Data centres, where rows of servers quietly store and process terabytes of digital information, have become a magnet for Malaysian investment. In the latest announcement from the sector, Amazon Web Services (AWS) in August added a new region to its cloud computing infrastructure, powered entirely by Malaysian data centres. It has committed to invest around RM29.2 billion (USD6.2 billion) in Malaysia by 2038.

The rapid growth of data centres is a boost for Malaysia’s economy and underlines the country’s investment appeal in an increasingly competitive area. The data centre market in Asia Pacific is projected to grow by 12.6% a year, reaching USD71.7 billion by 2032 as businesses and consumers embrace advances in digital technology.

In that context, Malaysia’s recent success leaves the country well positioned for the AI era.

A data-driven windfall

Investments in data centres and related infrastructure have soared in recent years, pulling in RM76 billion from 2021 to March 2023. That has catapulted Johor and Kuala Lumpur (Klang Valley) into the top 10 data centre locations in Asia Pacific, now ranking seventh and eighth on an annual survey of established data centre locations.

The benefits to Malaysia go beyond the direct investment windfall. Specialised digital infrastructure has a powerful multiplier effect on the economy, creating quality jobs and creating opportunities for other businesses in the digital ecosystem.

Data centres require specialist IT equipment, power, and cooling systems – all of which need planning, engineering and technical expertise. While the heavy lifting is done in the construction phase, data centres are high-maintenance assets even when they are operating. Any power outage or service interruption can have serious consequences. Hardware also needs to be regularly upgraded to keep pace with technological development – especially in light of the rapid growth of data-intensive AI applications.

As Malaysia’s data centre ecosystem matures, there is an opportunity for local suppliers to develop skills and components to support the sector’s growth. Microsoft, for example, aims to provide training opportunities for an additional 200,000 people as part of its US$2.2 billion (RM9.6 billion) investment in Malaysian data centres.

A thriving data centre sector also positions Malaysia well for the digital infrastructure needed for the AI era.

Maintaining the growth of the sector, however, will become increasingly difficult as other markets compete for their share of the opportunity. Access to financing will be critical to continued growth and HSBC is committed to supporting operators in building or expanding their data centre footprint.

Supporting the sector

Malaysia has a number of conditions in its favour. It benefits from a strong geographical location in the centre of a thriving Southeast Asia, as well as strong international connectivity through access to 22 submarine cable networks. It also boasts a large landbank, compared to neighbouring Singapore, which has restricted new data centre projects in recent years to curb energy consumption.

Beyond these innate advantages, Malaysia has also worked hard to attract investment in the sector, with a range of tax allowances and other incentives. The Malaysia Digital Economy Corporation, part of the Malaysia Digital initiative, is a key enabler.

Looking to the future, sustainability factors will become increasingly important, given the high-power consumption of data centre facilities. The global technology companies that account for a large proportion of data centres’ capacity are looking for facilities powered by renewable electricity as they work to reduce their environmental impact worldwide.

As well as electricity to power the servers and cooling systems, data centres use large amounts of water to remove the heat generated by the IT equipment. That presents additional challenges, especially in an area where competition for water resources is high.

Direct-to-chip and immersion cooling systems can be much more efficient, but they come at a cost. The government can help steer the industry in a more sustainable direction by encouraging and incentivising efforts to improve power and water efficiency, such as through investment tax allowances to cover up to 100% of capital expenditure on green technology projects.

Guidelines on energy and water consumption are also expected soon and could provide further clarity for potential new entrants by aligning Malaysia with international standards.

Access to clean power

Progress on the energy transition will also be important. Pressure from hyperscale customers is already accelerating the growth of renewable energy, and recent reforms have been well received by the data centre sector.

Corporate virtual power purchase agreements, for instance, allow data centres to source renewable energy under Malaysia’s Corporate Green Power Programme. One of our clients, AirTrunk, has used this framework to purchase 30MW of renewable energy from a new solar power plant for its new hyperscale facility in Johor Bahru.

The government’s new Corporate Renewable Energy Supply Scheme, announced in July, will give data centres more options to source clean power by allowing direct negotiations between electricity buyers and renewable power operators.

In the longer term, however, the continued growth of the data centre sector will add to the pressure on Malaysia to decarbonise its national grid.

Capital expenditure

Major new data centres are major investments, with construction costs running into the hundreds of millions of dollars. As the sector grows, that kind of capital expenditure will need a broad base of support from Malaysia’s financial markets. HSBC, with a strong balance sheet and deep connections with local and international investors, is uniquely positioned to help businesses access the right opportunities.

Banks will have a big part to play, of course. Asia Pacific’s biggest data centre businesses have enjoyed a strong response to international financings, such as last year’s A$4.6 billion (RM13.5 billion) syndicated loan for Australia-based AirTrunk, supported by HSBC.

As the sector matures, capital markets will become more relevant, too. Bonds and sukuk could complement commercial bank financing, and reliable cash flows in the sector can allow mature operators to consider an equity offering or recycle their capital through a real estate investment trust.

Growth capital can also be sourced from private equity investors or public markets. A listing on the Kuala Lumpur Stock Exchange, for example, would give an ambitious data centre company a long-term platform for repeat capital raising. IPOs are reported to be under discussion.

In a future where AI and digital technology is an expectation, not an exception, data centres will be an essential part of any economy. The growth of Malaysia’s digital infrastructure has a long way still to run.

Source: The Edge Malaysia

Data centre boom is a vote of confidence in Malaysia’s digital future

THE national load centre was a policy established initially to recapture a significant portion of Malaysia’s domestic cargo that was being shipped through the Port of Singapore and bypassing local ports.

This initiative — the setting up of the national load centre — also aimed to boost Port Klang’s role as the principal gateway for imports into and exports out of the country as well as make it a regional hub port that could compete with the Port of Singapore by bringing shipping lines into Port Klang.

In March, the federal government moved to end the national load centre policy after a 31-year run. The decision came at a time when Port Klang had risen to its highest level in Lloyd’s List ranking of the world’s top 100 busiest ports by volume — snagging 11th spot last year, up from 13th place in 2022.

Port Klang Authority (PKA) general manager Captain Subramaniam Karuppiah says the national load centre policy has fulfilled its original purpose and Port Klang is geared towards moving up to be among the world’s top 10 busiest ports in terms of throughput. He admits, however, that breaking into the top 10 busiest ports in the world band will be no mean feat.

“We will get there eventually but it will take a lot of planning and investments. Most importantly, we need to have the confidence and support of our customers, that is, shippers, shipping lines and traders,” he tells The Edge in a candid interview at PKA headquarters in Port Klang.

“At Port Klang, we are not done and dusted. Although we are more than 120 years old, we are still evolving.

“With the support of the government and industries, we are on the right track. We also have two port operators — Westports Holdings Bhd (KL:WPRTS) and MMC Corp Bhd — that are aligned with the government’s plan and recognise that we have good assets here at Port Klang, located on the major sea lane of the Strait of Melaka. We have all the right ingredients,” says Subramaniam, who joined PKA 31 years ago and took the helm at the port regulator in 2016.

In a nutshell, PKA regulates commercial activities at Port Klang, which comprises Westports and Northport.

Subramaniam recalls the introduction of the national load centre in 1993. “The concept behind the policy began in the 1990s at a time when 50% to 60% of Malaysian cargo was passing through the Port of Singapore.

“The cargo was ‘leaking’ through feeder vessels that took domestic cargo from several Malaysian ports to the Port of Singapore, where the containers were then loaded onto mother vessels to their final international destination.”

Domestic cargo was also leaking to the Port of Singapore by road, resulting in a huge loss to the country’s revenue.

According to Subramaniam, the government carried out studies on how to plug the leak of domestic cargo to the Port of Singapore. One way was by enhancing and expanding the facilities at Port Klang.

