‘Non-aligned’ sanctuary Malaysia reels in Chinese data centres despite geopolitical risks

Chinese IT service and data centre operator GDS launched its first regional data centre last August in Johor.

Proximity to Singapore and readily available open, cheap land is Malaysia’s winning ticket, experts say, particularly its Johor state which borders the vastly more expensive city state where space is at a premium.

Malaysia’s Economy Minister Rafizi Ramli says his country is courting potential Chinese investors interested in entering the Southeast Asian market.

Malaysia is already a key player in the global semiconductor industry, supplying 13 per cent of total demand in the assembly, packaging and testing sector, according to government data.

Now it is positioning itself as a “non-aligned” sanctuary to do business as geopolitics shapes supply-chain decisions.

This is largely driven by government initiatives such as free zones to meet industrial requirements, as well as the country’s New Industrial Master Plan 2030, which shifts the country’s economic focus towards the digital economy and drives its technology sector up the value chain.

Singapore-based Hinrich Foundation, however, cautioned that China’s global digital expansion introduces risk, amid escalating US-China geopolitical tension, with China framing its data challenges as national security challenges.

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In a report on China’s “quest for asymmetric dominance” in data centres published on June 25, the foundation said any restrictions on China’s digital activity going forward by the United States were likely to be treated as threats to China’s security by Beijing.

“In any such flare-up, commercial actors are likely to be caught in the crossfire,” the report said. “So are