Former Klang MP Charles Santiago today questioned how much real value Malaysia is capturing through the spillover effects generated by the influx of data centres into the country.
His remarks followed a statement last week by Malaysian Investment Development Authority (Mida) chairperson Tengku Zafrul Abdul Aziz, who, in addressing critics, stressed that data centre benefits were largely indirect, stemming from the development of the right ecosystem, particularly in relation to artificial intelligence (AI).
Bernama reported Zafrul saying that Mida is focused on ensuring that AI-related investments contribute positively to the broader economy through meaningful spillover effects.
The former minister also said criticisms that data centres create relatively few jobs compared with manufacturing investments fail to account for the broader economic spillovers the industry generates for the country.
In a rebuttal, Charles said that the argument should move beyond investment figures and headline announcements.
“The real questions are simple: Who captures the value? How many long-term jobs are created? What problems are being solved?
“And how much of that value remains in Malaysia?" Charles asked in a statement today.
He pointed out that not all of the value from data centre operations benefits Malaysia.
"Landowners, contractors, and utilities benefit. The highest-value segments, cloud services, AI, software and intellectual property, remain concentrated in the hands of global technology firms. How much value is Malaysia actually capturing?
"We are told data centres create indirect employment through the ecosystems they support. Fair enough. But if we follow the money, land, consultants, contractors, construction, servers, cloud services and electricity, at which stage are large numbers of permanent Malaysian jobs actually created?
"Then comes the AI argument. We are told data centres create spillovers because they enable AI ecosystems.
“But which local sectors today are constrained by a lack of AI computing capacity? Are we solving identified problems, or building infrastructure first and defining the use cases later?" Charles questioned.
Problematic comparison
He also noted that Zafrul's comparison of data centres to manufacturing is problematic, as manufacturing expands supplier networks and workforce demand - while data centres are highly automated.
As such, Charles argued that many indirect jobs come from existing contractors servicing an additional client, not from large-scale new hiring.
"More importantly, data centres need power and water now, not 10 to 15 years from now. During El Niño and drought periods, some states face water stress.
“How will Malaysia secure energy and water for households while supporting growing data centre demand?" Charles asked further.
Renewable energy
He also took Zafrul to task for advocating nuclear power as one of Malaysia's future energy sources, citing neighbouring countries such as Singapore, Vietnam, Thailand, and Indonesia are also exploring or pursuing nuclear-related pathways.
Charles said the countries mentioned are also deploying rooftop solar, floating solar, battery storage, and grid upgrades, as nuclear energy would take a prolonged period to materialise.
"Nuclear energy may take 10 to 15 years to materialise. What's Malaysia's plan for now?" Charles questioned.
He said that the strongest spillover effect may not be AI, but renewable energy.
Charles explained that data centres can create bankable demand for solar, storage and grid upgrades, and this is also where meaningful job creation is most likely to occur.
"If Malaysia misses that opportunity, we may bear the costs while capturing only a fraction of the benefits," he added. - Mkini
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