Plans by AWS and Microsoft to establish large data centres in the country are expected to enhance infrastructure and empower SMEs
INVESTMENTS by technology giants in Malaysia’s data centre industry are expected to boost the national economy by empowering the domestic small and medium enterprises (SMEs) and catalyzing technological advancement in the sector.
The recent plans unveiled separately by Amazon Web Services Inc (AWS) and Microsoft Corp in setting up large data centres in the country are welcomed by the SMEs as it will offer them supply chain opportunities. It will in turn empower local tech talents and enhance domestic digital infrastructure, thus accelerating the digital transformation of SMEs and creating a vibrant ecosystem for start-ups to flourish.
AWS, the cloud computing division of Amazon.com Inc, disclosed in August last year its plans to invest US$6 billion (RM28.32 billion) by 2037 to establish the new AWS Region in Malaysia.
On May 2, Microsoft also revealed plans to invest US$2.2 billion (RM10.38 billion) to advance new cloud and artificial intelligence (AI) infrastructure in the country.
Previously, Investment, Trade and Industry (MITI) Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said data centres made up the bulk at RM114.7 billion, out of RM144.7 billion approved digital investments between 2021 and 2023.
He also said the approved investments were RM3.4 billion in 2021, RM80.8 billion (2022) and RM60.5 billion (2023) coming from various organisations such as Amazon, GDS Holdings Ltd, YTL Corp Bhd and ByteDance Ltd.
According to Statista, the global data centre market this year is projected to reach US$340.2 billion in revenue.
In addition, according to the online platform, revenue is expected to show a compound annual growth rate (CAGR 2024-2028) of 6.56%, resulting in a market volume of US$438.7 billion by 2028.
Upgrading the Local Workforce
Sunway University economics professor Dr Yeah Kim Leng said foreign direct investments (FDI) by global tech companies such as AWS and Microsoft are a good signal that the recipient country has favourable growth prospects in both the overall economy and specifically, the ICT industry.
“It also amplifies investor confidence in the country’s economic policies and macroeconomic management in addition to political stability.
“Given the preeminent roles of these two global firms in driving computer industry growth and transformation, their investments, although small relative to Malaysia’s total FDI inflows, have significant impact through network effects and crowding in both domestic and foreign companies,” he told TMR.
Furthermore, he said the global firms also play a key role in providing solutions to enterprise IT needs, thereby driving up firm-level productivity and efficiency.
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