Malaysia has become one of Southeast Asia’s most actively pursued locations for digital infrastructure in the past two years, attracting an estimated RM278 billion in digital investments between 2021 and 2024^[1].

About RM184.7 billion of this has gone into cloud infrastructure and data center projects, making Malaysia one of the top locations in the world for hyperscale facilities and cloud computing services.

The charge is led by several American tech giants, such as Microsoft, where a US$2.2 billion investment was announced to construct three data centers in Malaysia by the second quarter of 2025^[2], and Google, investing US$2 billion to build its first data center and cloud facility here, which is expected to generate 26,500 jobs and US$3.2 billion in economic activity by 2030^[3].

All indicators suggest that Malaysia’s digital economy is expanding to unprecedented levels, but the more important question is whether Malaysia is actually reaping the benefits of this infrastructure, or if we are just contributing land and electricity to someone else’s digital empire?

Beyond the hype: What’s actually being built?

Data centers serve as the internet’s invisible foundation. All AI queries, cloud documents, messages, and searches go through their servers.

Attracting them may seem like a huge victory, and in some respects, it is. They express confidence among investors in Malaysia’s connectivity, energy supply, and political stability.

However, data centers by themselves are not major employers.

Typically, a hyperscale facility may generate between 100 and 200 permanent positions, mostly in technical maintenance, security, and facility management.

Instead, construction, electrical work, HVAC (heating, ventilation, and air conditioning) installation, and supply chain services account for the majority of job growth.

Microsoft projects that nearly 37,000 jobs will be supported by the investment, which will also create US$10.9 billion in downstream value over a four-year period^[2].

The true economic concern, however, is that the ability to retain this value in Malaysia, and not be diverted abroad in the form of deals, earnings, and data repatriation.

Digital infrastructure without digital sovereignty

We are constructing the digital economy’s hardware, but are we also building its ownership and capability? This is a silent worry as Malaysia presents itself as a digital hub.

Foreign corporations will profit from the majority of the data handled in these centers, which will service clients worldwide and are subjected to foreign regulations.

Without meaningful stakes in the software, platforms, or intellectual property layered on top of that infrastructure, Malaysia risks becoming the industrial park of the digital world: essential, but easily replaceable.

The idea of digital sovereignty becomes crucial at this point. We must have a national policy that guarantees:

■ Malaysian law regulates the data created and kept here;
■ Cloud computing capability is available to researchers and local businesses;
■ Schools are preparing students for the skills of the future with cloud-native technology;
■ And critically, rather than merely hosting foreign IT giants, we are also developing Malaysian ones.

Malaysia’s digital economy is expanding to unprecedented levels, but the more important question is whether we are actually reaping the benefits of this infrastructure, or are just contributing land and electricity to someone else’s digital empire?

The environmental cost of progress

There’s also a quieter cost—energy and water.

Data centers are notoriously resource-intensive. The industry is putting a burden on power systems throughout the world as each factory uses energy that frequently exceeds 100MW.

Electricity rates in Malaysia are anticipated to increase by 14.2 percent in July 2025^[4].

Some businesses are already looking into solar and other options, but it is crucial that the ecosystem as a whole follow suit, in order to pursue a sustainable economy.

Ideas: Constructing more than just server rooms

Only if it is a component of a larger, strategic digital industrial policy can Malaysia’s data center boom be revolutionary.

Here’s how we can become a digital leader instead of just being a data landlord:

■ Require local involvement in high-skilled operations like data analytics, AI services, and cybersecurity.
■ Take advantage of tax breaks for R&D, startup incubation, and local cloud services in addition to construction.
■ Include goals for renewable energy in all digital infrastructure projects to meet global ESG standards.
■ Increase collaborations between academia and business by integrating instructors and students into actual cloud and data science settings.

While policymakers should be optimistic about the billions pouring into Malaysia’s data center industry, it is also one that raises questions worth considering. Who is the data owner? Who truly benefits from this expansion? And who is shaping the policies that will govern our digital future?

Malaysia is in a unique position to take the lead in Southeast Asia’s digital revolution. However, including more vision, value, and sovereignty into our digital strategy will be the key to leadership, not adding more servers.

If we don’t explore these questions now, we might discover a decade from now that we’ve built the highways to the cloud, but left our people stuck on the ground.

[1] MIDA, 8 May 2025, MIDA powers up Malaysia’s digital future at data center nexus 
[2] Microsoft, 20 March 2025, Microsoft’s upcoming cloud region to unlock new economic opportunities for Malaysia 
[3] The Malaysian Reserve, 1 October 2024, Google’s Malaysia data center sets new standard for power, water usage efficiency 
[4] The Star, 27 December 2024, Base electricity tariff to rise 14.2% starting July

(Galvin Lee Kuan Sian serves as Lecturer and Program Coordinator for the Diploma in Business program at the School of Diploma & Professional Studies, Taylor’s College. With more than six years of experience in secondary and tertiary education, Galvin aspires to bring the best out of every student that comes under his guidance through robust teaching and learning pedagogy.)