KUALA LUMPUR (Sept 29): Malaysia’s data centre boom has brought a fresh wave of foreign capital into the country, with global technology giants committing billions of ringgit to expand their digital infrastructure.

Over RM144 billion in data centre and cloud investments have already been approved between 2021 and mid-2025, with major facilities being developed in states including Johor and Selangor.

The country is now ranked among the top five Southeast Asian economies poised to attract more foreign direct investment (FDI), supported by its strengths in manufacturing and digital infrastructure.

The key challenge now is in determining what can Malaysia build on top of these investments. Beyond the physical infrastructure, the government is looking to develop homegrown artificial intelligence (AI) capabilities, create higher-value jobs, nurture local technology companies, and unlock new commercial opportunities.

These were among the key issues that dominated discussions at the MDX Forum 2026, organised by the Malaysia Digital Economy Corporation (MDEC), an agency under the Ministry of Digital.

The forum brought together around 300 representatives from global investment firms, technology providers, state agencies and Malaysian enterprises to explore how Malaysia can build on its growing digital capacity.

In his keynote address, Digital Minister Gobind Singh Deo highlighted that Malaysia has set a clear direction towards becoming an inclusive and sustainable AI Nation by 2030, with its expanding digital infrastructure providing the foundation for that ambition.

“A fully operational data centre employs a few dozen people. But an AI services industry, a cloud operations hub, or a regional digital headquarters employs thousands. And it pulls an entire nation’s economy forward," Gobind said. "That distinction is where the future of our economy will be decided. Our job today is to ensure we don't just host the digital future. We build it, we run it, and we own it."

That shift is anchored by the Malaysia Digital 2030 (MD2030) framework, the government's blueprint to transform Malaysia from a technology user into a producer of digital and AI innovation, with the aim of raising digital economy's contribution to the national gross domestic product to 30% by 2030.

Guided by this framework, MDEC is working to widen participation in the digital economy by empowering micro, small and medium enterprises (MSMEs) and strengthening Malaysia’s AI capabilities.

“For MSMEs, this means making digitalisation and AI more accessible, practical and commercially relevant. For Malaysia's digital companies, it means creating stronger pathways towards commercialisation, investment and international markets,” said Gobind.

He said programmes such as the Malaysia Digital Acceleration Grant for Artificial Intelligence support Malaysia Digital companies in developing and commercialising AI solutions, while MDEC would continue connecting businesses with talent and capital.

The expansion of the digital sector is reflected in the number of companies receiving Malaysia Digital Status (MDS), which allows them access to facilitation, incentives and Malaysia’s broader digital ecosystem — subject to applicable approvals and conditions.

As of the second quarter of 2026, over 7,000 companies held that status, with more than 4,400 actively operating, according to MDEC.

AI, data centre and cloud, and global business services companies accounted for nearly 70% of the 119 companies newly approved for MDS in the second quarter of 2026. These companies are expected to bring in RM133.6 billion worth of investments and create 4,922 jobs over five years.

At the MDX Forum on Monday, 12 additional companies across eight states received the status. The recipients, both Malaysian and foreign-owned, are involved in areas including AI, data centre and cloud, Internet of Things (IoT), fintech, and creative media technology.

In his closing remarks, MDEC chief executive officer Anuar Fariz Fadzil stressed that the priority now must be on ensuring that digital investments translate into wider economic participation, with the benefits extending beyond the traditional concentration of digital activities.

“Our focus is not simply on attracting more investments, but connecting those investments to the wider Malaysian digital ecosystem so that more businesses and communities can participate in the AI economy,” he said.

“Our challenge today is to ensure that the value created by digital investments and infrastructure reaches across Malaysia, with different states contributing their respective strengths to build one national AI economy.

“The next chapter will not be defined simply by how much we invest or use AI. It will be defined by the value Malaysia creates with AI,” he added.

To support this, Anuar pledged that MDEC would work with state governments, industry and investors to strengthen coordination and create clearer pathways for Malaysian companies and talent to participate in the digital economy.

Industry leaders at the forum also discussed how Malaysia can turn its growing AI infrastructure into broader economic opportunities.

Dell Technologies Malaysia managing director TS Koay said the country had made strong progress in establishing the foundations of the AI ecosystem, including power, chip-related capabilities and data centre infrastructure. The focus now, he said, should be on developing applications and models that can address business needs.

“I think the value is really about the applications, the models, and the agentic AI, which is how to make it useful for the enterprise, the business, and more so about the country. So I think the last two parts are really what we need to accelerate and help Malaysia to grow,” he said.

For companies experimenting with AI, Koay suggested that they start with a clear business problem and measurable outcome rather than running multiple proofs of concept (POCs) without a defined purpose.

“POCs are a good start, but how do we help them scale beyond POC? ... We have seen a lot of customers try to do POCs without that clear end in mind — they could go for 10 POCs at the same time. It’s very important that we run workshops to guide them: What is your business problem? What is the measurable impact?” he said.

Meta’s head of public policy Daniel Lim said the benefits of AI should extend beyond large companies, with skills and technology made accessible to smaller businesses and the wider population.

