Ong said Putrajaya should prioritise data centre incentives that would generate more investments and jobs for Malaysians. (Photo by Patrick Goh/The Edge)

KUALA LUMPUR (May 9): The government must ensure that foreign direct investments (FDI) to develop data centres in Malaysia will benefit local players, according to speakers at the National Economic Forum 2024 here hosted by the National Chamber of Commerce and Industry of Malaysia.

While companies such as YTL Power International Bhd (KL:YTLPOWR) are benefitting from the data centre ecosystem, the government should prioritise data centre incentives that would generate more investments and jobs for Malaysians, said Prof Ong Kian Ming, programme director of the philosophy, politics and economics programme at Taylor's University, during his speech at the National Economic Forum 2024.

“[Local players] may feel that it is unfair because all these foreign direct investments get incentives from MIDA (the Malaysian Investment Development Authority), but domestic players do not get anything,” said Ong, who was also once the member of Parliament of Serdang and Bangi.

“Mida should put in conditions in terms of data centres incentives — how many local jobs do you want to bring in? How do you deploy data processing power to help the local industries?” he said, adding that the government should also encourage foreign investors to set up joint ventures with local companies.

In 2022, Google Cloud announced that it would bring its new cloud region to Malaysia.

In the following year, Amazon Web Services (AWS) said it planned to invest US$6 billion (RM25.5 billion) in Malaysia by 2037 to strengthen its cloud services infrastructure in the country.

As recently as last week, Microsoft Corp said it would invest US$2.2 billion over the next four years in cloud and artificial intelligence (AI) infrastructure in Malaysia.

The government should encourage foreign investors to also move their operations to Malaysia, said Malaysian International Chamber of Commerce and Industry’s president Christina Tee.

It should also step up efforts to retain talent as many graduates from the science, technology, engineering and mathematics (STEM) fields have moved to Singapore, said Tee.

Citing Singapore’s approach to the data centre sector, she added that the Malaysian government must be selective in choosing the right investments.

The Singaporean government imposed a moratorium on data centres in 2019 due to the considerable energy consumption associated with data centres. It lifted the moratorium in 2022 but said it would be “more selective” of such projects.

“Select those data centres that are coming to Malaysia, and [tell them that] you need to move your HQ from Singapore to Malaysia. They cannot say we do not have talents because they must check the background of their people working in Singapore — are they from Malaysia?” she said during a panel session at the event.