Malaysia Leverages AI Wave to Attract Investment in Data Centers

Malaysia’s data center industry is thriving, with investments tripling by 2024. Real estate consulting firm Knight Frank found that data center companies invested MYR 141.7 billion (USD 31.5 billion) in the first ten months of last year alone, up from MYR 46.2 billion (USD 10.3 billion) in 2023.

Most of them come from technology giants: $4.3 billion from Nvidia, $2.2 billion from Microsoft, $2.1 billion from ByteDance, $2 billion from Google, and $6 billion from AWS to 2038. Malaysia is the largest data center player in Southeast Asia with a capacity of 429MW, far ahead of the second largest Indonesia with a capacity of 93MW.
The driving factor behind this investment flood is the massive influx of funds into the field of artificial intelligence. The ASEAN region, with a population of 700 million and rapidly growing digital services, is an attractive target for both Western giants and Chinese counterparts.
But this is also thanks to the Malaysian government’s efforts to promote its digital economy.

Key factors

Knight Frank stated that it particularly reinforces two factors that are crucial for developing a strong data center ecosystem – regulatory environment and sustainability.
For example, it has accelerated the power supply speed of data centers, reducing the implementation time from three to four years to just 12 months. It has developed a plan to allow renewable energy developers to connect to the grid. It also promises to provide incentives for artificial intelligence data centers.
In addition, research firm Telegeography has listed Kuala Lumpur, the capital of Malaysia, as the fastest-growing city in the world in terms of digital infrastructure development. Kuala Lumpur is ahead of 3000 other cities in terms of existing and planned cloud regions, data centers, and submarine cables.
Earlier this week, the two countries agreed to establish a 3571 square kilometer Johor Singapore Special Economic Zone, which could further boost Malaysia’s data center industry.
The digital economy is one of the 11 investment target industries in the district, and the government provides special taxes and other incentive measures. The governments of Malaysia and Singapore are planning to establish infrastructure funds to support businesses established in this new region.