Subramaniam says today, most of the areas in Northport and Southport have been developed by PKA.

“When we privatised the terminal, the structures were already there. It was almost fully built up. So, when [MMC Corp] took over, they upgraded most of the structures and reengineered some of the facilities, but there is only so much you can do with an old port.”

Thus began the development of Westports in 1989.

“The first port facility at Westports came onstream in 1993, before the terminal was privatised to Westports Holdings in 1994. The government then said: ‘Since you have a new terminal, can we use it to lift Port Klang even further?’ That’s because our master plan for Westports indicated that we could develop the terminal up to a total wharf length of 15km. And if fully developed, it could handle up to 14 million 20-foot equivalent units (TEUs) a year. This was at a time when Port Klang was handling less than one million TEUs,” Subramaniam says.

“Still, just a plan was not good enough. We needed to have a good implementation strategy. Our master plan for Westports had facilities for containers, dry bulk cargo and liquid bulk cargo.

“This master plan was developed by PKA in 1994 and inserted into the privatisation agreement with Westports Holdings.”

The first privatisation agreement between the federal government, PKA and Westports Holdings was signed for a period of 30 years from September 1994 to August this year.

Since then, Westports Holdings has signed a new concession with the federal government and PKA for an extended period of 58 years from September 2024 to August 2082.

The new concession governs the existing facilities of Container Terminals (CTs) 1 to 9 as well as the new facilities (CTs 10 to 17) to be developed (dubbed Westports 2) during the concession period, which involves an investment of RM39.6 billion. The new container terminals will nearly double Westports’ capacity to 27 million TEUs from 14 million TEUs, spread over 26 years.

As for Northport and Southport, MMC Corp — controlled by low-profile tycoon Tan Sri Syed Mokhtar Al-Bukhary — took over the terminals in January 2016. It also operates the Port of Tanjung Pelepas (PTP), Johor Port, Penang Port and Tanjung Bruas Port.

Subramaniam says: “After privatisation, no more assistance or incentive from the government was given to the two terminals; therefore, the private entities had to manage their business well.

“Today, we have all the supporting activities such as bunkering, ship chandling, ship repairs and crew change facility here. We have managed to recapture most of the [Malaysian] cargo back from Singapore. We also have most of the main line operators (MLOs) calling at Port Klang,” he says, noting that about 40 MLOs currently call at the port.

Never-ending comparison with Port of Singapore

Still, the comparison between Port Klang and Singapore Port continues. “We always benchmark ourselves against Singapore. That’s because we were once together and, eventually, when Singapore parted ways with us [in 1965], we then started growing as Malaysia without Singapore. Having said that, there were so many industries that were shared by both countries. Shipping was one of them,” says Subramaniam.

In fact, there was a time when Port Klang had a competitive advantage over Singapore.

“Port Klang was the first to introduce containerisation in 1973. Singapore started it only two years later but quickly caught up,” he recalls, adding that the local shipping sector was also losing its skilled workforce to Singapore.

“Then we realised it was because we did not have the right ecosystem at the time. For one, were we attractive enough for global shipping lines to call at? Shipping lines don’t come for a little bit of cargo. They expect to have a critical mass of cargo before they consider whether it is worth making a direct call in terms of their economic returns and cost. While Malaysia was a big country, our cargo was not actually passing through Port Klang.

“So, we realised that one of the reasons for this was that our port facilities then were not up to mark. If shipping lines were to come, they want to see fast turnaround of their vessels as well as the best port equipment and facilities. They don’t want to spend too much time here.

“Having said that, over the years, we have done well.”

Last year, Port Klang handled a container throughput of 14.06 million TEUs, up 6.3% from the 13.22 million TEUs recorded in 2022. It handled 8.4 million TEUs in the first seven months of this year, up 25.6% from the same period last year.

“We are forecasting a 5.5% growth for 2024 to 14.83 million TEUs, putting the port in good stead to break through to the top 10 rankings,” says Subramaniam.

“As a country, if you combine the container throughput of Port Klang and other ports like PTP, Penang Port, Kuantan Port, Kota Kinabalu Port and Kuching Port, we handled 27 million TEUs last year.”

By comparison, however, the gap is still considerably wider compared with the Port of Singapore, which handled 39 million TEUs in 2023. Today, the Port of Singapore is the biggest and busiest in Southeast Asia and the second in the world after Shanghai.

The following are excerpts from the interview.

The Edge: Why does Port Klang continue to lag behind Singapore Port?

Captain Subramaniam Karuppiah: This is a question that I have been asked many times. What I can say is that Singapore is a different entity. [The Singapore government] developed its port facilities on the basis that Singapore’s container port is a critical part of the island state’s economy and identity as a maritime nation.

Not that it was not a necessity for us but it was more so for Singapore because they were an island nation [and] they were looking at economic activities that were maritime-based. They are surrounded by a coastline … So, when they developed this way back in the 1970s, they did not just develop port facilities; they created a maritime centre.

From [being a] regional port, they moved on to become an international maritime centre (IMC). An IMC is more than just a port. It deals with everything that is required by the maritime industry. They went beyond [the basics] to develop other maritime infrastructure. Take, for example, shipyards. Today, Singapore is well known for ship repairs and shipbuilding.

Then, they have shore-based activities [to support the maritime industry] such as banking, ship financing, maritime legal system, healthcare access for seafarers, crew change on cargo ships and on-board licensing. They had a head start compared with Port Klang in the 1970s and 1980s when we were still trying to grow our port business. At the time, we were very much focused on ‘let’s develop the cargo first; everything else later’.

Having said that, over the years, we have done well. From the time in the 1990s when we were handling half a million TEUs, we are now doing 14 million TEUs. That is something to be proud of.

We are now also seen as a transshipment hub. After we created the local critical mass [of indigenous cargo], we started to look at the transshipment market. How can we attract regional cargo to transship in Port Klang? Then we came up with strategies to help shipping lines move their cargo from regional ports such as Indonesia, the Philippines, Thailand, Vietnam, India and Bangladesh to transship in Malaysia. Between 2004 and 2008, [PKA] introduced a scheme incentivising feeder operators to transfer their cargo to Northport and Westports. That was successfully implemented.

What’s next? Will Port Klang be able to make it to the world’s top 10 list of busiest ports?

Every port around the world is aspiring to do better than what they are doing now. At Port Klang, we also have this ambition. We want to break into the world’s top 10 ports but it is not going to be easy. It will take a lot of planning and investments. We will get there eventually. We have for many years been in the top 15 global rankings.

But ambition alone isn’t enough. We need to have proper plans and strategies, proper implementation techniques and make sure that we meet the requirements of the port users. At the same time, we need to grow, develop and bring in new businesses.

Today, we are looking at how to grow our bunkering business in Port Klang. We are trying to promote ourselves as an alternative bunkering centre apart from Singapore.

By comparison, total bunker fuel demand in Singapore last year was 51.8 million tonnes; in Port Klang, it was only close to two million tonnes. You can see the disparity. We also want to improve our ship chandling services.

Malaysia is a large country. We are unlike Singapore, which can consolidate everything into one port. We have coastlines that extend from Langkawi right down to Johor and across to Sabah and Sarawak. No one port can serve the needs of the country.

For instance, Penang is the hub for the northern area. Port Klang is mainly for the Klang Valley, while PTP is able to challenge [Singapore directly], especially on transshipment cargo. For Kuantan Port, many industries, such as steel, petrochemicals and palm oil, are using the port. Bintulu Port deals mainly with the needs of oil and gas. Sabah has a total of eight ports in the state.

As a large country, nothing can stop us from developing more ports. There is no policy to say that everything must be concentrated in Port Klang, PTP, Johor or Penang. If there is a need for more ports to be developed, the authorities or the government will definitely study this matter to ensure that when they build a port there, it actually serves the industries there and demands are met.

