The Malaysia Digital Economy Corp (MDEC) is optimistic that revenue generated by the data center service industry in the Southeast Asia nation will exceed one billion ringgit (US$224M) this year, up from 900 million ringgit currently, as reported by Malaysia broadsheet The Star.

At a briefing on the country’s data center industry yesterday, the director of digital enablement Wan Murdani Wan Mohamad said MDEC also planned for an annual growth of between 10 percent and 15 percent for the data service sector.

Cyberjaya Malaysia
Cyberjaya Malaysia – cyberjayamalaysia.com.my

Wooing foreign players

According to Wan Murdani, the aim is to transform the sector into a RM2 billion industry by 2020 with the introduction of more incentives to attract foreign players. The initiatives entail inviting more foreign companies to Malaysia to subscribe to services offered by local operators, and through foreign direct investments.

“We are also looking at about US$300M (RM1.3B) worth of investments from foreigners in the short term and hope it would increase to RM5B in a few years, when they set up a proper data center here,” he said.

A presentation made by MDEC head (data cloud, digital enablement) Tan Tze Meng pointed to connectivity and the high cost of bandwidth as challenges to increasing data center investments, which he says MDEC is working closely with the Malaysian Communications and Multimedia Commission to tackle.

Malaysian data centers spend from 20 to 25 percent of their operational cost on bandwidth, said Tan, according to IDC figures. This compares with less than 5 percent at locations such as Singapore, Hong Kong, the United Kingdom and the United States.

As we reported previously, this situation led to the creation of the Inter-DC Network initiative in 2015, which is a high-speed dark fiber backbone to connect participating data centers in Cyberjaya at 10Gbps.