Malaysia’s Digital Economy To Contribute 25.5% To GDP Come 2025: Zafrul

Malaysia has increasingly captured the global data centre business in Southeast Asia, due to a combination of factors and natural advantages – proactive investor facilitation, cost-efficiency, plentiful landbank, and seamless connectivity to Asia and beyond through 22 submarine cable networks and 14 landing stations.

“In a world where data reigns as the new oil, the security and profitability of the digital economy rest on robust data centres – the pulsating hubs propelling governments, businesses, and individuals into a global sphere of digitised connections, collaboration, and innovation,” said Investment, Trade and Industry (Miti) Minister Tengku Datuk Seri Zafrul Abdul Aziz during the launch of the GDS NTP Data Centre Campus.

According to him, the digital economy stands as one of Malaysia’s foremost economic cornerstones, contributing a substantial 23.2% to the nation’s GDP, or RM348 billion in the year 2021.

This contribution is expected to reach 25.5% by the year 2025, or more than RM382 billion. As for the data centre market share in Malaysia, it has an expected average annual growth rate of 16%, or USD2.08 billion (equivalent to RM9.36 billion) from 2021 to 2026.

In the pursuit to achieve these goals, the government, through MITI and its agencies, has meticulously crafted the New Industrial Master Plan 2030 (NIMP2030).

The NIMP2030 will be launched by the Prime Minister by the end of this month to catalyse Malaysia’s economic complexity and high-impact industrial growth through 2030.

Zafrul said the NIMP2030 employs a mission-based approach to strategically promote five ‘economically complex’ industries, which are aerospace, chemicals/ petrochemicals, digital economy, E&E and pharmaceuticals.

All these will open doors to substantial development opportunities and become the primary cornerstones for the nation’s economic complexity and sustainable GDP growth.

“Through the masterplan’s ambitious industrial reforms, we will generate higher-value exports that will create more high-tech and high-paying jobs. All these will substantially raise the median salary, enhancing the lives and consumption power of Malaysians, which will, in turn, energise the business landscape,” he said.

NIMP2030 aims to propel Malaysia, among others, towards being a digitally vibrant nation, with high-income growth, and establishing Malaysia’s position as a global leader in the region’s digital economy by increasing exports derived from digital content and services.

Digital transformation and connectivity will also pave the way for Malaysian companies, especially the MSMEs to tap into more global opportunities. Empowered by enablers such as digital platforms and data centres, companies can build and expand their revenue streams and channels to thrive locally, regionally, and even globally.

“A notable enabler for this is the Digital Investment Office (DIO), a strategic collaboration between MIDA and MDEC. The DIO has been busy positioning Malaysia as the ‘Digital Heart of ASEAN’. Its promotion and facilitation efforts had secured RM80.4 billion of approved investments in digitalization as at end- 2022, exceeding the RM70 billion investment target by 2025,” said Zafrul.

Global data centres must also focus on reducing their carbon footprint. As such, the integration and availability of renewable energy are becoming key considerations for investments in this sphere.

“In sync with one of the NIMP’s missions, which is to push for net zero by 2050, Malaysia is actively pushing for a new power generation strategy. We aim to achieve 31% renewable energy in our installed capacity by 2025, with a firm goal of reaching 40% by 2035,” he said.

Integral to this vision is the government’s commitment to Environmental, Social, and Governance (ESG) practices. Zafrul announced that MITI will introduce the National Industry ESG framework, or i-ESG, for the manufacturing sector by September this year.

A holistic guide, the i-ESG comprises standards, financial support, incentives, capacity building, as well as market mechanisms. It serves as a strategic guide to Malaysia’s sustainable development goals within the broader context of NIMP 2030.

“Working in harmony with the i-ESG is our National Energy Transition Roadmap (NETR). This roadmap stands as a robust declaration of our resolve to decrease greenhouse gas emissions by 45% by 2030 from today’s 33%,” he said.

A central pillar in the government’s strategy for data centres is the recently launched Green Lane initiative, spearheaded by TNB. Taking centre stage in fortifying supply processes, this initiative mirrors Malaysia’s commitment to meeting the increasing demands of the data centre industry and fostering its growth.

This transformative initiative is set to redefine data centre connectivity, launching it into a new era of speed and efficiency. This initiative’s crowning feature is its ability to connect data centres three times faster than before, reducing what was once a 48-month process to just 12 months.

This transformative approach is further supported by the energy-efficient technologies integrated into data centre operations. Innovations such as liquid cooling with advanced airflow management and the utilisation of renewable energy sources will definitely significantly reduce environmental impact.

“For instance, by optimising cooling systems with certain technologies, data centres can achieve an impressive 94% reduction in cooling power consumption. This not only leverages sustainable solutions but also enables data centres to substantially mitigate their carbon footprint,” said Zafrul.

Through such cutting-edge measures, MITI is cultivating a more environmentally conscious digital landscape that strongly reflects their commitment to a sustainable future.

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