minister Jacinda Ardern.

“I was so impressed by that country's digital ambitions. Our new data center there will only accelerate its digital transformation and help propel all New Zealanders forward."

This new region comes as the government proposes the Privacy Act, a law requiring protections for New Zealand's citizen data and data residency restricitions.

Digital sovereignty

Stuff.nz reports that government ministers have viewed this new data center as a way to store and protect domestic data securely.

The Minister for Government Digital Services, Kris Faafoi, said: "Onshore cloud facilities give us stronger control of our data and reduce the concerns relating to storing data offshore."

Faafoi added that it would provide job opportunities and stimulate the country’s ICT sector.

The location of data center region is secret and the entire project will be subject to approval from the country’s Overseas Investment Office. So far no application by Microsoft has been made to the department.

While the exact location is unknown, it will be on the country’s North Island, home to the cities of Auckland and Wellington and the site of the cable landing stations for the country's two International submarine cables.