Malaysia is witnessing a boom in data center construction, including the latest partnership announced in January 2022 between Chinese technology company Huawei and Malaysian real estate developer Hatten Land. Bridge Data Centres announced its plans to build a third data center in Malaysia by the end of 2022. Microsoft announced plans to launch its first data center region in Malaysia in 2021.

Malaysia's market for data centers and hosting services is expected to grow at a compound annual growth rate of 5% from 2020 to 2025 as more and more businesses adopt cloud-based services and step up their digital transformation efforts, according to GlobalData, a data and analytics company.

Rapid digitilzation

Saurabh Daga, Technology Analyst at GlobalData, comments: “The rapid pace of digitalization in the country with several enterprises accelerating the adoption of digital business models like e-commerce, net banking, OTT entertainment platforms and remote working/Work-from-Home (WFH) strategies will drive enterprise spending on data center services to reach $430m by 2025.”

Remote working

In the next few years, many Malaysian companies are predicted to adopt a hybrid approach or go completely remote. United Overseas Bank Malaysia, for instance, gives its employees the option of working remotely two days a week even after the COVID-19 restrictions have been lifted. Because of a shift to remote/hybrid working models, data center services are in high demand, as they provide a central point of access to data, collaborative tools like Zoom, and other business-critical applications.

MyDIGITAL policy

Daga adds: “Favorable government policies, codified in the digital blueprint known as MyDIGITAL, which outlines various strategies and initiatives for strengthening digital adoption, are driving digital transformation and making Malaysia a regional hub for digital content. Against this backdrop, cybersecurity will also be crucial factor for growth of data center & hosting services market in the country”.

Future5 Strategy

A key initiative is the Malaysia Digital Economy Corporation's Digital Investments Future5 Strategy (2021-2025), which focuses on five key technologies: artificial intelligence, cloud computing, cybersecurity, data centers, and digital content tools.

Growth by segment

In terms of market share, the application hosting and data center services segment is expected to grow faster as enterprises choose to outsource the management of their applications and data to a managed hosting service provider over a colocation facility, mainly because colocation facilities are more expensive.

Photo credit: ​​Esmonde Yong