The Port Klang Free Zone, or PKFZ, was a dark spot of PKA’s history. In the making of the 1,000-acre free commercial and industrial zone, the project’s cost ballooned from an initial estimate of RM2 billion to RM12.5 billion because of mismanagement, inflated land deals and construction costs. The project ultimately left taxpayers to shoulder billions of ringgit in debt. How are you managing the inherited problems left by your predecessors?

I think we are way past that [scandal-ridden] era. We need to move forward. We have invested in this logistics hub and it has achieved full occupancy, although we feel that we can get more [revenue] out of this place. We are relooking at some of the areas that can be redeveloped to offer a higher-yield kind of business. We will see what facilities are required in the future.

When we redevelop the place, we need to be sure that that is what the industry wants. There’s no point developing something that is not really in line with the requirements of the industry. Therefore, [the board of directors of both PKA and PKFZ] are doing some studies now to find out what is the best redevelopment that should take place at PKFZ.

PKA’s latest annual report for 2021 shows a net loss of RM68.5 million in 2021 compared with a net profit of RM50.1 million in 2020. Why? And when does it expect to turn around? (It has yet to submit its 2022 annual report to the parliament.)

One of the major financial drawbacks that we experienced was the development of PKFZ. We had to take a soft loan amounting to RM3.8 billion from the federal government to finance the whole project.

Under the loan agreement, we have to make a yearly RM200 million repayment to the Ministry of Finance (MoF). We have been servicing the loan since 2018. It has been a good six years now. We have been paying RM50 million diligently every quarter. That is one of our biggest expenditures. If you look at our earnings over the last few years, we have earned good returns from our port activities and lease payments by the terminals. The PKFZ payment is the one that leads to occasional losses [for PKA]. The loan is payable until 2047. I am confident we will manage this well.

Having said that, we also faced other issues. For one, there were many pockets of land within the port that for many years had not been properly transferred to the port authority. These plots of land were entrusted to the port authority to manage and operate as a port facility, but the transfer [of land ownership] was not executed. This issue came to light seven to eight years ago and, so, we decided we needed to make sure that all the land in the port area must be owned by the port authority to ensure that we don’t end up with any legal problems in the future.

In the process, however, we had to pay premiums to the state government to make sure these pockets of land are all owned by the port authority. We spent about RM200 million on this exercise. Today, I can confidently tell you there are no more pockets of land within the port area that is not owned by us.

Also, as a port authority, we need to maintain the ports, especially to deepen and maintain channels for ships to dock. On average, we spend RM15 million a year on dredging.

Still, we have a healthy cash reserve of close to RM500 million. Although our outstanding liabilities are big, especially for PKFZ, we are able to service those loans. The port authority is in a good state now.

We recently renegotiated [the lease terms for] Westports under Westports 2 and our revenue has increased considerably. That will offset some of the losses that we have been experiencing over the last few years. So, 2025 will most likely be a profitable year for us.

What are some challenges that Port Klang faces?

Geopolitical tensions, such as attacks on vessels in the Red Sea, have an impact on the global maritime sector. On Port Klang’s part, we are trying to minimise the impact of delays by working closely with the shipping lines. Waiting times for ships to berth at Northport varied between three hours and seven hours in May; at Westports, they peaked in June, at 36 hours — the worst. The congestion has since eased. The waiting time is now 5.3 hours at Westports and 4.6 hours at Northport. But I can’t say whether this situation won’t deteriorate over the coming weeks as long as the Red Sea crisis persists.

Port digitalisation is another challenge. The third challenge is sustainability. Malaysian ports, especially Port Klang, are old ports. Today, we need to move to new technologies that are carbon-free or emit less emissions. We are looking at using electric vehicles and power-driven equipment, but they require a lot of investment. How do we scale up quickly? We are working very closely with the terminal operators, MoF, the Ministry of Transport and the Ministry of Natural Resources and Environmental Sustainability to come up with policies, strategies and a timeline that will not force port operators to move towards sustainable initiatives, but [will be] a win-win kind of collaboration. We need to have a transformation plan but we can’t do it overnight.

Source: The Edge Malaysia

Steering Port Klang to become one of the world’s top 10 busiest ports

Sarawak is planning to accelerate the shift to greener and smarter port operations across Asia-Pacific, said Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg.

“We are at the forefront, developing green ports, producing green fuel, creating a green fuel bunkering hub and implementing a common utilities corridor for advanced port facilities,” he said in his keynote address “Advancing Climate Change Solutions in a Divergent World” during the Asia Pacific Petroleum Conference (APPEC) 2024 in Singapore today.

To support Sarawak’s clean energy efforts, Abang Johari said his administration is building gas terminal facilities and planning a new Kuching International Airport to meet modern transportation and sustainability needs, prioritising resilient and sustainable infrastructure.

He said Sarawak is investing in advanced sectors like avionics and aircraft components and cutting-edge aerospace courses in line with the state’s innovation-driven economy.

“This initiative aligns with our broader goal of creating a sustainable, innovation-driven economy, equipping our youth with the skills to thrive in high-tech value chain industries and support our economic transformation,” he said.

According to him, building roads on Sarawak’s challenging peat soils is something akin to Singapore’s marine clay but more complex, posing settlement issues and greenhouse gas risks.

To counter this, he said Sarawak is constructing elevated roads on peatlands, a method which preserves peatlands’ carbon sequestration, supporting the state’s carbon capture efforts and improving transportation efficiency.

“These initiatives reflect our commitment to balancing development with environmental stewardship, ensuring Sarawak leads in sustainable growth,” he added.

Abang Johari said Sarawak’s goal is to double electricity capacity to 10GW by 2030 and reach 15GW by 2035, positioning the state as a green energy powerhouse in Asean through global partnerships and AI-driven research to optimise energy production and distribution, driving Sarawak’s green economy forward.

Alongside spearheading the development of a green hydrogen economy as a clean alternative to fossil fuels, he said Sarawak is also advancing the commercial production of sustainable aviation fuel (SAF) from microalgae, solidifying the state’s role in providing sustainable energy solutions across multiple sectors.

“Our vision is to position Sarawak as a global leader in the green hydrogen market, extending beyond Asean and Asia-Pacific. We are continuously advancing our clean energy strategy by exploring technologies like hybrid solar-wind and solar-hydro projects.

“These innovations complement our hydropower expansion and are pivotal in reducing carbon emissions across various sectors. Together with our renewable energy initiatives, these hybrid solutions underscore our unwavering commitment to sustainable energy development and a low-carbon future,” he said.

With the Sarawak Methanol Complex launched in July this year, Abang Johari said this marks the state’s entry as a leading global methanol producer with an annual capacity of 1.75 million metric tonnes.

He said the state is also focusing on downstream ammonia production for urea fertiliser, which is crucial for soil fertility and food security, while supporting local employment through Sarawak’s expanding industrial efforts.

“Sarawak is exploring alternative energy sources including converting coal plants to biomass and developing wave energy as part of our energy mix. Strong governance and international partnerships drive our commitment to a low-carbon future,” he added.

Source: Borneo Post

Premier: Sarawak leads the way in green, smart port operations in Asia-Pacific

Conducive government policies, including the National Artificial Intelligence (AI) Framework and the Digital Economy Blueprint, have positioned Malaysia as a leader in AI innovation and adoption.

IBM Malaysia managing director Dickson Woo said that as Malaysia prepares to serve as chair of ASEAN in 2025, the country will be leading the region in scaling AI.

“These initiatives reflect the Madani Government’s proactive stance in nurturing a robust digital ecosystem, attracting global tech investments and ensuring that AI development aligns with ethical standards,“ said Woo.

“Such policies have accelerated AI integration across various sectors and paved the way for Malaysia to influence ASEAN’s digital future.”

He explained that AI’s potential to transform industries is already evident, with sectors such as banking and manufacturing witnessing enhanced productivity, efficiency, and innovation.

