Malaysia Carves Premium Niche In Asia's Digital-Infra Race - Economist
By Nor Baizura Basri
KUALA LUMPUR, Aug 25 (Bernama) -- Malaysia is carving out a premium niche in Asia's digital-infrastructure race, combining scalable power, connectivity, execution speed, industrial depth and hyperscale capital, says an economist.
Juwai IQI global chief economist Shan Saeed said Malaysia’s data-centre boom is beginning to look less like spillover from Singapore and more like a distinct economic strategy.
He said the investment numbers are increasingly macroeconomically consequential and Malaysia already possesses a sizeable digital base.
"Malaysia is also benefiting from a global reallocation of capital towards compute," he said in a statement to Bernama here today.
The Malaysian Investment Development Authority (MIDA) approved RM144.4 billion in data-centre and cloud-computing investments between 2021 and mid-2025.
In the first quarter of 2026 alone, data-centre and cloud-computing investments accounted for RM34.6 billion across 33 projects, equivalent to 88.9 per cent of information-and-communications investment approvals.
Shan said the policy challenge is to convert infrastructure investment into domestic value-added and productivity growth.
He said that because data centres are capital- and power-intensive, their economic dividend depends on the spillovers they create.
These include lower barriers to cloud and artificial intelligence (AI) adoption, stronger cybersecurity and engineering capabilities, semiconductor linkages, advanced cooling, renewable-energy investment, local procurement and higher-skilled employment.
"This is where Malaysia’s semiconductor ecosystem provides an additional advantage.
"Digital infrastructure can create a bridge between the country’s established electronics manufacturing base and the emerging AI economy, allowing capital deepening to generate broader technology diffusion across manufacturing and services," said Shan.
He added that Southeast Asia now represents roughly half of Asia-Pacific’s data-centre capacity under construction, with Malaysia leading the region with 1,039 megawatts (MW) under construction, ahead of Thailand at 859 MW.
Johor alone recorded 1,110 MW of operational capacity, 602 MW under construction and a 3,088 MW development pipeline in the first half of 2026, with its pipeline exceeding Bangkok’s 2,084 MW and Jakarta’s 1,699 MW.
Shan said grid resilience, renewable-energy supply, water efficiency and regulatory execution will therefore become part of Malaysia’s investment proposition.
He added that the risk is that capacity expands faster than domestic value capture.
Therefore, Malaysia must ensure that digital infrastructure crowds in, rather than crowds out, productive investment.
"If that balance is achieved, the payoff extends well beyond server farms. The data-centre cycle can deepen the productive capital stock, accelerate technology diffusion, raise total-factor productivity and strengthen Malaysia’s potential growth rate.
"Malaysia is not merely building data centres. It is building the compute infrastructure and potentially the productivity architecture for ASEAN’s next growth cycle," said Shan.
According to the UN Conference on Trade and Development (UNCTAD), global greenfield investment in data centres exceeded US$270 billion in 2025, accounting for more than one-fifth of global greenfield investment value, with Malaysia ranked among the top 10 global destinations for data-centre projects.
McKinsey & Co, a global management consulting firm, meanwhile estimated that data centres could require roughly US$6.7 trillion in cumulative global investment by 2030, with AI workloads accounting for around 70 per cent of capacity demand by the end of the decade.
-- BERNAMA