They say attracting data centre operators from China, the US and Europe will enable Malaysia to become a regional data centre hub.
More Chinese companies are expected to set up data centres in Malaysia in the next five years. (Freepik pic)
PETALING JAYA: Malaysia’s liberal approach of welcoming companies from around the world to set up data centres in the country will boost its ambition to become a regional data centre hub, analysts and industry players say.
Attracting data centre operators from China as well as the US and the West, despite the simmering US-China tensions, would be a significant boost for the economy, they said.
Malaysian Institute of Economic Research head of research Shankaran Nambiar said welcoming data centre operators regardless of their origin would significantly transform the country’s skill base and foster the development of a new technological ecosystem.
“Even if it is from China, as long as there are opportunities for local talent to be engaged, it would be beneficial to encourage them,” he told FMT Business.
He said with the robust demand by foreign companies to set up data centres in Malaysia, the country could well become a hub for data centres in the region.
“Nevertheless, it is important to ensure that there is participation by Malaysian vendors and workforce,” Nambiar added.
Recent media reports indicate that more Chinese companies are expected to set up data centres in Malaysia over the next five years.
Between 2021 and 2023, data centres produced RM114.7 billion in approved digital investments and created 39,231 job opportunities.
The US-China trade war broke out and escalated in 2018–2019, when former US president Donald Trump began imposing tariffs and other trade barriers on China.
Best of both worlds
Vicks Kanagasingam, CEO and co-founder of technology company Verge IoT, agreed that Malaysia has all the right ingredients to be a regional data centre hub.
He said that partnering with Chinese, US or Western data centre companies would benefit the country as a whole.
“We get the best of both worlds, US-West and China. I encourage it very much as it will increase technology knowledge, per capita income and talent in the country,” he added.
“Data centres require crucial resources such as energy, and Malaysia’s electricity tariffs are among the lowest in the region, particularly in Sarawak.
“Additionally, our extensive fibre infrastructure, supported by providers like Telekom Malaysia, TIME, Maxis, CelcomDigi, and ALLO, makes us an attractive destination.
“Land is also more abundant and affordable here compared to Singapore,” he told FMT Business.
Vicks also noted that advanced data centres, such as NVIDIA’s planned AI cloud and supercomputer facility, offer multiple economic advantages over standard data centres.
Meanwhile, Malaysia-China Business Council executive director Alvin Tee said Malaysia would benefit greatly from both Chinese and Western data centre players.
“The economic spillover effects of major Chinese DCs coming to Malaysia is that it will become a catalyst to attract more entrants from technology companies in China and international players in Malaysia, especially in AI development and services and cloud services,” he said.
He added that more Chinese companies setting up data centres in Malaysia would lead to a competitive data centre landscape in the country.
“Chinese data centre operators are vigorously competing within the local market while providing valuable lessons in superior technology offerings, expedited time-to-market, and more efficient methods for reducing the cost of services.
“Likewise, Malaysian companies could adopt similar strategies, such as the US$4.3 billion (RM20.27 billion) investment deal by the YTL Power-Nvidia partnership to develop AI infrastructure, supercomputers, and cloud computing in Johor,” he said.
In 2022, Google Cloud announced that it would bring its new cloud region to Malaysia.
The following year, Amazon Web Services said it planned to invest US$6 billion (RM28.16 billion) in Malaysia by 2037 to strengthen its cloud services infrastructure in the country.
Recently, Microsoft Corp said it would invest US$2.2 billion (RM9.39 billion) over the next four years in cloud and AI infrastructure in Malaysia.
Bridge Data Centres, a firm backed by Chinese tech firm ByteDance, has announced its expansion to Cyberjaya with the development of its third data centre, MY02.
China-based GDS Holdings meanwhile has invested RM14.33 billion in Johor with the opening of two data centres in Nusajaya Tech Park and Kempas Tech Park.
