Theo Tech-KnotenConstruction work is currently underway at the Elmina Business Park in the Malaysian state of Selangor. Investment of $2 billion in data centers and cloud infrastructure will help meet growing demand for Google Cloud, AI innovations and other digital products and services in Malaysia.
Google says this investment is estimated to contribute more than $3.2 billion to GDP, have a positive impact on the economy and is expected to create 26,500 jobs by 2030.
Fiscal incentives and technical financial assistance
One of the key factors helping Malaysia attract investment in data centers is tax incentives and financial support policies.
Malaysia exempts companies investing in high-tech sectors, including data centers, from corporate tax for up to 10 years under the provisions of the Income Tax Act 10.
In addition, investors can benefit from the Investment Tax Allowance (ITA) program, which allows tax deductions of up to 60% of the total amount of infrastructure investments.
Malaysia has better data center infrastructure than Indonesia and Thailand. Photo: ACCA
In addition, companies are also exempt from import tax on the equipment and software needed for data centers.
This is an important advantage because the cost of data center equipment, especially servers, is very high and often has to be imported from foreign suppliers.
This allows investors to save big on costs when investing in Malaysia compared to other markets.
Malaysia also offers financial assistance programs through agencies such as the Malaysian Investment Development Authority (MIDA) and the Malaysian Investment Development Authority (MIDA). Economy Malaysia Digital (MDEC).
These agencies encourage investment by providing low-interest loans and financial support to high-tech companies.
The Malaysia Digital Economy Fund (MDEF) is one of the typical programs that helps companies provide additional capital for data center infrastructure development.
For example, the Smart Automation Grant is a program that provides funding of up to MYR 1 million (approximately USD 250,000) to companies investing in automation and digital technology.
These measures create favorable investment conditions for companies without great financial pressure and also encourage small and medium-sized companies to get involved in this area.
Right corridor
Another important factor that makes Malaysia an attractive investment location is clear and stable data protection regulations. Malaysia’s Personal Data Protection Act 2010 (PDPA) strictly regulates data protection and management of personal data.
This creates a secure environment for international companies, especially large technology companies such as Google or Amazon, where the security of user data is a crucial factor.
Malaysia’s data protection regulations are in line with the policies of the tech giants. Photo: MIDA
The PDPA requires organizations to adhere to strict principles when collecting, processing and storing personal data.
These regulations not only help protect consumer rights, but also give foreign companies confidence in protecting their data.
PDPA also requires companies to ensure data security by using technical and physical measures to prevent unauthorized access, loss or destruction of data.
In addition to the PDPA, Malaysia also participates in numerous international alliances and commitments on cybersecurity and data protection, including the Asia-Thai Economic Cooperation Forum Binh Duong (APEC) and cooperation programs of the Association of Southeast Asian Nations (ASEAN).
This creates a strong international regulatory framework that ensures data centers in Malaysia meet the highest security standards.
In addition, Malaysia has introduced policies to promote the development of cloud services and green data center services, and encouraged companies to invest in renewable energy solutions to meet international environmental and sustainability standards.
This meets the needs of large companies such as Google, which have committed to using 100% renewable energy for their data centers.
Human resources and digital technology infrastructure
According to 2023 data from the Malaysian Ministry of Statistics, the country has a high proportion of the population of working age (from 15 to 64 years old), accounting for about 69.6% of the total population, while the age (over 64 years old) is only 7 .4%.
Although the birth rate is falling, about 23% of the country’s population is still young (0-14 years old).
This structure shows that Malaysia is in the golden phase of the workforce and has a young, dynamic population structure that easily absorbs new technologies.
One of the Malaysian government’s key priorities is investing in the development of high-quality human resources in the field of digital technology.
Government has implemented many training programs and education aims to improve the digital skills of workers through initiatives such as the Malaysia Digital Economy (MDEC) and the Human Resource Development Fund (HRDF).
These programs not only focus on improving workers’ digital skills, but also support small and medium-sized enterprises (SMEs) in digital transformation.
Malaysia has invested heavily in science, technology, engineering and mathematics (STEM) education, offering digital and information technology training programs in the university and college system.
This helps provide human resources with knowledge and skills for technology development and digitalization.
Additionally, the Malaysian government’s MyDigital program aims to make digital skills a core element of national education and training.
The aim of the program is for 50% of the workforce to have basic digital skills and 30% of university graduates to work in the technology sector by 2025.
Thanks to a preferential tax policy, a secure legal infrastructure, and the development of human resources and digital infrastructure, Malaysia has successfully created an attractive environment for entering the private sector.
Google’s investment not only strengthens Malaysia’s position in information technology and data centers, but also promises to provide motivation for the sustainable development of this country’s digital economy.
(CNBC, economics, Microsoft News)
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