Data centre boom to deliver over RM30bil to local firms: Expert

KUALA LUMPUR: Malaysia's data centre investment boom could channel over RM30 billion into local businesses through domestic content requirements, providing opportunities for companies to expand their capabilities and move up the technology value chain.

Juwai IQI co-founder and group chief executive officer Kashif Ansari said the requirement for at least 30 per cent local content in approved data centre projects could generate significant economic benefits for Malaysian suppliers and service providers.

He said about RM95.8 billion in data centre and cloud computing projects were approved in the first half of 2026, meaning the local content requirement could translate into about RM29 billion in spending directed towards domestic companies.

"Malaysia is telling global investors that it will let them have data centres in the country, where land is less expensive and there's plenty of local talent, but only if they help local firms grow," he told Business Times.

The potential spending comes amid major commitments by global technology companies, including Google's planned US$15 billion (RM63 billion) investment and Amazon Web Services' (AWS) RM29.2 billion commitment to Malaysia's artificial intelligence (AI) and data centre ecosystem.

Google's latest commitment covers new data centre campuses, clean energy and water security initiatives, alongside plans to upskill 800,000 Malaysians between 2027 and 2031.

The company is working with more than 80 Malaysian entities across its domestic supply chain, covering construction, engineering, network infrastructure, power and cooling systems, logistics and other services.

Google expects the construction of its new campuses to contribute an annual average of US$1.1 billion to Malaysia's gross domestic product and support more than 37,000 local jobs a year.

Once operational, the facilities are projected to sustain more than 9,000 local jobs annually.

AWS, meanwhile, has launched Semarak AI Malaysia, targeting up to 445,000 government officers and 10,000 small and medium enterprises, while pursuing a RM29.2 billion investment plan through 2038.

Ansari said the requirement was an important strategy to help Malaysia move into more sophisticated economic activities and strengthen its position in the global value chain.

He said the potential local spending represented a substantial boost for domestic businesses, although the actual amount would depend on how the local content requirements were implemented.

Malaysia has approved 117 data centres with a combined maximum energy demand of about 23,500 megawatts upon completion, with 55 already operational.

Data centre and cloud computing projects accounted for nearly 44 per cent of the RM218.5 billion in approved investments recorded in the first half of 2026.

Ansari said concerns over the relatively low number of permanent jobs generated by data centres should be considered alongside their wider contribution to the technology ecosystem.

"If the options are RM95.8 billion of investment and some jobs, or no investment and no jobs, I know which I would choose. This investment is a good thing for Malaysia on its merits," he said.

He said data centres could help develop local engineers, software developers and technology companies, creating new businesses and employment opportunities across the technology sector.

However, he said having data centres in Malaysia alone would not be enough to develop the country's digital capabilities.

Ansari said the infrastructure needed to be supported by policies that encourage innovation, skills development and the growth of local technology companies.

He cited initiatives such as Semarak AI Malaysia, GovHub powered by AWS's Kiro platform, and partnerships involving GD Xchange and VSTECS as efforts to encourage wider AI adoption.

"Trying to build our own AI capabilities without local data centres is like trying to build a house without the foundation. The foundation is essential, but not enough, to successfully build a house," he said.

He said the government's focus on pairing infrastructure investments with policies to develop domestic capabilities would be important in ensuring Malaysia captures more value from the expansion of the digital economy.