BMI: AI-grade data centres to support sustainable digital economy in Malaysia
30 Jul 2024
BMI, a Fitch Solutions company, said it sees artificial intelligence (AI)-grade data centres supporting a sustainable digital economy in Malaysia.
In a report last Friday (July 26), the firm said that Telekom Malaysia Bhd (KL:TM) and Nxera — the Digital InfraCo unit of SingTel — have begun constructing a sustainable, AI-grade data centre in Johor.
It said that the aim is to accelerate the digitalisation of the economy, positioning Malaysia as a leading digital hub in the region.
“This development underscores our view that Southeast Asian markets, to varying degrees, are becoming increasingly attractive for investments in digital infrastructure, furthering countries’ specific digital transformation goals,” it said.
BMI said its projections for total market supply reveal that while Malaysia’s current live capacity slightly outperforms BMI’s sample average, its planned capacity significantly surpasses this benchmark at 1.1 gigawatt (GW).
The firm explained that the new 64-megawatt AI data centre campus will add to this figure.
“Discounting this latest project, Malaysia’s planned capacity stands at 2.8GW, whereas most other markets exhibit below-average performance.
“AI adoption will, however, be contingent on the ability for AI-powered devices to connect to the internet.
“Although Malaysia is making good progress with regards to fixed high-speed broadband connectivity, it is in the 5G arena that digital readiness will be assessed.
However, BMI said Malaysia demonstrates a relatively low 5G adoption rate compared to its Southeast Asian counterparts.
It said as of 2023, the 5G penetration rate was estimated at 24.12% of the total mobile base; this will increase to 40.82% by the end of 2024 and will eventually reach approximately 86% by the end of 2033.
“This growth trajectory is modest compared to regional peers such as Singapore, which is forecasted to achieve a penetration rate of 141% by 2033, up from 52% in 2024, and Thailand, expected to rise from 45% to 121% within the same period,” it said.
BMI said that coupled with a wave of global tech firms (most notably Google, AWS and Microsoft) presenting a vested interest into Southeast Asian markets, Malaysia’s economy is set to achieve its national ambitions through initiatives such as the Digital Economy BluePrint (MyDigital) and National Digital Network Plan (Jendela).
The firm said this momentum is bolstered by institutional investments from firms such as KKR, which owns a 20% stake in SingTel’s data centre unit and has previously invested US$2.21 billion (RM10.25 billion) in ST Telemedia Global Data Centres.
“Financial backing from alternative investment management firms provides the necessary support to sustain modern digital infrastructure deployments, most notably hyperscale data centres.
“It is worth noting that these investments are targeted with a risk-based approach, where data centre investments are aimed towards infrastructure with tangible value and those with contracted revenue profiles, which are more certain in nature,” it said.
Source: The Edge Malaysia
