KUALA LUMPUR (Nov 11): Malaysia should shift from merely hosting data centres to becoming a global leader in the design, manufacturing, and export of data centre infrastructure, said Minister of Economy Rafizi Ramli.

To achieve this, Rafizi said specific policies will be incorporated in the upcoming 13th Malaysia Plan (13MP) to make this vision a reality, to position Malaysia as a central hub for artificial intelligence-driven (AI) data infrastructure on the world stage.

"What we want to avoid is Malaysia continuing to attract data centres, but are not able to get into the data centre value chain and supply chain. We have been looking at how to work on a few catalytic interventions to create the ecosystem so that by the end of this decade, Malaysia can also participate in the whole data centre value chain," he told reporters following an industry engagement session for the 13MP.

"First [is for us] to benefit from existing and future data centres in the country, but more importantly for us to begin exporting our own data centres around the world," Rafizi added.

While the country may not yet be at the forefront of creating cutting-edge AI algorithms or large language models (LLMs) now, Malaysia already has a head start in attracting global players to build data centres due to its strategic location, robust energy infrastructure, and business-friendly policies, Rafizi said during the session.

"Malaysia has an ecosystem that can house an economy that is driven by AI. It begins with the data centre. Given the head start that we have, we are among the first few countries in the world that begin the growth of data centres. We should not stop by just housing data centres," he said.

Rafizi posited that Malaysia can evolve into a global exporter of data centres, offering various expertise from the design of data centre systems to the manufacture of specialised chips and the components that power them.

"Data centres will go through various cycles. They have to upgrade their chips. Newer chips will come in. And with every new data centre, that means a new data centre system has to be designed.

"So, Malaysia fits this profile of a country that can offer a complete AI data centre-based ecosystem, all the way across the value chain, from housing the data centres to designing data centres, to designing the chips, to manufacturing the chips, and all the ancillary products that come with the data centre.

"In the future, one would imagine that as you have more countries having to build their own data centres, Malaysia would be one of the main players whereby people have to come here to get the data centres from us," he said.

Between 2021 and 2023, Malaysia approved a total of RM114.7 billion in investments related to data centres, according to Knight Frank Malaysia's 1H2024 Real Estate Highlights report, as the country aims to become a data centre hub in the region.

Among the latest of such investments was Microsoft Corp’s investment of US$2.2 billion (RM10.4 billion) in cloud and AI infrastructure in Malaysia.

However, concerns have been raised that data centre investments are being driven solely by property plays, limiting their impact to the broader economy.