Fitch Solutions: Malaysia is a top market for digital infrastructure businesses regionally and globally

Publish date: Fri, 17 Mar 2023, 09:00 AM

KUALA LUMPUR: Fitch Solutions has ranked Malaysia as one of the top markets for digital infrastructure-led utility businesses regionally and globally, providing the appropriate platform for data centre operations.

The data, research and analytics provider said Malaysia has emerged as one of the key digital infrastructure hubs in the Asia-Pacific region due to developments in the government's digitalisation plans, easing the regulatory landscape and technology-friendly policies.

Recently, the US-based IT service management company Amazon Web Services (AWS) has unveiled plans to invest US$6 billion (US$1=RM4.51) by 2037 to boost cloud services in the country, it said.

"AWS is planning to add three availability zones in the country to its 99-zone global portfolio across 31 geographic regions," it said.

Fitch Solutions noted that Malaysia would offer businesses a competitive labour profile on the back of a productive workforce, good and improving healthcare standards, and a well-distributed urban population, albeit less competitive in terms of costs.

"Growth of the working population is also set to slow and reverse over the long term, which will lead to tight labour market conditions, (adding) to short-term construction costs.

"In the long term, the country benefits from skilled work base that will be required for long-term data centre management," it said in a note today.

Fitch Solutions further said that the country attracted major global players with investments on the uptrend considering its strategic location and proximity to Singapore.

The firm noted that data centre demands would grow gradually and dynamically making it harder to cater to their demand.

"Our operational risks team pointed out that in comparison to many of its regional competitors (including Singapore and Hong Kong), Malaysia is well-endowed with natural resources, (benefiting) companies by making dependable and economical utilities, notably fuel and electricity, widely available.

"However, the combination of increased energy demand and poor tax revenue collection will place a significant burden on the government's resources and make it difficult for the government to maintain fuel prices through financial support," it said.

Fitch Solutions said this might eventually lead to the medium- to the long-term progressive elimination of subsidies, which would result in an increase in energy prices.

But as new power plants and transmission systems increase their capacity to produce energy at comparably lower rates, Malaysia would continue to provide some of the most affordable gasoline and electricity in the area, it emphasised.

"As a result, Malaysia scores 72.6 (out of 100) for utilities network and ranked third position out of 18 markets in the East and South East Asia region, ahead of Singapore, Hong Kong and Vietnam but behind Brunei and Taiwan. Globally, Malaysia ranked eighth out of 201 economies," it said.


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