1. Company insight > Data centres
Chief Executive Officer | www.the-chiefexecutive.com 45
I
n 2010, the Malaysian Government introduced an
Economic Transformation Programme that it hoped
would bring the country up to high-income status.
“We have no time to lose,” Idris Jala, the Malaysian
politician, said at the time. “We need a complete, radical
economic transformation.”
It was bold statement, an attempt to move away from ‘the
old engines of growth’ that Malaysia and so many other
South-East Asian countries have become known for.
“The Malaysian Government is aware it needs to move into
the digital knowledge economy,” says Derek Webster, a
UK-based consultant on data centre strategy. “It is aiming to
and succeeding in positioning itself as a high-tech hub, adding
the value and skills for sustainable growth in the future.”
Ripe for growth
One sector that fulfils many of the qualities the Malaysian
Government is looking for is that of data centres. It’s a high-
growth industry – many of the most visited websites in the
world, such as Facebook, Google and Yahoo, use cloud-based
models for the storage and processing of data – that fits
well with the country’s geographical location. It was no
surprise, then, that the industry was included in one of the
12 different designated National Key Economic Areas
identified by the government in 2010.
“It’s a strong investment proposition,” Webster says.
“The data centres of the dot-com boom are coming to the
end of their life, and we are approaching a refresh cycle for
facilities. The sector also expands on the back of growth in
internet use, broadband penetration and internet speed.
“As that happens, there is a big impact on gross domestic
product; for every 10.0% increase in broadband penetration,
there is a measurable 0.9–1.5% increase in gross domestic
product,” he points out.
“These countries understand that this is a very economical
and quick way to increase wealth within your nation. It’s not
going to disappear; it’s just going to keep on growing.”
Recipe for success
So what makes Malaysia such an ideal place for inward
investors looking to put money into the data centre sector?
“There are a lot of factors,” Webster says. “As a hub location,
Malaysia is well positioned for market reach to potential
growth opportunities in Vietnam, Thailand and Myanmar
to the north, and to other large growth nations, such as
Indonesia and the Philippines. There’s available powered
land and lower operational costs.
“There’s the fact that if you build there, you are dealing
with a stable government for the region. You have skilled
staff – around 5,000 high-tech companies have already
invested in Malaysia as a foreign direct investment location,
and it has basic infrastructure in place.
“It does need to spend a bit more on fibre broadband,”
he adds, “but if you were looking to the future, you may
get a better return on investment to market risk ration in
Malaysia than other nation in the region.
Right on message
There are also factors of risk to consider. In South-East
Asia, there is the potentially disruptive hurricane season to
contend with, as well as other geological problems such as
earthquakes and volcanoes – but Malaysia doesn’t have that.
For the region, it is geologically incredibly stable.
But perhaps the most important point is just how much
the country’s government wants this to take off.
“It’s hard to find anyone else in the region that has such a
bold message,” Webster says. “They have openly stated that
they want the sector here and are doing everything possible
to help people set up shop.
“They are making it easy to do business, and are offering
a huge amount of investment and resources to help make
that investment work.”
Malaysia takes centre
stage for data operations
With internet use showing no signs of slowing down, the data centre sector
is attracting considerable attention from investors. But where is the best bet to
see a return on your investment? Derek Webster, a UK-based consultant on data
centre strategy, pinpoints Malaysia as having the potential to be the next hotspot.
It’s hard to find anyone else
in the region that has such a bold
message. They have openly stated
that they want the sector here and
are doing everything possible to
help people set up shop.
Further information
Multimedia Development Corporation (MDeC)
www.mdec.my