“Generative AI, in particular, is enabling businesses to automate processes, optimise resources and create new opportunities for growth.

“As AI becomes more integrated into economic strategies, the opportunities for job creation, higher efficiency, and sustainable development multiply, offering a pathway to a more prosperous and inclusive regional economy.”

However, the promise of a digital Southeast Asia can only be realised if there is a concerted effort to invest in talent development.

“By focusing on reskilling and upskilling the workforce in critical areas like AI, cloud computing and cybersecurity, Malaysia can ensure that its people are equipped to thrive in the digital age,” said Woo.

“Collaboration between governments, educational institutions, and private sector leaders will be crucial in fostering a digitally skilled workforce capable of driving the region’s AI agenda forward.”

In conclusion, IBM continues to support Malaysia’s vision of a digitally empowered future through initiatives like IBM SkillsBuild and IBMZXplore.

“These programmes are designed to reskill and upskill local talents in critical areas such as AI, cloud computing and cybersecurity.

“By partnering with educational institutions and non-profit organisations, IBM also aims to equip Malaysia’s workforce with the skills needed to thrive in the digital age, ensuring the country’s continued leadership in AI and digital innovation,” said Woo.

Source: The Sun

IBM: Malaysia can lead in ASEAN’s AI revolution

In May, Microsoft announced a US$2.2 billion (RM9.5 billion) investment — the largest in its 32-year history in Malaysia — to establish new cloud and artificial intelligence (AI) infrastructure. This commitment not only reinforces Microsoft’s position in the region but also supports Malaysia’s broader digital transformation, according to Andrew Lau, business programme director of cloud and digital transformation at Microsoft Malaysia Sdn Bhd.

Lau says the investment has enhanced Microsoft Malaysia’s existing “Bersama Malaysia” initiative. The initiative was established in 2021 to empower the country’s digital economy. Part of its plan was to establish Microsoft’s first data centre in the country to deliver cloud services locally.

“The US$2.2 billion is seen as a continued investment to build data centres, fuel cloud and AI innovation, and upskill talent,” says Lau.

In 2021, Microsoft announced plans to upskill an additional one million Malaysians by the end of 2023 to create economic opportunities for people and businesses in the digital era.

The company exceeded these numbers in 2023, says Lau, successfully upskilling 1.5 million Malaysians through various programmes and projects in collaboration with industry players.

“For instance, we work with academic institutions and specific non-governmental organisations to help women upskill with coding and AI studies, all as part of our pathway towards the current workforce,” he says.

“We also collaborated with Universiti Teknologi Malaysia’s (UTM) recently established AI Faculty in terms of AI programmes and student empowerment.”

The company offers online courses such as Code Without Barriers and Skills for Jobs to help women break into the growing cloud, AI and digital technology sectors. These programmes are designed to close the gender gap and contribute to a more inclusive economy.

Additionally, the explosion of data centres is expected to create 32,000 job opportunities, including 60 to 70 specialised professional roles such as AI experts and cybersecurity professionals, which will significantly impact the country’s economy.

“We have engaged res­earch agencies like the International Data Corp (IDC) and found that the multiplier effect of bringing a data centre is estimated to generate about US$8.8 billion in economic impact for the country. This impact cannot be achieved by Microsoft alone; it requires the collaboration of various parties, including the government, our customers and stakeholders,” says Lau.

Strengthening partnerships

Leveraging strong partnerships and the government’s blueprints as guiding principles, Lau shares that Microsoft is committed to enhancing the nation’s digital ecosystem through various initiatives.

One key initiative is the establishment of a National Artificial Intelligence Centre of Excellence (CoE) in collaboration with agencies like the Ministry of Digital. This CoE aims to drive AI adoption across key industries.

“We are looking into the AI CoE from various dimensions, including the upskilling and trust elements. When deploying AI, it is important to ensure we are using AI for good and it is trusted by society. Some guardrails need to be put in place and we are working with government agencies to ensure there are proper AI policies in place and how we can support Malaysia in this as well,” says Lau.

Other projects where the tech giant is pioneering AI adoption in the public sector include a collaboration with the Ministry of Investment, Trade and Industry (Miti) to better analyse the economic trajectories of different negotiating partners during international trade negotiations.

Another key initiative involves Cradle, an agency under Malaysia’s Ministry of Science, Technology and Innovation. Cradle is leveraging Azure OpenAI Service to develop a virtual information assistant for its MYStartup platform, the “Single Window” to Malaysia’s start-up ecosystem, which was recently launched at the KL20 Summit.

The company will also collaborate with the National Cyber Security Agency of Malaysia (Nacsa) through the Perisai Siber (Cyber Shield) initiative to enhance the country’s cybersecurity capabilities, according to reports.

This collaboration will focus on promoting security and resilience in the public sector through security assessments and capacity building.

Through this initiative, Microsoft aims to support Nacsa in its role as Malaysia’s lead agency for cybersecurity matters, particularly as it formulates the next stage of the nation’s cybersecurity strategy. The two organisations will also explore deeper collaborations in developing cybersecurity skills through initiatives such as Microsoft’s Ready4AI&Security programme.

“Generally, we work across ministries and this is important because, with government agencies and ministries focusing on this space, leadership, collaboration and expertise are needed to advance the country’s aspirations of becoming a digital hub,” Lau says.

The data centre destination

As Malaysia becomes a hotspot for data centres, Johor is emerging as a major player in this space, largely due to its proximity to Singapore. Microsoft is also joining the fray by acquiring land in Johor to build its data centre.

“A lot has been said about the lifting of the moratorium [on data centres] in Singapore. This is something we can potentially tap into, particularly in terms of expertise or technology transfer. For now, we are monitoring the space and looking for opportunities to align with these developments,” says Lau.

In January 2022, the Singaporean government lifted the moratorium on data centres which had been in place since 2019 due to concerns over their significant energy consumption. As Singapore’s data centre market begins to expand again, Johor’s growing data centre industry is well-positioned to absorb the anticipated overspill from its neighbouring city state.

Hence, Microsoft is set to build a data centre in Eco World’s industrial park following its commitment to develop cloud computing and AI services in Malaysia.

Reports state that Eco World has sold a parcel of land in Johor to a local Microsoft subsidiary which plans to develop a data centre on the site. This transaction is part of a broader trend, with Malaysia increasingly emerging as a hub for data centre activity this year.

The undeveloped land, located in Eco Business Park VI in Senai, Kulai District, just north of Johor, was acquired for US$85.2 million.

Microsoft Payment (Malaysia), a wholly-owned subsidiary of Microsoft Ireland Operations Ltd, has strategically acquired four parcels of land totalling 85.37 acres in Johor from Crescendo Corp Bhd (KL:CRESNDO) for RM447.64 million since November last year.

Eco World noted that the proceeds from this sale will contribute to the company’s cash reserves, which will be used for new land bank acquisitions.

The real estate firm stated in June that the presence of an internationally recognised technology leader establishing a sizable data centre in the area is expected to drive demand for other industrial products in Eco Business Park VI.

While the details are still being finalised, Lau says the data centre region’s cloud services availability will be disclosed by the end of the year or early next year, once all arrangements are in place.

Focusing on sustainability

Data centres consume substantial amounts of electricity to operate their servers, cooling systems, networking equipment and other infrastructure.

Acknowledging that data centres are significant energy consumers, Lau says the company has made commitments to achieve the nation’s net-zero target by 2030. “Data centres take up a lot of energy. We have made a very strong statement to say that by 2030 the company will achieve net zero and completely shift to renewable energy by 2025. Our data centres will achieve net zero, whether through the use of renewable energy or offsetting our carbon emissions.”

Microsoft has made a global commitment to transition to 100% renewable energy sources by 2025. This means that all of Microsoft’s data centres, buildings and campuses, including the planned Malaysia data centre region, will have power purchase agreements for green energy that cover 100% of their carbon-emitting electricity consumption.

