PSM: Does Malaysia’s data centre boom serve the people?

Malaysia is experiencing an unprecedented Artificial Intelligence (AI) data centre boom, with AI data centres having overtaken manufacturing as the major destination for investment in the country.

Data centre and cloud computing projects, totalling RM95.8 billion (A$33.44 billion), accounted for almost 44% of Malaysia’s approved investments in the first half of last year. Since 2021, approved data centre investments have totalled RM385.7 billion (A$134.62 billion).

However, if the government wants Malaysians to celebrate this investment boom, it should publicly release the full balance sheet on jobs, economic development and environmental impacts, Socialist Party of Malaysia (PSM) deputy secretary-general Gandipan Nantha Gopalan, told Green Left’s Peter Boyle.

What are these data centres being used for and whose interests do they serve?

Data centres are the physical infrastructure behind much of the digital economy. They store and process data, run cloud services and increasingly provide the computing power needed for AI training and inference. The important questions that everyone should ask are who owns it, who controls it and who captures the economic value generated from it.

Malaysia has attracted major global operators and investors including AWS, Microsoft, Google, Bridge Data Centres, DayOne, AirTrunk and Vantage Data Centres. It is time, as a global south country, that we distinguish between investment coming into Malaysia and economic ownership remaining in Malaysia.

Our central bank, Bank Negara Malaysia (BNM), has already warned that Malaysia remains dependent on imported specialised equipment, which limits local value creation and technology transfer. It also notes that foreign-owned firms can repatriate profits.

BNM’s own research shows that data centres typically create fewer jobs than manufacturing, because of automation and remote operations.

From my perspective, data and computing are becoming increasingly important means of production. The question is whether Malaysian workers and Malaysian society gain ownership and productive capacity, or whether Malaysia mainly provides land, electricity, water and infrastructure for multinational capital to accumulate elsewhere.

What are Malaysians actually getting for providing the land, electricity, water, infrastructure and incentives that make these investments possible?

How much are we subsidising these companies through tax incentives, discounted utilities, land and infrastructure? How much corporate tax and other revenue are data centre operators actually returning to Malaysia? What is the government’s net fiscal gain after all incentives and public infrastructure costs are counted?

And how many permanent jobs are being created? How much technology is being transferred to Malaysian companies? How much of the equipment and services are being sourced locally? How much of the profits will remain in Malaysia?

These are questions the government urgently needs to answer.