KUALA LUMPUR: Malaysia's journey towards becoming a regional hub for data centres is driven by a confluence of strategic factors, including economic stability and robust connectivity.

These factors pave the way for the country to be highly attractive for digital-related investments, said Universiti Teknologi Malaysia Faculty of Artificial Intelligence (AI) dean and associate professor Dr Mohd Naz'ri Mahrin.

He said the increasing demand for AI, cloud computing, data storage, and related technologies will significantly bolster Malaysia's position as a key data centre hub in Southeast Asia.

He noted that Malaysia's stable economic environment provides a conducive atmosphere for long-term investments, with a strong industrial base and skilled workforce to support the data centre industry's growth.

"The country is seen as providing cost competitiveness for foreign investments, offering lower operational costs compared to neighbouring countries, including lower land and labour costs.

"Malaysia also boasts extensive submarine cable networks and terrestrial fibre optic connectivity, ensuring high-speed and reliable internet connections as continuous investment in telecommunications infrastructure enhances Malaysia's position as a connectivity hub," Mohd Naz'ri told Bernama.

In recent events, Malaysia has welcomed investment commitments from various tech giants to build their data centres here, among others, Google will invest US$2 billion (US$1=RM4.71), Microsoft has committed to US$2.2 billion and Nvidia pledged US$4.3 billion as it partners with a local player, YTL Power International.

Mohd Naz'ri opined that Malaysia's strategic position in Southeast Asia makes it an ideal hub for serving the growing digital needs of the region, including Indonesia, Thailand, and Vietnam.

"Malaysia's digital economy is growing rapidly, driven by increased internet penetration, e-commerce, and the adoption of digital services, while the rise of AI, big data, and cloud computing in the region creates substantial demand for data centre capacity," he added.

Echoing a similar sentiment, Malaysian Economic Association deputy president Professor Dr Yeah Kim Leng noted that Malaysia's comparative advantages as a hub for data centres include ample land with good quality transport and communications infrastructures, coupled with the availability of cost-effective and reliable electricity supply.

"Other contributing factors include comparatively lower natural disaster and climate change, access to multilingual and skilled labour, investor-friendly policies, aligning with the country's digital economy aspirations," he said.

Economic spillover from data centre investments

According to Mohd Naz'ri, the increasing demand for data centres has opened up opportunities for Malaysia to rise in the digital economy.

"Encouraging the adoption of AI and machine learning across industries will drive efficiency, innovation, and competitiveness while government initiatives and incentives to support AI startups and research institutions will foster a vibrant AI ecosystem.

"Continued investment in building state-of-the-art data centres will be crucial for the infrastructure investment so that Malaysia can attract more global tech giants by offering reliable, scalable, and cost-effective data centre solutions," he said.

Mohd Naz'ri noted that the presence of data centres will attract other technology companies, fostering the growth of the local information technology (IT) ecosystem.

"Demand for IT services such as network management, cybersecurity, and data analytics will increase, providing opportunities for local IT firms and startups.

"Data centres also directly create jobs in operations, maintenance, and security. Additionally, they generate indirect employment in supporting industries such as cleaning, catering, and logistics," he added.

Meanwhile, Yeah opined that building data centres involves specialised engineering and equipment that have benefited both the industrial electronics equipment and construction industries.

"The property sector together with suppliers and service providers are also expected to experience stronger demand from the influx of expatriates and local employees that boost the local economy," he said. - BERNAMA

https://www.nst.com.my/news/nation/2024/06/1066460/malaysia-strategic-position-be-data-centre-regional-hub-experts