Market Trends of Malaysia Data Center Construction Industry
IT and Telcom Segment is Expected to Gain Significant Market Share
- Malaysia is going through an extended negotiation phase in the telecom sector. The two sides here are the government and the leading Malaysian telecom operators: Maxis Berhad, Celcom Axiata Berhad, Digi Telecommunications, and U Mobile. These four operators have recently requested a review of the government's 5G access offer as they want at least a 51% stake in the government-owned 5G agency DNB.
- The development of digital infrastructures, such as data centers, is central to enabling 5G applications. With this, various investors are signing an agreement for the 5G launch. For instance, in November 2022, Malaysian telcos Celcom and DiGi approved the merger agreement. Once the two companies are fully merged, the new entity will be one of the largest carriers in Malaysia, with over 20 million subscribers.
- In context to data center investment for telecom, in the recent past, TM ONE, a business unit of state-controlled telecommunications company Telekom Malaysia, invested up to MYR 300 million (USD 70.94 million) for the development of a data center in Johor Bahru to cater to a growing demand from foreign entities. The facility is currently constructed as a core data center. With the growing scope of 5G in Malaysia, the data flow will increase exponentially, catering to the need for colocation.
- Moreover, according to the Malaysian Communications and Multimedia Commission, mobile broadband subscriptions have risen. In the first quarter of 2022, Selangor amounted to over eight million subscriptions, making it the state with the highest number of mobile broadband subscriptions. The growing subscriptions are expected to increase dependency on data centers.
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Rising Partnerhsips, Growing Industry 4.0 Technologies Are Factors To Boost The Data Centers In Malaysia
- The Cyberjaya-Kuala Lumpur hotspot is a significant hotspot with a projected growth rate of 4.21%. These regions are mainly being considered under the Multimedia Super Corridor, which is now being revamped as Malaysia Digital, the new national strategic initiative to encourage and attract companies, talents, and investments to Malaysia's digital economy.
- Cyberjaya is a major city, with most of its data centers offering colocation facility solutions. The city has vast amounts of land, making it an ideal location for industry players. It is expected to reduce its carbon emissions by more than 21% by 2022. Cyberview partnered with DiGi Telecommunications Sdn Bhd and opened the 5G OpenLab at RekaScape in Cyberjaya to improve internet speed. The 5G OpenLab allowed innovators and academics to trial test cases and prototypes that will benefit from 5G's super high-speed, massive bandwidth, and ultra-low latency connectivity in a live and controlled environment.
- Kuala Lumpur (KL) holds the second spot in terms of market share, and its growth transformation strategy involves pivoting toward next-generation digital industries. Prominent MNCs, ranging from insurance services to advanced technology innovators, have relocated their Asia-Pacific 'high-value, high-impact central operating models to KL, leveraging Industry 4.0 technologies and the information and communications technology (ICT) talent pool. The market is expected to grow further in the Cyberjaya-Kuala Lumpur hotspot.
