Microsoft’s RM10.5b investment in Malaysia — A game changer for the economy - MIDA | Malaysian Investment Development Authority
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Microsoft’s RM10.5b investment in Malaysia — A game changer for the economy

Microsoft’s RM10.5b investment in Malaysia — A game changer for the economy

06 May 2024

TECH giant Microsoft Corp announced its plans to invest a staggering RM10.5 billion in Malaysia’s cloud and artificial intelligence (AI) infrastructure which will boost and provide a gamechanger in the country’s economy.

Last Thursday, Microsoft’s chairman and CEO Satya Nadella outlined the company’s ambitious plan to establish a world-class AI infrastructure and provide AI skilling opportunities for 200,000 Malaysians.

“We want to ensure we have world-class infrastructure right here in the country so that every organisation and start-up can benefit,” he said in an event in Kuala Lumpur (KL).

This investment will also bolster collaboration with the government to establish a National AI Centre of Excellence and enhance cyber security capabilities.

Microsoft’s cloud and AI infrastructure promises to unleash a ripple effect of opportunities, empowering businesses to thrive in the digital age and cementing Malaysia’s position as a leader in the global tech industry.

Positive Economic Growth Opportunities

Institute for Democracy and Economic Affairs (IDEAS) economist Carmelo Ferlito (picture) shared insights into the potential ramifications of this big investment.

“This is great news for two reasons. On one side, it creates economic opportunities, on the other, it is an important sign of confidence,” he told The Malaysian Reserve (TMR).

Ferlito said undoubtedly, Microsoft’s substantial investment will have far-reaching implications for Malaysia’s economy.

He added that beyond the infusion of capital, the investment serves as a beacon of confidence, signalling to other potential investors the attractiveness and viability of Malaysia’s technology sector.

“The investment is in itself an FDI and it could signal confidence toward other potential investors,” he noted.

Though it is not automatic, Ferlito said the project has a positive ecosystem.

He said that beyond enhancing IT literacy, it has the potential to catalyse the growth of local companies, forming a robust value chain around the data centre.

“I think the main benefit would not only be the IT literacy that potentially the initiatives can create but also the spillover that can generate in terms of local companies which are going to make up the value chain around the data centre,” he added.

In terms of Malaysia’s global standing in the tech industry, Ferlito believed that Microsoft’s investment serves as a powerful endorsement of the country’s competitiveness and attractiveness to other tech giants.

However, he emphasised that the actual impact will hinge on the execution and outcomes of the project.

“It is a positive signal. It can attract other entrepreneurs, but I think a lot will depend on the actual implementation and results from the project.”

Nevertheless, he was aware of the potential drawbacks and risks associated with such a significant investment.

He highlighted the importance of ensuring a favourable regulatory framework to mitigate these risks and ensure the initiative’s success.

“If, for some reason, the initiative would not be successful, the added value it created will be destroyed. It is important to be sure that the regulatory framework will be favourable for the initiative to thrive,” he noted.

Malaysian Investment Development Authority (MIDA) CEO Sikh Shamsul Ibrahim Sikh Abdul Majid said it is excited to deepen its partnership with Microsoft as it underscores the dedication to innovation and regional industry growth.

“This investment not only reinforces Malaysia’s position as a leading digital hub but also marks a promising start in attracting more companies to embark on this digital journey with us, promoting inclusive growth and prosperity nationwide,” he said.

Updates on Microsoft’s Data Centre in Malaysia Microsoft recently secured a contract with Pasukhas Sdn Bhd, a wholly owned subsidiary of Pasukhas Group Bhd.

With a total lump sum contract value of RM56.9 million, the project is expected to be completed by June 30, 2025.

Microsoft reportedly acquired a plot of land in Johor. The land, spanning 102,560 sq m in Pulai, was sold by local property development firm Crescendo Corp Bhd (CCB).

CCB’s subsidiary, Panoramic Industrial Development Sdn Bhd, entered a conditional sale and purchase agreement with Microsoft Payments (M) Sdn Bhd for a cash consideration of RM132.4 million.

Microsoft also announced a broader commitment to provide AI skilling opportunities for 2.5 million people in Asean member states by 2025. Other than Malaysia, the company be also be in partnership with governments, nonprofit and business organisations and communities in Indonesia, the Philippines, Thailand and Vietnam.

Source: The Malaysian Reserve