Google to Invest US$2 Billion in Malaysia’s Data Center and Cloud Market

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Google has announced a significant investment in Malaysia, committing US$2 billion to establish its first data center and Google Cloud region in the country. This move marks a notable expansion by Google, part of Alphabet Inc., into Southeast Asia, a region that has been attracting considerable interest from global technology firms.

The Malaysian government has welcomed this investment, highlighting its potential to advance the country’s digital ambitions. The deployment of artificial intelligence (AI) capabilities and other advanced technologies through this investment is expected to elevate local industries into becoming part of the global value chain.

Malaysia’s Minister of Communications and Multimedia expressed optimism that this development would spur economic growth and foster a more competitive technological landscape in the country.

Southeast Asia: A magnet for technology giants

Southeast Asia, with its youthful, tech-savvy population of 670 million, has become a hotbed for technological investments. Tech giants such as Microsoft, Amazon, Nvidia, and Apple have recently intensified their focus on the region, recognizing its potential for growth and innovation.

Google’s decision to situate its new data center and cloud region in Sime Darby Property’s Elmina Business Park in central Selangor state is strategic. This facility will support Google’s core services, including Search, Maps, and Workspace, and facilitate the delivery of AI services. Additionally, the cloud center will cater to the needs of local businesses and public sector organizations, offering advanced cloud services that can drive digital transformation across various sectors.

“Malaysia and Google are partnering to advance our shared work to create a supportive ecosystem for innovation and unlock the potential of digital transformation,” said Ruth Porat, Google’s Chief Financial Officer, in a statement.

Meanwhile, Google also announced its completion of the expansion of its data center and cloud facilities in Singapore, marking a US$5 billion investment in the country’s technical infrastructure. These data centers, employing over 500 people, support services like Google Search and Maps. 

A wave of technology investments in the region

Google’s investment follows a series of similar commitments from other tech giants. Last November, Malaysia’s government and Google announced a collaboration aimed at accelerating domestic innovation.

Following this, Microsoft CEO Satya Nadella revealed plans for cloud services investments worth US$2.2 billion in Malaysia and US$1.7 billion in Indonesia. In another major development, Malaysian conglomerate YTL’s utilities unit partnered with Nvidia to develop AI infrastructure, committing US$4.3 billion.

Amazon has also been actively investing in the region, with announced plans to invest US$9 billion in Singapore, US$5 billion in Thailand, and US$6 billion in Malaysia. These investments highlight the growing significance of Southeast Asia in the global tech landscape.

Malaysia’s data center market: Growth and challenges

The Malaysia data center market is poised for significant growth, with projections indicating a compound annual growth rate (CAGR) of 13.92 percent from 2023 to 2029. This growth trajectory suggests that the market will expand from US$1.81 billion in 2023 to an estimated US$3.97 billion by 2029, according to a report by ResearchAndMarkets.

Currently, Malaysia hosts around 34 operational colocation data centers, with most being developed to Tier III standards. Notable examples include NTT DATA’s Cyberjaya, which is designed and certified according to these standards by the Uptime Institute. However, Malaysia is also one of the most expensive markets globally for developing data centers, with construction costs ranging between US$8.5 million to US$10 million per megawatt, making it the costliest market in the Asia-Pacific (APAC) region after Singapore and Indonesia (Jakarta).

Characteristics of Malaysia’s data center market

Per data from Mordor Intelligence, in 2023, Tier 3 data centers held the majority market share in Malaysia and were projected to be the fastest-growing segment during the forecast period 2017 to 2029.

The Tier 1 and 2 data center segment in Malaysia increased its IT load capacity from 0.59 MW in 2021 to 2.39 MW in 2022 and is expected to reach 3.59 MW by 2029, with a CAGR of 5.99 percent. In contrast, the Tier 3 segment had an IT load capacity of 257.85 MW in 2021 and is forecasted to grow from 457.66 MW in 2022 to 1,379.11 MW by 2029, with a higher CAGR of 17.07 percent. Tier 3 data centers are preferred for their concurrent maintainability, allowing for maintenance without disrupting operations, which is why many telecom operators are focusing on establishing such facilities to prevent operational disturbances.

The development of digital infrastructure, such as data centers, is crucial for enabling 5G applications. Various investors are entering agreements to launch 5G services in Malaysia. For instance, in November 2022, Malaysian telcos Celcom and DiGi merged, forming one of the largest carriers in the country with over 20 million subscribers.

The Tier 4 data center segment is currently stagnant but is expected to see increased opportunities in the future. At present, TelcoHubeXchange and Regal Orion Sdn Bhd are the only companies in Malaysia with Tier 4 certified facilities.

Key players and new entrants

The Malaysian data center industry features several leading colocation operators, such as Bridge Data Centres, NTT DATA, Keppel Data Centres, Vantage Data Centers, VADS, and GDS Services. The market is also seeing the entry of new players, including AirTrunk, Equinix, EdgeConneX, Princeton Digital Group, NEXTDC, and ST Telemedia Global Data Centres, indicating a dynamic and competitive landscape.

Strategic developments and outlook

Kuala Lumpur, the capital city, is witnessing substantial industrial development driven by initiatives like the Kuala Lumpur Smart City Master Plan 2020-2025. This plan aims to foster innovations and sustainable development in the city’s industrial infrastructure, focusing on smart digital infrastructure and a smart economy.

Moreover, a recent Memorandum of Understanding (MoU) between the governments of Malaysia and Singapore aims to jointly develop a Special Economic Zone (SEZ) in Johor. This collaboration is expected to enhance cross-border movement of people and goods, increase renewable energy adoption, and streamline business regulations.

The forthcoming Sedenak Tech Park in Johor, known for its use of renewable energy, low disaster risk, ample land availability, and skilled talent pool, further bolsters the region’s attractiveness for data center developments.


Google’s US$2 billion investment in Malaysia’s data center and cloud market signifies a broader trend of tech giants recognizing Southeast Asia’s potential as a hub for technological innovation and growth.

With strategic initiatives and substantial investments from leading companies, Malaysia is well-positioned to become a key player in the global digital economy, driving technological advancements and economic development in the region.

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