“I think the key in the coming years ahead is how AI technology will be truly accessible, fair, and equitable. I think that’s where the most exciting potential is for Malaysia.”

Lim said Malaysia’s longer-term advantage would depend not only on physical infrastructure, but also on the capabilities built around it, particularly talent, frontier technology and product development.

“What is really sticky is where you have the talent layer, the frontier technology, and the product development built on top of it,” Lim said.

YTL AI Labs CEO Foong Chee Mun pointed out a distribution bottleneck.

“From my vantage point, we have pretty good AI infrastructure and software layers, but the bridge between SMEs and enterprises is the lack of software delivery channels.

“We have a whole bunch of tokens, but tokens are not what delivers intelligence. Software is usually the channel that delivers intelligence to use cases. We need a lot more FDEs (forward deployed engineers) to help SMEs and enterprises utilise these tokens properly within their organisations. That will be a big theme for MDEC and digital initiatives to help push forward,” Foong said.

He also dismissed claims that Malaysia lacks technical talent, but rather good opportunities for them to work on high-level technology.

“I don't think we lack talent. The truth is that we lack a supply of quality opportunities. Why do I say so? Do you think Malaysia has the team to run a world-standard cloud? It's extremely tough to do but the truth is we do! When we first set up our GB200 cloud, we were the first company outside North America to host DGX Cloud for Nvidia. Thus, they helped train our workforce to run the DGX Cloud at international reliability and resiliency.

“Subsequently, our team got certified as an exemplar cloud by Nvidia, and we are the only Asian team that has that kind of certification. The reason why they have it is less about COEs, training, or education.. it's simply because we happened to have the quality opportunity to bring the team up to those standards,” Foong added.

During a fireside chat, AI technologist and founder of Sosa Research Jason Sosa warned legacy firms against simply adding AI onto existing codebases. In order to survive the rapidly evolving landscape, businesses need to reinvent themselves from the ground up, he said.

“We often get caught up in the ceremony of our processes and that's what we really get stuck in, because it's based on how we did things in 2005 or 2015. But it's not those years anymore,” Sosa pointed out.

A common trap that businesses fall into is using AI just to optimise business or technological processes, instead of addressing actual customer needs, he noted. AI-first competitors, by contrast, can bypass legacy constraints entirely and build processes from scratch by reimagining the entire customer journey. This is where smaller businesses have an edge because they have the agility and nimbleness to start fresh.

To compete, businesses must learn to let go of the past, he said. “You [have] sunk costs in building this tool over 10 years, putting in a lot of money and engineers. It’s your baby, but you have to let it go and be willing to disrupt yourself, because there is somebody in a garage somewhere that will be building something to disrupt you.”

However, he noted that established companies are not entirely disadvantaged. They have partnerships and business relationships that they can leverage, which newcomers do not have and cannot easily replicate.

“So, rather than basing [solutions] on how things were six months ago, look to where things are going. Aim for that as your North Star, because if you are building for today, you are already behind,” he said.

For Malaysia to meet its goal of becoming an AI Nation by 2030, the connectivity and benefits of AI need to be felt nationwide.

Penang, the country’s primary hub for semiconductor chips, vital for AI, is taking steps to extend the state’s reach beyond just semiconductors.

One such initiative is the One-Person Company (OPC) initiative, a state government project launched by Digital Penang in July 2026 to help individuals in building and operating digital startups as solo founders using AI systems.

“We launched the OPC initiative a couple of months back. We went through all the verticals; we decided to start on the digital creatives because of the pervasiveness of the AI-generated content business and the tools available. [The initiative] was oversubscribed twice,” said Digital Penang CEO Ng Kwang Ming.

Pahang, where agriculture is a key economic pillar, is deploying Edge AI and precision farming to optimise crop yields and reduce pest control costs. The move also aims to retain local talent by creating high-income tech roles outside major urban areas, said Airulamri Amran, CEO of Perbadanan Kemajuan Negeri Pahang.

In Perak, the state is in the process of allowing SMEs to test AI solutions and develop skills to capitalise on the technology, said Digital Perak business development director Effendi Abdul Talib.

Throughout the forum, affordable access to advanced technologies was highlighted as vital to developing a comprehensive AI ecosystem, a challenge addressed by MDEC's vice-president of strategy and innovation Dr Muhammad Hafiz Wan Rosli during his presentation.

“[Malaysia] has about RM385 billion in data centre-related investments. We have the infrastructure; that part is done or at least underway. But only 38% of Malaysian enterprises have actually adopted AI,” Muhammad Hafiz noted.

The primary barrier is not infrastructure capacity, but affordable access to compute for smaller businesses, startups, students, and researchers, he said.

To bridge this gap, Malaysia is introducing the National AI Compute Exchange (NACX). The platform is seen as a crucial piece in completing Malaysia's AI ecosystem, which currently faces an adoption bottleneck despite heavy infrastructure investments.

NACX will serve as a centralised marketplace that aggregates demand, connects users with multiple compute providers, and negotiates competitive, scaled prices to boost compute accessibility among innovators.

Scheduled to launch in the first quarter of 2027, NACX is expected to lower the entry barriers for local businesses and researchers to tap into local computing capacity.