Data centre revenue forecast to surpass RM1bil this year

Wan Murdani Mohamad, Director of Digital Enablement Division MdeC

KUALA LUMPUR: Malaysia Digital Economy Corp Sdn Bhd (MDEC) is optimistic that revenue generated by the data centre service industry in the country would exceed RM1bil this year.

Director of digital enablement Wan Murdani Wan Mohamad (pic) said MDEC also planned a 10%-15% annual growth for the data service sector, while turning it into a RM2bil revenue generating industry by 2020, with the provision of more incentives to attract foreign players

The industry is currently valued at around RM900mil, which is relatively low, when compared to leading players like Singapore and Hong Kong.

He told journalists this after a briefing on Malaysia’s data centre industry in Kuala Lumpur on Thursday.

Wan Murdani said to boost the industry further, MDEC was looking at two initiatives, namely inviting more foreign companies to Malaysia to subscribe to services provided by the local operators, as well as through foreign direct investments (FDIs).

“Besides providing incentives, MDEC also has a few programmes to upskill the capability of local players, while providing market access to higher valued customers.

“We have seen the traction in our various programmes, with positive growth in the number of foreign companies subscribing to local data centres services,” he added.

He said revenue from international clients subscribing to Malaysia’s data centre had increased from 5% a few years back to almost 20% now.

Malaysia, currently has more than 20 data centres, with more than 90% owned by local players.

“We do not have a big data centre yet in Malaysia, apart from those owned by Nippon Telegraph and Telephone Corp, and are looking at more than three international companies in the future.

“We are also looking at about US$300mil (RM1.3bil) worth of investments from foreigners in the short term and hope it would increase to RM5bil in a few years, when they set up a proper data centres here,” said Wan Murdani.

Meanwhile, MDEC head (data cloud, digital enablement) Tan Tze Meng in his presentation said among the factors influencing data centre and cloud investment are connectivity, land, energy, ease of doing business, and water.

He said in Malaysia, a key challenge to increasing data centre investments is connectivity and high cost of bandwidth, which MDEC is working closely with the Malaysian Communications and Multimedia Commission to tackle.

“Malaysian data centres spend from 20%-25% of their operational costs on bandwidth, compared to less than 5% in Singapore, Hong Kong, Japan, the United Kingdom and the US,” he added.

Despite the impediment, Tan said the industry is a lucrative business to grow in Malaysia.

It had various impact on the nation’s economy, either direct or indirectly.

Among these are creating high valued jobs, increase government tax revenue, create maintenance revenue and jobs for equipment vendors, involved construction related jobs and is a large consumer of energy. - Bernama
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