Malaysia must capitalise on the AI boom

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Microsoft chairman and chief executive officer Satya Nadella (left) greeting Prime Minister Datuk Seri Anwar Ibrahim in this recent photo. Microsoft’s investment demonstrates a profound commitment to developing Malaysia as a hub for cloud computing and advanced technologies.

Microsoft chairman and chief executive officer Satya Nadella (left) greeting Prime Minister Datuk Seri Anwar Ibrahim in this recent photo. Microsoft’s investment demonstrates a profound commitment to developing Malaysia as a hub for cloud computing and advanced technologies.

Contributed by JUSTIN HEYES

MICROSOFT’s groundbreaking investment of US$2.2bil over the next four years to bolster Malaysia's digital transformation is the largest in the company's 32-year history in the country. The investment covers several key initiatives aimed at driving economic growth, fostering innovation, and empowering local communities.

I welcome the government’s vision, and its agencies MDEC and MIDA for their work in realising this ambitious project. Recently, sceptics have been flooding social media with negative articles on Malaysia’s data centre boom claiming that it does not contribute anything to the economy in terms of GDP or employment. The announcement on May 2 seems to have effectively silenced them.

The investment includes the development of cloud and Artificial Intelligence (AI) infrastructure in Malaysia, which will serve as a catalyst for the nation's digital advancement. This infrastructure will support the adoption of advanced technologies, including generative AI, and enhance Malaysia's productivity, competitiveness, resilience, and overall economic growth.

This also comes with a commitment to establishing a national AI Centre of Excellence and enhancing the nation's cybersecurity capabilities, providing AI skilling opportunities for an additional 200,000 people as well as helping 2,000 Malaysian developers become AI subject matter experts.

Overall, Microsoft's investment demonstrates a profound commitment to developing Malaysia as a hub for cloud computing and advanced technologies. By expanding digital capacity, providing training, strengthening partnerships, and empowering developers, Microsoft aims to fuel Malaysia's digital transformation and position the country for sustained success in the global digital economy.

The likes of AWS, Google, Facebook, ByteDance and other huge industry players are aware of this potential and will be following Microsoft’s lead. To capitalise on these opportunities, we need to start providing the country with world-class infrastructure.

The ongoing generative AI boom, exemplified by the explosive popularity of ChatGPT and other tools, is the latest addition to a laundry list of new technological strides that have kicked off a rush for new data centres. According to analysts at this year’s Bloomberg Intelligence Summit, models for projecting capacity have grossly underestimated demand.

In Malaysia, the local demand itself is enough to seriously consider increasing infrastructure. Our population is young, digitally savvy, and upwardly mobile. Only about 8% are of retirement age while 23% are aged 14 or younger and given time will add to the overall demand. Meanwhile, 89% of Malaysians are smartphone and Internet users. That is one of the highest rates in South-East Asia (MIDA, 2023).

However, building more facilities to process and store the rising amount of data isn’t as simple as it sounds. DCs require numerous considerations in their construction as they quietly run in the background night and day.

We face the challenge of where to build data centres, and those sites must be scalable to cater for growing demand. What's the solution?

We need to first identify and then develop DC campuses. These will require large land areas [300 acres - 600 acres] with connectivity to the national grid, access to green energy, demonstrate the availability of surplus power to account for surges, ample water supply for cooling to ensure racks continue running at an optimal temperature and, critically, access to dark fibre cables that are the lifeline of a DC in ensuring faster data transmission and reduced latency.

So, where should we build them? DC site selection extends beyond conventional real estate considerations - it must include technology and infrastructure factors. The ideal site must have a combination of essential components, including development-ready land, comprehensive infrastructure, and resilience against natural disasters.

Furthermore, “one size fits all” cannot be applied to the site selection. Facilities must serve specific operational demands -- whether it’s high-performance computing, cloud services, or storing sensitive data -- to ensure compliance with regulatory requirements and optimal performance.

Malaysia’s DC industry has been primarily serviced in Cyberjaya and more recently in Johor. However, the current sites are beginning to reach maximum capacity, with multiple DC clients now competing for limited resources.

Having alternative sites will offer DC clients greater capacity, as well as the availability of redundancy for them to transfer data between sites during downtime.

As Malaysia’s demand for DCs grows, it is crucial to identify sites that provide both economic value and strategic advantages. Malaysia must get this right, not merely focusing on economic returns for developers and land owners but prioritising the operational and technological functionality of DC sites.

If we can catch the wave of new opportunities from the AI boom, we will be able to ride it for years to come and make Malaysia the digital capital of Asean. It will take considerable foresight and planning, but we cannot afford to fail.

Justin


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