Capitalising on data centre boom

The Sun

27-05-2025

MALAYSIA has become one of Southeast Asia's most actively pursued locations for digital infrastructure in the past two years, attracting an estimated RM278 billion in digital investments between 2021 and 2024.
About RM184.7 billion of this has gone into cloud infrastructure and data centre projects, making Malaysia one of the top locations in the world for hyperscale facilities and cloud computing services.
The charge is led by several American tech giants, such as Microsoft, where a US$2.2 billion (RM9.25 billion) investment was announced to construct three data centres in Malaysia by the second quarter of 2025.
In addition, Google is investing US$2 billion to build its first data centre and cloud facility here, which is expected to generate 26,500 jobs and US$3.2 billion in economic activity by 2030.
All indicators suggest that Malaysia's digital economy is expanding to unprecedented levels. However, the important question is whether Malaysia is reaping the benefits of this infrastructure or are we just contributing land and electricity to someone else's digital empire?
Beyond the hype
Data centres serve as the internet's invisible foundation. All AI queries, cloud documents, messages and searches go through their servers.
Attracting them may seem like a huge victory, and in some respects, it is. They express confidence among investors in Malaysia's connectivity, energy supply and political stability.
However, data centres by themselves are not major employers. Typically, a hyperscale facility may generate between 100 and 200 permanent positions, mostly in technical maintenance, security and facility management. Instead, construction, electrical work, HVAC (heating, ventilation and air conditioning) installation and supply chain services account for the majority of job growth.
Microsoft projects that nearly 37,000 jobs will be supported by the investment, which will also create US$10.9 billion in downstream value over a four-year period.
The true economic concern, however, is whether this value can be retained in Malaysia rather than be diverted abroad through deals, earnings and data repatriation.
Digital infrastructure
We are constructing the digital economy's hardware but are we also building its ownership and capabilities? This is a silent worry as Malaysia presents itself as a digital hub.
Foreign corporations will profit from the majority of the data handled in these centres, which will service clients worldwide and are subjected to foreign regulations.
Without meaningful stakes in the software, platforms or intellectual property layered on top of that infrastructure, Malaysia risks becoming the industrial park of the digital world: essential but easily replaceable.
The idea of digital sovereignty becomes crucial at this point. We must have a national policy that guarantees that:
Malaysian law regulates the data created and kept here;
Cloud computing capabilities are available to researchers and local businesses;
Schools prepare students for the skills of the future with cloud-native technology;
And critically, rather than merely hosting foreign IT giants, we are also developing homegrown ones.
Environmental cost
There is also a quieter cost – energy and water. Data centres are notoriously resource-intensive.
The industry is putting a burden on power systems throughout the world as each factory uses energy that frequently exceeds 100MW.
Electricity rates in Malaysia are anticipated to increase by 14.2% in July 2025. Some businesses are already looking into solar and other options but it is crucial that the ecosystem as a whole follow suit to pursue a sustainable economy.
Constructing more than server rooms
Malaysia's data centre boom can be revolutionary only if it is a component of a larger and strategic digital industrial policy.
Here is how we can become a digital leader instead of just being a data landlord:
Ensure local involvement in high-skilled operations like data analytics, AI services and cybersecurity.
Take advantage of tax breaks for R&D, startup incubation and local cloud services in addition to construction.
Include goals for renewable energy in all digital infrastructure projects to meet global ESG standards.
Increase collaborations between academia and businesses by integrating instructors and students into cloud and data science settings.
While policymakers should be optimistic about the billions pouring into Malaysia's data centre industry, it is also one that raises questions worth considering. Who is the data owner? Who truly benefits from this expansion? And who is shaping the policies that will govern our digital future?
Malaysia is in a unique position to take the lead in Southeast Asia's digital revolution. However, including more vision, value and sovereignty into our digital strategy will be the key to leadership, not adding more servers.
If we do not explore these questions now, we may discover a decade from now that we have built the highways to the cloud but left our people stuck on the ground.
Galvin Lee Kuan Sian is a lecturer and programme coordinator for the Diploma in Business programme at the School of Diploma and Professional Studies, Taylor's College.