Why companies should make Malaysia their data hub in Southeast Asia

Businesses in Malaysia, like their other Asian counterparts have had it rough in the last year as the Covid-19 pandemic wreaked havoc.

For businesses, the solution seemed simple – adopt digital in their operational processes and continue to stay relevant. This relevancy means businesses need to abide by social distancing norms, zero-touch delivery, digital payments, and others.

In June 2020, Dato’ Abdul Rauf Rahid, EY Asean Assurance Leader: Malaysia Managing Partner, Ernst & Young, shared, in a note, how the start of the journey towards economic recovery is contingent on rebuilding trust and confidence in public and business realms and the deliberate intervention of the government.

“Businesses need to work hand-in-hand with the government to resume operations and kick-start economic activities. Meanwhile, the increasing need for higher technology capabilities to connect businesses, customers, and supply networks is fast-tracking the world into digitalisation. Malaysia must not be left behind,” he said.

All this also means that companies have to up their tech quotient. Naturally, this means data, data and more data at the back end. That translates into a “gold rush” moment for companies operating the non-glamorous IT infrastructure.

It is here that the government is looking to attract data centre companies as well as other infrastructure players to Malaysia.

“The (Malaysian) government is looking to accelerate the nation’s digital economy. The MSC Malaysia status provides eligible ICT-related businesses, both local and foreign, with relevant incentives and support to promote continued growth,” opined Wan Murdani Mohamad, Director, Digital Infrastructure Services, Malaysia Digital Economy Corporation (MDEC).

Strong tech infra and data centre push

Based on the concept of industry clustering and customised infrastructure offerings, MSC Malaysia Cybercities & Cybercentres – being the designated operations sites – are where companies within a similar sector will be placed together to spur rapid growth. This is backed by strong performance standards, high-speed broadband infrastructure, reliable access to clean power and other technological components that are critical to the businesses.

“Power is available at almost any location in Malaysia and in locations like Kulai Iskandar Data Exchange (KIDEX). In fact, upon confirmation of opening an office in these premises, power is available immediately with very little lead time required. Also, 100 percent renewable energy can also be made available in some locations in East Malaysia,” stated Wan Murdani.

Even as cybersecurity measures and server protection need to be adopted by data centre providers in Malaysia, national-level cybersecurity initiatives are coordinated with various related agencies. This mainly includes the National Cybersecurity Agency (NACSA) and Cybersecurity Malaysia (CSM) who, with MDEC, each play a role to facilitate the development of the local cybersecurity services industry and develop best practices to reassure companies in the event of any issues.

Redundancy and resiliency of data centres are also the responsibility of the service providers. “Energy and telecommunication players in Malaysia may be able to assist with deploying redundant routes and secondary supply to data centers at their request,” pointed out Wan Murdani.

Other digital-based concerns are properly addressed as well. In regards to personal data protection in Malaysia, the Personal Data Protection Act (PDPA) is the main governing law that manages personal data privacy and information security. On the connectivity side, fibre is available throughout Malaysia via various telco providers in the country.

“International connectivity is available via many routes, including direct connections to major regional connectivity hubs. More capacity is being invested by the local telcos for the future, who have joined international consortiums to bring new submarine cables into Malaysia,” added Wan Murdani.

As is, MDEC’s measures are already bearing results. Recently, Bridge Data Centres, a subsidiary of Chindata Group, said that it will build a third data centre in Malaysia. Lim Dz Shing, President of Bridge, had said that this expansion is in the context of Malaysia witnessing an accelerated demand for quality and scalable data centre providers, due to digital transformation and cloud adoption across the country.

To further acknowledge and reinforce this rapid growth for the digital economy, recently, during the MyDIGITAL launch, YAB Prime Minister Tan Sri Muhyiddin Yassin revealed how the Malaysian Government provided conditional approvals to Microsoft, Google, Amazon and Telekom Malaysia to build and manage new hyper-scale data centres and cloud services.

Currently, around 3,000 companies are already present in MSC Malaysia. The country’s data centre market is expected to hit around $800 million by 2025, according to Arizton Intelligence.

Venkatesh Ganesh

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