Lau suggests that Malaysia can learn from the experiences of other Microsoft data centres around the world.

“By examining the practices and strategies implemented in these existing facilities, Malaysia can gain valuable insights into how to effectively manage its upcoming data centres,” he adds.

For instance, the company has pledged to attain zero waste by 2030 and to ensure proper circulation of electronic waste (e-waste) that comes from its data centre regions.

He notes that data centres contribute a significant amount of e-waste and there are a few ways the company is looking to reduce this.

“Data centres often handle a massive influx of signals to maintain and operate their devices. When a device malfunctions, we use AI technology to identify and isolate the issue. We then bring the device to our dedicated circular centres for repair or recycling, contributing to our sustainability efforts,” he adds.

He adds that these circular centres focus on extending the lifespan of circuit boards. By using advanced technologies, they have increased the operational life of the data centre devices from four to six years. Lau assures that this effort has not only reduced waste but also contributed to a more sustainable future.

“We prioritise sustainability by focusing on reducing our operational carbon footprint. Our commitment to achieving carbon negativity by 2030 is central to our comprehensive decarbonisation strategy and our data centres play a crucial role in this effort.”

Source: The Edge Malaysia

Building a digital nexus

The influx of foreign direct investments for the data centre industry, coupled with the increasing adoption of cloud computing and artificial intelligence (AI), have led to a lucrative opportunity for industry players.

Property developer Mah Sing Group Bhd is venturing into the data centre market as a strategic move to diversify its income stream and capitalise on the growing demand for data centres in the region by establishing a data centre hub that plugs the gaps in the market.

“The data centre industry is set to grow significantly due to increased demand because of AI and cloud computing, heightened investment in security and IT resilience and advancements in technology such as cooling and power efficiency, with a stronger emphasis on green energy,” says Benjamin Ong, CEO of Mah Sing’s Property Subsidiaries.

This is why the property developer made the decision to develop a data centre hub. Southville City, a well-established 428-acre township with comprehensive amenities and that forms a strategic triangle with Cyberjaya and Bukit Jalil, was chosen as the location for this data centre hub.

Mah Sing’s decision to enter the market was not made on the spur of the moment, says Ong. The group aims to leverage its expertise in real estate development to create profitable ventures in the data centre industry.

“There is an influx of data centre operators and increased competition in the market, driven by major cloud players unveiling plans to establish dedicated cloud regions in Malaysia. With our experience in developing towns and buildings that address the needs of the market, venturing into the development of data centres should be a seamless transition,” he adds.

Southville City was chosen as the location for the data centre hub based on several factors, such as infrastructure readiness, says Ong. This includes immediate access to power, water and high-speed connectivity.

Spanning a total of 150 acres, Mah Sing DC Hub @ Southville City has the capacity to support up to 500mw, offering significant scalability. The DC Hub @ Southville City is less than 50km from Telekom Malaysia’s upcoming cable landing station, which will ensure one of the lowest latency routes, Ong explains. Mah Sing will offer a dark fibre network that will enhance connectivity and performance.

“This provides ample room for future expansion, which is a key consideration for data centre operators looking to establish long-term operations. The speed to market advantage is also particularly important given the shortage of power and water in other locations,” he continues.

Mah Sing envisions making Southville City a data centre hub by capitalising on these strategic advantages, says Ong. Furthermore, the data centre hub will significantly enhance the value of Southville City by positioning it as a strategic location for digital and tech-driven businesses.

Thus, this development will likely attract high-value enterprises to the area, he adds. This includes tech firms, service providers and supporting industries that seek proximity to cutting-edge data centres facilities.

This will then increase demand for residential, retail and commercial properties and drive up property values, which will contribute to the long-term appreciation of Southville City as a premier mixed-use development.

“This move transitions Mah Sing’s profile from a traditional developer of residential, commercial and industrial properties to a key player in high-tech infrastructure development,” says Ong.

Not just a flash in the pan

Ong anticipates continued demand for data centres in the country and is confident in Mah Sing’s ability to adapt to the changing market dynamics.This is why it is essential that the data centre hub strengthens the company’s brand as a key contributor to digital transformation in the region. All this would enhance its appeal to investors and customers who value innovation and long-term vision.

Ong says the data centre hub will enhance Mah Sing’s future earnings through multiple channels. These include one-off gains from land sales to joint-venture (JV) companies, recurring share of profits from JV partnerships with data centre operators and the development or construction profits from buildings with data centres.

Additionally, there is potential for attractive investment gains upon exit, given the high valuation of data centre assets, says Ong. These diversified income streams are expected to contribute to Mah Sing’s long-term financial growth.

“As more data centre operators are attracted to the hub, Mah Sing sees significant potential to grow its recurring income and expand its data centre portfolio. This strategic approach not only enhances immediate returns but also contributes to long-term value creation for the company,” he says.

Speed to market is crucial to capture first-mover advantage and attract high-value data centre operators, he stresses. To mitigate risks and maximise returns, Mah Sing will form JVs with multiple established partners and explore diverse investment structures to spread the risk.

Moreover, the company will avoid speculative builds by only proceeding with construction after securing offtakers, says Ong. This ensures that each phase of a development aligns with confirmed demand.

“Mah Sing will leverage its expertise in land management and its fast turnaround capabilities to streamline the approval process and accelerate infrastructure development,” he adds.

To strengthen its position in the data centre market, Mah Sing has formed a JV with Bridge Data Centres.

“The partnership with Bridge Data Centres ensures best-in-class facilities, while Malaysia’s favourable policies for data centre investment, including incentives, mature infrastructure and commitment to renewable energy, further enhances the hub’s attractiveness,” says Ong.

This is why Mah Sing is in active discussions with multiple global and regional data centre operators that are looking to enter the Malaysian market, he reveals. The company is focused on strategic partnerships with players aligned with its vision for a scalable and sustainable data centre hub.

“Beyond the initial phase, Mah Sing is in advanced negotiations with another major data centre player for an additional parcel with up to 90mw of capacity. Concurrently, the remaining parcels in Southville City are actively being marketed to attract more operators, ensuring a steady pipeline of development that will further enhance the hub’s capacity,” says Ong.

Southville City is only the start of Mah Sing’s journey in the data centre market. The innovative property developer is also exploring opportunities for its other land banks. For instance, it is in discussions with a data centre operator for a 42-acre industrial parcel in the 1,313-acre Meriden East township in Johor Bahru.

“The Mah Sing DC Hub @ Southville City will elevate Mah Sing’s brand image as a forward-thinking and technologically advanced company. By entering the high-growth data centre sector, Mah Sing is showcasing its ability to adapt to emerging trends and its commitment to innovation,” says Ong.

Source: The Edge Malaysia

Making a mark in the evolving data centre landscape

The growth of Malaysia’s data centre sector has been driven by the rising demand for high-performance computing, particularly for artificial intelligence (AI) applications and solutions.

AirTrunk’s AI-ready data centre, which features a direct-to-chip liquid cooling solution, can help meet this demand. Developed over five years, the facility aims to support the expansion of advanced AI processes and address the challenges in AI innovation.

Over 20mw of liquid cooling has been deployed during the first phase of AirTrunk’s data centre in Johor Bahru (JHB1). As AirTrunk expands to more countries with tropical climates, this implementation has resulted in significant energy savings.

This technology is designed to be an effective sustainable solution, and AirTrunk plans to deploy more in the future.

“JHB1 is the home of one of the largest deployments of direct-to-chip liquid cooling technologies in the world, reducing energy consumption by up to 23%,” shares Pei Jet Lim, vice-president and country head of Malaysia at AirTrunk.

