Despite concerns surrounding US chip policy or the emergence of DeepSeek, Malaysia remains an attractive destination for global data center hyperscalers…
Based on a forecast of new data center projects with a total capacity of up to 1,313 MW (reaching 505 MW by the end of 2024), the CIMB report estimates that this will bring between US$5.3 billion and US$6.6 billion in job opportunities to the Malaysian construction industry over the next decade, according to Tech Node Global.
The report also reaffirms the view that the investment outlook for Malaysia’s data centre infrastructure remains stable and could accelerate in the coming period, despite challenges.
“While we acknowledge that the emergence of DeepSeek and changes in the US government’s AI chip policy could lead to a short-term review, Malaysia’s rich resource situation and balanced diplomatic stance help the country remain competitive as a growing data hub and a key player in the global AI race,” the report said.
According to CIMB, the firm has not seen any clear signs of a significant reduction in AI investments from leading technology companies, despite the emergence of some low-cost AI technology providers such as DeepSeek and the implementation of new US government regulations on AI.
A report from Quartz shows that four major tech companies, including Meta, Microsoft, Google, and Amazon, could spend a total of $320 billion on AI development and AI infrastructure by 2025.
Meanwhile, the Stargate Project, funded by OpenAI and Japan's SoftBank, will invest $500 billion over the next four years to develop new AI infrastructure in the United States.
Additionally, CIMB believes that shifting data center investment back to the US could actually increase export quotas for advanced graphics processing units, easing some of the limits on computing power that Tier 2 countries, such as Malaysia, can access under the new US regulations.
Broadcom's strong revenue guidance for the second quarter of fiscal 2025 also helped bolster investor confidence in AI-related spending, underscoring hyperscale cloud providers' efforts to diversify their processor supply, the report added.
REAL ESTATE MARKET BENEFITS
Additionally, CIMB also pointed out that in Malaysia, the US government's tightening of controls on advanced chips has not prevented land deals for large-scale data center investments.
Specifically, on January 27, 2025, Microsoft's data center unit, Microsoft Payments (Malaysia), acquired a 22.5-acre (over 90,000m2) plot of land at Nusa Cemerlang Industrial Park from Crescondo Corp for US$27 million, this is the company's fourth purchase in Johor.
Shortly thereafter, on February 25, 2025, Eco World signed a contract with Google to develop and lease 92 acres of land at Eco Business Park V in Puncak Alam, Selangor for US$1.08 billion.
Similar to the build-and-lease agreement Google signed with Sime Darby Property, Eco World signed a 20-year lease with Google (with an option to extend for two additional 5-year periods) and simultaneously sold an additional 58 acres (about 235,000 square meters) of land at Eco Business Park V for $59.88 million.
The increased demand for land reflects the strong flow of data center projects taking shape in Malaysia. As the 2025 ASEAN chair, Malaysia has identified attracting large-scale data center investment as a key part of its aspiration to become a regional digital hub.
Malaysia’s digital economy is forecast to contribute 26% to the country’s gross domestic product (GDP), in line with the target set in the 12th Malaysia Development Plan (12MP). CIMB therefore believes that there is a need for more AI and digital infrastructure to support Malaysia’s digital transformation.
EFFORTS FROM THE MALAYSIA GOVERNMENT
To support this ambition, two strategic initiatives between Google and Malaysian government agencies were launched in mid-December 2024, “AI at Work” and “AI Policy and Skilling Lab”, along with the launch of the National AI Office of Malaysia, to transform public service delivery through the application of generative AI.
At the corporate level, Gamuda made a major move through its 50:50 partnership with Dagang NeXchange (DNex) to provide Google Distributed Cloud services to Malaysia, along with the acquisition of a 20% stake in Cloud Space, an official Google Cloud partner.
According to Knight Frank's Data Centre Research 2024 Report, CIMB said Malaysia attracted US$31.74 billion in digital investments in the first 10 months of 2024, three times the total amount the country raised in 2023.
The effort is underpinned by a $23 billion strategic investment that Malaysia has successfully attracted from several tech giants such as Nvidia, Microsoft, Google, ByteDance, Amazon Web Services (AWS) and Oracle between December 2023 and October 2024, to develop AI and cloud computing infrastructure.
According to Knight Frank's Data Centre Research Report 2024, Malaysia is expected to host 61 upcoming data centres, with a total information technology (IT) capacity of 1,313 MW.
Based on a forecasted data center capex of US$6 million/MW, CIMB estimates that these projects could represent a construction opportunity worth up to US$7.88 billion over the next five to 10 years.
(Source: https://vneconomy.vn)