Johari: Malaysia must be more than a host for tech giants

KUALA LUMPUR: Malaysia is attracting some of the world's biggest technology investments, but the real test is whether the billions flowing into data centres and artificial intelligence (AI) translate into lasting benefits for the economy.

Google's planned US$15 billion investment between 2027 and 2028 and Amazon Web Services' (AWS) RM29.2 billion commitment through 2038 underline the country's growing appeal as a regional hub for cloud computing and AI.

Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani said Malaysia, however, must look beyond hosting the
infrastructure and ensure domestic businesses and workers benefit from the expansion.

"Malaysia must not be merely a host for digital infrastructure but a creator of digital value."

His caution comes as data centre and cloud computing projects account for RM95.8 billion, or nearly 44 per cent, of the RM218.5 billion in approved investments in the first half of the year.

Malaysia has approved 117 data centres with a combined maximum energy demand of about 23,500MW upon completion. Fifty-five are operational, with the rest at various stages of construction and planning.

The scale of investment is significant, but so is the question of how much value will remain in the domestic economy.

Google estimates that construction of its new campuses will contribute an average of US$1.1 billion annually to Malaysia's gross domestic product and support more than 37,000 jobs.

Once operational, however, the facilities are expected to sustain more than 9,000 jobs annually, a much smaller workforce relative to the capital invested.

This was why Johari emphasised the need to build domestic expertise rather than rely solely on foreign investment.

Projects approved under the Data Centre Task Force must meet at least 30 per cent domestic content requirements, including the use of Malaysian consultants, contractors, engineers and procurement managers.

The aim is to give domestic companies a stronger foothold in the supply chain, from construction and electrical engineering to cooling systems, network infrastructure and facility management.

Google's collaboration with more than 80 Malaysian entities could help deepen that expertise and create opportunities for domestic companies to serve data centre markets in the region.

Talent development is another part of the equation.

Google plans to establish Data Centre Institutes at selected polytechnics and upskill 800,000 Malaysians between 2027 and 2031.

Meanwhile, AWS has launched Semarak AI Malaysia, targeting up to 445,000 government officers and 10,000 small and medium enterprises (SMEs), with programmes to expand AI adoption and digital skills.

The wider ambition is to ensure businesses and public agencies can turn access to AI into practical gains, from developing new products and automating processes to improving public services.

The expansion, however, will place further demands on electricity and water supplies. This comes at a time when the country is seeking to support growing demand from manufacturing and other high-value industries.

Johari said the government was examining additional generation capacity through solar, battery storage, hydropower and potentially greater use of gas resources.

Google plans to support more than 1GW of new clean energy capacity.

Water security is another concern, particularly in areas where industrial demand competes with household needs.

Google's water replenishment and resilience initiatives reflect the growing importance of managing the environmental impact of data centre expansion.