Lim says AirTrunk’s long-term investment in Malaysia would enable customer growth by implementing such solutions at scale to assist in catalysing sustainable cloud and AI development. “Data centres also lay the foundation for additional investment, acting as the backbone to the digital economy.”

Johor Bahru’s strategic geographic location provided AirTrunk with proximity to other Southeast Asian and key markets, robust infrastructure, streamlined government policies and opportunities for renewable energy through reliable electricity transmission and distribution networks.

“The region’s skilled workforce and competitive operating costs were also significant factors in the decision-making process,” says Lim.

During the launch of JHB1, Sikh Shamsul Ibrahim Sikh Abdul Majid, CEO of the Malaysian Investment Development Authority, said it plans to collaborate with AirTrunk and other stakeholders to maximise the benefits of its investment and position Malaysia as a leading destination for digital investments.

“This AI-ready data centre project, which prioritises sustainability through the energy-efficient technologies and green practices, is poised to create significant spill over effects,” he said.

“It will not only enhance our digital infrastructure, but also foster innovation across sectors, creating high-quality jobs and strengthening the building blocks of the digital economy.”

AirTrunk announced its expansion to Malaysia in January of 2023 and commenced operations of JHB1 earlier in July with a capacity of 50mw.

Less than a month after its launch, an expansion was rolled out to deliver the remaining phases of the campus over the next 18 months to deliver another 100mw capacity.

“This expansion will create thousands of jobs during construction and a significant number of new highly skilled technical and operational jobs for Malaysians,” says Lim.

AirTrunk is compliant with the requirements of critical infrastructure legislation in its operating markets, and Malaysia is no exception. “We are monitoring the finalisation of the Cybersecurity Act and accompanying regulations to implement the laws.”

AirTrunk has also signed a memorandum of understanding with Tenaga Nasional Bhd (KL:TENAGA) in 2023 for JHB1 to advance the energy transition in the region, and Lim shares that the strength of Tenaga’s power grid was also a key factor in its decision to enter Johor.

“Tenaga has been crucial with its work in streamlining grid connection and the delivery process across all Tenaga functions,” she says.

Additionally, AirTrunk and ib vogt, a renewable energy company from Germany, have signed a virtual power purchase agreement for 30mw of renewable energy under Malaysia’s Corporate Green Power Programme.

Lim says the company will focus on the sustainable growth of Malaysia, and will continue to invest in cutting-edge technologies, energy efficiency and talent development.

“Our goal is to be a leader in the industry, helping to not only enable the digital transformation in Malaysia but also deliver real social value in the communities where we operate.”

Source: The Edge Malaysia

Supporting the growth of AI

Princeton Digital Group (PDG) is strategically capitalising on the increasing demand for data centres to support the artificial intelligence (AI) boom, recognising Johor as an ideal location for the development.

As AI continues to evolve, the need for larger, more efficient data centres has become critical to accommodating the substantial computing power required. AI’s rapid growth has driven the demand for large-scale facilities, faster construction methods and advanced cooling technologies to keep up with its expansion.

“AI growth came in and took the world by storm. Nobody saw it coming. But we need to build large-scale data centres to power these [AI] chips. There are very few places in the world where it’s suitable for these kinds of deployments because you need large pieces of land, strong and reliable power, strong connectivity and local talents that can operate [the data centres],” says Asher Ling, chief technology officer and managing director of PDG Singapore.

“Companies were looking around the world for locations where this works. [Now], Johor in Malaysia is recognised globally as such a location.”

The data centre provider will establish a 150mw AI-ready data centre in Sedenak Tech Park, Johor, to meet these demands. Dubbed JH1, PDGs AI-ready facility is one of the largest data centre campuses in Southeast Asia.

The first phase of the US$1.5 billion (RM6.6 billion) project was completed within 12 months of its announcement. The first phase comprises 52mw of the JH1 campus.

“If you had been here a year ago, this would have been a flat piece of land and you would not have seen anything out here,” says Ling.

The decision to invest in Malaysia, and Johor specifically, came after the moratorium of new data centres in Singapore, says Ling. This led to PDG exploring neighbouring countries for suitable locations.

Johor was ideal, thanks to its ample land, reliable power infrastructure and growing talent pool. PDG’s goal is to fully utilise the capacity of the Johor campus within the next two to three years.

“In fact, I would emphasise our investment and our scale in Malaysia is the largest in all the regions that [we are in]. It was the most recent foray for us, but it is now the largest and fastest in terms of the build,” says Ling.

PDG operates 21 data centres across six countries.

Taking a step further

Just as factories rely on roads for transportation, data centres depend on connectivity to function efficiently, says Ling.

Malaysia’s key advantage is its extensive submarine cable networks, which connect the country to various parts of Asia and the world. This is because connectivity is a key component for data centre ecosystems to ensure seamless data transfer that supports the demands of businesses.

In turn, this encourages companies and support services to set up operations in the vicinity, says Ling. Data centres are able to gather direct investments for the country while fostering job creation and spurring economic growth. This is because the construction and operation of data centres require a wide range of suppliers, contractors and consultants, says Ling, leading to increased business opportunities for local companies.

There is a challenge of finding skilled data centre employees in Malaysia, as it is a relatively new sector, says Ling.

“The data sector industry in Malaysia really took off only two years ago. There are other similar mission-critical industries that have talented folks that want to move into this industry. For example, my operations director used to run a fabrication plant in Penang,” he says.

“Just like a manufacturing plant cannot go down in the middle of the day, a data centre can never go down. The mindset is transferable and we look into cross-training.”

The demand for data centre space in Johor is expected to be driven by both hyperscalers and enterprise clients, says Ling. While the company is not solely reliant on hyperscalers, they represent a significant portion of PDGs customer base.

The campus’ large footprint can accommodate high-density computing workloads, while the implementation of cooling technologies will allow the handling of intense heat generated by AI workloads, notes Ling.

For example, liquid cooling improves efficiency and energy savings compared to traditional cooling methods. He expects this technology to be prevalent in the coming years.

Sustainability is a concern for data centres. Ling says PDG is exploring opportunities to incorporate renewable energy sources into its operations, optimise energy efficiency and implement water saving measures.

PDG has also secured a US$280 million green loan for JH1, which aims to contribute to minimising resource consumption and emission. In addition, there are plans for solar panels to be installed on the rooftop of JH1.

By adhering to environmental standards and obtaining the relevant certifications, PDG is able to access financing options that support the data centre providers’ sustainability goals, notes Ling.

“For example, we use the most efficient chillers and spend more money [on this]. I’m willing to choose a more efficient chiller, which is more expensive; but, from a total cost of ownership when I’m operating, it’s a lot more efficient purely because of this,” he says.

Source: The Edge Malaysia

Growing with the times

Data centres, often perceived as mere physical infrastructures housing hundreds of servers and consuming vast amounts of electricity, are the unsung heroes of the digital age. They are the backbone of cloud computing and artificial intelligence (AI), enabling countless innovations across various sectors.

By examining their impact on healthcare, agriculture, logistics and more, we can appreciate how data centres optimise operations and expand possibilities in the Asia-Pacific (Apac) region.

Healthcare: Enhancing patient care and medical research

During the Covid-19 pandemic, AI-driven research and development processes that relied heavily on cloud-based data centres made the rapid development of vaccines possible.

Facilities offering telehealth services to often underserved patients can also perform real-time lab test results and comprehensive electronic medical records, improving patient outcomes and streamlining healthcare delivery, especially for the millions of people in Asia’s rural and hard-to-reach regions.

Agriculture: Boosting crop yields and sustainability

Asian farmers use cloud technology to improve crop yields and harvests, enhance desired traits for drought tolerance or disease resistance, achieve faster time-to-market at lower costs and reduce environmental impacts.

Advanced data analytics tools help optimise irrigation schedules, monitor soil health and predict weather patterns — enhancing agricultural productivity. Integrating AI and cloud services enables farmers to make informed decisions, resulting in more efficient and sustainable farming practices.

For instance, precision agriculture in Australia is transforming farming by using drones and Internet of Things (IoT) technologies to monitor crop health, livestock management and land surveying.

Another impactful initiative is the Malaysia Digital (MD) AgTech driven by the Malaysia Digital Economy Corporation (MDEC). In collaboration with stakeholders and ecosystem partners, this initiative aims to digitally empower the national agriculture sector. By integrating digital technologies such as IoT, big data analytics (BDA), AI and drone technology, the goal is to increase productivity, enhance quality, boost income, reduce operational costs, optimise plantations and encourage further participation.

Logistics: Accelerating global trade

Logistics companies benefit from cloud computing by optimising shipping routes, reducing fuel consumption and improving delivery times. By leveraging data centres, these companies can manage global supply chains more efficiently, ensuring goods and materials reach their destinations faster while using fewer resources.

This operational efficiency cuts costs and minimises the logistics industry’s environmental footprint. Companies like Singapore’s YCH Group are at the forefront of integrating smart logistics and robotics solutions to provide end-to-end supply chain solutions in the region.

Education: Supporting remote learning

Students and educational institutions rely on data centres to enable remote learning and access to vast academic resources. Cloud-based platforms provide interactive learning experiences, real-time feedback and collaboration tools that enhance the quality of education.

These digital infrastructures ensure students can continue their studies uninterrupted, regardless of geographical constraints. Initiatives like Japan’s Global and Innovation Gateway for All (Giga) School Program aim to provide every student with a computer and high-speed internet.

Municipalities & government: Building sustainable and connected cities

According to an IDC 2023 Smart Cities report, Apac governments are rapidly adopting technologies like IoT to digitalise cities and government services, aiming to reduce traffic congestion, enhance security and improve overall efficiency.

This digital transformation is not only seen as a strategic move to modernise infrastructure but also as a vital approach to empower governments and significantly improve the lives of citizens.

A 2024 IDC report acknowledges that 50% of Apac cities will pilot generative AI in 2024. Municipalities can monitor and manage urban environments more effectively, leading to smarter cities that respond dynamically to the needs of their populations. The deployment of these technologies fosters a more sustainable and connected urban ecosystem, ultimately creating a more liveable and resilient environment for all residents.

Energy: Facilitating green power solutions

Artificial intelligence tools supported by data centres enhance access to green energy sources, such as wind, solar, hydro and geothermal power.

These AI algorithms can track temperature, performance metrics and weather patterns by analysing vast amounts of data. By integrating battery storage solutions, data centres can ensure a cleaner, more efficient alternative to diesel and provide backup power for electrical grids. They also guarantee high availability and contribute to decarbonising local grids.

These innovations help meet the growing demand for renewable energy and reduce reliance on traditional power sources. In India, partnerships are being formed to bring gigawatts of renewable energy capacity, and leveraging low-cost clean energy and storage can ensure long-term affordable electricity, avoiding outages.

Transport: Streamlining operations

The Apac’s airlines and public transport  systems use cloud computing and AI to optimise schedules, flight planning, scheduling routes and maintenance plans, reducing emissions and improving efficiency.

Pilot training can be levelled up by integrating AI-powered software and simulators. Data centres enable real-time data analysis and decision-making, which are crucial for managing complex transport networks and minimising delays. Companies like Japan Airlines leverage cloud solutions to enhance operational efficiency and build resilient airline operations.

Manufacturing: Enhancing efficiency and productivity

Manufacturers in Apac utilise data centres to improve inventory management, streamline operations and optimise staffing levels. AI-driven insights help predict equipment failures, lead predictive maintenance systems, improve production schedules and manage energy consumption.

These advancements lead to higher productivity, lower costs and a more sustainable manufacturing process. China has forged ahead in developing domestic smart manufacturing and smart factories, and it is setting new benchmarks for efficiency, sustainability and innovation.

Mobile Infrastructure: Bridging the digital divide

According to a 2023 report by the Asia-Pacific Economic Cooperation, the prevalence of mobile phones in the Apac region and the remarkable growth of mobile Internet have led to increased use of data centres to facilitate connections to various apps and services on the Internet.

The report noted that by the end of 2023, 1.8 billion people in Apac (63%) would have subscribed to a mobile service. This trend has enabled greater participation in the digital economy and has helped bridge the digital gap, allowing more people to access and benefit from online services and resources.

Skilling Up

Despite typically not employing thousands of employees directly, data centres play a crucial role in job creation in their operating regions.

These facilities primarily employ high-skilled workers who earn higher salaries, making a significant economic impact. In Malaysia, for instance, the data centre sector is rapidly expanding and poised for a compound annual growth rate (CAGR) of 13.92% from 2023 to 2029 and, as such, creating numerous high-skilled job opportunities in fields such as network engineering, cybersecurity and data management.

This growth is not limited to the centres but extends to related sectors like real estate, construction, connectivity, logistics and renewable energy. This ripple effect results in thousands of jobs being created indirectly, supporting the overall economic development of these areas.

The role of data centres in modern economies

The emergence of data centres in Asia, particularly Southeast Asia, is reshaping the digital landscape and enhancing connectivity and internet infrastructure. From essential mobile apps to facilitating real-time global financial transactions, these services rely on the robust foundation provided by strategically located data centres.

As highlighted by the ARC Group, countries like Singapore, Malaysia, Thailand and Indonesia spearhead this transformation, positioning Southeast Asia as a key player in the global digital hub. The economic spillover effect of data centre investments on local economies is significant and comprehensive.

The rapid growth of the data centre ecosystem in Malaysia is driving expansion in sectors such as real estate, construction, connectivity, logistics, warehousing, energy (including renewable energy), equipment suppliers, contract manufacturing and talent development. This growth demonstrates how data centres are more than just isolated entities; they are catalysts for comprehensive economic and technological advancement.

The quest for green

Data centres also play a pivotal role in sustainability. Leading providers implement 24/7 carbon-free energy solutions and pioneer water, cooling and waste processing technologies.

Eco-friendly data centres help drive US$6.3 billion (RM27.56 billion) of green investment across Southeast Asia, boosted by energy efficiency regulations in Malaysia and Singapore. Transparency through regular sustainability reports fosters collaboration and drives industry-wide innovation and efficiency.

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Chi Ling is the vice-president of real estate and site development (Apac) at EdgeConneX, a global hyperlocal to hyperscale data centre solutions provider

Source: The Edge Malaysia

The power behind progress

The development of tech hubs and data centres is closely intertwined, with each driving and benefiting from the growth and advancement of the other. This is because tech hubs provide a fertile environment for innovation and business development, and data centres supply the essential infrastructure to support the growth of the digital economy.

Tech hubs greatly benefit from the presence of data centres — by leveraging the robust and scalable infrastructure that data centres offer — to drive innovation and sustain tech development. Both sides of the coin contribute to a shared goal of economic prosperity, technological innovation and sustainable development.

Data centre companies are turning to Cyberjaya for its world-class infrastructure and established tech ecosystem, effectively supporting their operations in Malaysia. In the past year alone, Cyberjaya has welcomed major data centre players, including hyperscale providers such as EdgeConneX, Equinix and Vantage Data Centres. Vantage has started construction on its second campus with a planned investment of US$3 billion.

Moreover, key players such as NTT and Bridge Data Centre, which has already been established in the city, have also expanded their footprints with new campuses last year.

The influx of data centre players underscores Cyberjaya’s growing prominence as an ideal location for operations of these facilities.

“Purpose-driven to support Malaysia’s tech development, Cyberjaya is the best location when it comes to world-class ready infra. Cyberview acknowledges that the needs and demands of the tech industry are certainly evolving and increasing, especially with participation by global tech giants,” says Kamarul Ariffin Abdul Samad, CEO of Cyberview Sdn Bhd, the tech hub developer of Cyberjaya.

“Working via a collaborative framework with key partners and government agencies at both the federal and state levels has enabled us to be nimble and agile in offering innovative solutions to scale our infrastructure and manage our resources better.”

As a global tech hub, Cyberjaya’s advantages include its dark fibre connectivity, which ensures uninterrupted bandwidth by allowing companies to manage their network infrastructure and providing consistent and reliable data transmission speed.

This reliability is crucial for data centre companies, especially in the context of the high demand driven by artificial intelligence (AI) and other data-intensive applications.

“The increasing demand for AI, cloud computing, big data analytics and other digital services and e-commerce has driven the need for advanced data infrastructure. To meet the needs of our investors, Cyberjaya offers an expansive land bank, robust infrastructure and redundant power supply,” says Kamarul.

“This positions the city as a prime location for international and local data centre players looking to establish and expand in Malaysia and the region.”

Ushering in the digital economy

The digital economy stands as a powerful force for transformation with the potential to reshape entire industries, fuel groundbreaking innovations and open up vast new opportunities on a global scale.

Malaysia is experiencing remarkable growth in digital investments, which has reached RM66.2 billion in the first half of the year, according to the Ministry of Digital. As businesses increasingly rely on digital infrastructure to drive growth, the demand for data centres is expected to rise.

The increase in the number of data centres in Cyberjaya is a direct outcome of the expanding digital economy.

“As a global tech hub and preferred destination for data centres, Cyberjaya and its offerings will benefit not only the data centre industry but also extend to the broader digital economy,” says Kamarul.

There is more to data centre offerings than just infrastructure. For one, data centres play a pivotal role in advancing the government’s Madani Economy framework, which aims to secure Malaysia’s economic future by prioritising digitalisation and embracing sophisticated economic activities through innovation and technology.

Data centres also drive the expansion of ancillary industries such as cybersecurity, network infrastructure and IT services by strengthening domestic supply chain linkages. These are vital to the broader economic ecosystem.

For small and medium enterprises (SMEs), data centres offer significant benefits through colocation services. This allows SMEs to rent space in a data centre to house their servers and IT equipment, rather than maintaining their own infrastructure.

“SMEs pay only for the space and resources they use, reducing capital expenditure and operational costs and making advanced IT infrastructure more accessible. Accessibility of IT enhances connectivity and collaboration, which fosters an interconnected and competitive business environment, contributing to the overall expansion and resilience of our digital economy,” says Kamarul.

On the other hand, he says, tech hubs such as Cyberjaya are essential to attracting these tech companies, which include foreign direct investments to the country. These new tech investments create job opportunities, foster a skilled workforce and promote local employment — all this while generating economic activities and growth, from the earliest stages of construction to having spillover impact in the greater community and across industries.

Getting ready for digital transformation

Data centre investments directly create jobs requiring specific expertise. These include IT engineers, data scientists, big data analysts and cybersecurity engineers.

This is why focusing on talent development to ensure local communities benefit from jobs created in these sectors is essential, notes Kamarul. This is done by preparing local talent to be industry-ready and fostering the growth of more tech creators in Malaysia.

It also supports indirect jobs, which results from data centre operators acquiring services such as equipment suppliers, construction workers and engineers.

Tech hubs such as Cyberjaya are ideal for aligning local talent and skills with Malaysia’s expanding digital economy, says Kamarul. Tech hubs function as innovation ecosystems that bring together educational institutions, industry leaders and government initiatives to foster growth and development.

For instance, companies and educational institutions are partnering for internship placements, industry exposure and mentoring. These programmes provide hands-on experience and enhance job readiness by aligning academic programmes with industry needs.

Meanwhile, educational institutions can implement educational programmes and vocational courses that are closely aligned with the skills and qualifications required by local industries, says Kamarul. These programmes can then be regularly updated based on industry trends and feedback to ensure relevance.

“Essentially, jobs created within tech sectors and the creation of local innovators are the building blocks of a future economy driven by digitalisation and technology. This aspiration must begin with fostering a passion for science, technology, engineering and mathematics among Malaysian students from an early age,” says Kamarul.

This is why Cyberjaya is heavily investing in technology transfers, knowledge sharing and collaborations with institutes of higher learning (IHLs) and industry players. Cyberjaya is home to eight IHLs that supply talent to the tech sector.

Moreover, the Cyberview Living Lab Talent provides incentives on hiring the right talent and fostering industry-academia collaboration to encourage two-way communication that improves the employability of graduates.

A key zone in Cyberjaya is West Cyberjaya, which serves as a centre for industry-academia collaboration to produce skilled talent.

“Our ongoing partnership with Multimedia University has been instrumental in bolstering Cyberjaya’s talent supply. With at least two more institutions expected to establish themselves in Cyberjaya within the coming months, the tech sector should experience a stronger supply of both core and non-core talent,” says Kamarul.

The infrastructure and connectivity of data centres will create mutilfold benefits in scaling up innovation and tech ecosystems, he says. Further collaboration with local start-ups, SMEs, research institutions and industry leaders will make it possible to stay ahead of trends, to enhance efficiency and create new value propositions.

“As part of our global tech hub proposition, we are focused on developing a tech ecosystem in Cyberjaya that includes building capacity in emerging technologies, research, development and commercialisation,” says Kamarul.

“Embracing emerging technologies, investing in R&D and nurturing a culture of continuous improvement will enable tech hubs to optimise and leverage the presence of data centres in order to thrive in today’s digital era.”

In this stead, Cyberjaya is a sandbox for emerging tech companies via the Cyberview Living Lab Accelerator (CLLA) programme, whose aim is to identify, enhance and encourage the growth of start-ups and accelerate their ideas through mentorships while providing a platform to test and validate solutions.

Since its inception in 2013, the CLLA programme has helped start-ups raise more than RM255 million in total investments and more than RM792 million in cumulative revenue. These local start-ups have had a collective impact on the economy by creating more than 1,450 jobs.

Today, Cyberjaya is home to more than 40,000 knowledge workers and 28,000 students that form a pool of skilled, diverse and vibrant talent in technology and innovation.

Keeping it sustainable and green

As tech and data centre investments continue to grow, it is critical to address concerns related to increasing emissions and resource consumption, notes Kamarul. It is projected that power demand from data centres will surge 160% by 2030, which highlights the urgent need for a robust and sustainable energy infrastructure.

An ESG framework and a five-year roadmap are in place to help and ensure that Cyberjaya is a smart, carbon-neutral city by 2030. Already well in place are centralised cooling facilities managed through Pendinginan Megajana Sdn Bhd, which uses chilled water to reduce emissions. This currently benefits more than 45 buildings and cuts 7,000 tonnes of emissions annually.

“We are exploring further opportunities with potential partners to enhance our use of solar and renewable energy for data centres in Cyberjaya. This includes evaluating the feasibility of renewable power options through the enhanced corporate green power programme and third-party access,” says Kamarul.

“These efforts aim to support the transition to a low-carbon future, ensuring that the tech hub’s growth aligns with environmental goals while maintaining its economic and innovative potential.”

He adds data centres are at the forefront of innovation in sustainability and are adopting greener technologies and practices to minimise their environmental footprint.

Moreover, key players are exploring seawater cooling and reusing wastewater as part of their innovative water conservation strategies. This presents an opportunity for Cyberjaya to benefit from sustainable tech development.

In the long run, the growth of data centres in a tech hub certainly brings significant economic benefits as Malaysia focuses on the digital economy.

“Cyberview is looking into the horizon and understands that other tech investments must also be present here to create a balanced growth environment. Ultimately, the priority is always on curating an innovative landscape that will benefit all, especially the community and Malaysians at large,” says Kamarul.

Source: The Edge Malaysia

Cyberjaya’s ideal location attracts data centre investments