“SoftBank Also Bets USD 50 Billion”: Global AI Capital Flows into Malaysia as Cost Competitiveness and Government Support Accelerate Investment

SoftBank pursues USD 50 billion in new AI investment in Malaysia
Microsoft, Oracle, AWS and Google also expand infrastructure in Malaysia
Cost savings and easy access to talent highlight Malaysia’s investment appeal

Investment from global technology companies is pouring into Malaysia. Factors lowering barriers to entry for foreign companies include electricity costs below those in neighboring Singapore, an abundant English-speaking workforce, and favorable conditions for securing large sites. The Malaysian government is also stepping up efforts to attract global investment in artificial intelligence (AI) and data centers by offering corporate tax reductions and tax incentives for skilled professionals, particularly in special economic zones.

SoftBank Turns Its Attention to Malaysia

According to Bloomberg on the 26th local time, Malaysian Prime Minister Anwar Ibrahim said at an event in Malacca on the 24th that he had discussed a major investment plan with SoftBank Chairman Masayoshi Son via video conference. “Chairman Son said he had selected Kuching in Sarawak and areas of Peninsular Malaysia as investment destinations,” Anwar said. “The investment will total USD 50 billion (approximately USD 51.0 billion), making it one of the largest investments in the region.” He added that the investment would focus on “AI, new technologies and data centers,” emphasizing that it would “provide better jobs, particularly for younger generations.” SoftBank, however, has not issued an official statement on the specific investment amount or business plans.

Earlier this month, SoftBank also signed a framework agreement for AI and digital infrastructure development with Grab, the operator of Southeast Asia’s largest super app, and Petroleum Sarawak (PETROS), the state-owned energy company of Malaysia’s Sarawak state. The plan is to use Sarawak, which has abundant hydropower and natural gas resources, as a base for building AI computing infrastructure and digital platforms, developing Malaysia into a major AI infrastructure hub in Southeast Asia. The agreement was signed personally by Son, Grab CEO Anthony Tan and PETROS CEO Janin Girie, and the three companies agreed to jointly draw up phased infrastructure development plans.

Global Big Tech Investment Pours In

Beyond SoftBank, numerous global technology companies are making successive investments in AI and cloud infrastructure in Malaysia. Microsoft, for example, announced in May 2024 that it would invest USD 2.2 billion (approximately USD 2.24 billion) over four years to expand Malaysia’s AI and cloud infrastructure, and has steadily expanded its local business since then. In May last year, it opened Malaysia West, its first cloud region in Malaysia, in the greater Kuala Lumpur area. In November last year, it also unveiled plans to build a second cloud region, Southeast Asia 3, in Johor Bahru.

Oracle also announced in October 2024 that it would invest more than USD 6.5 billion (approximately USD 6.62 billion) in Malaysia to establish public cloud infrastructure. It plans to offer more than 150 cloud and software services to meet local demand for AI and cloud services, supporting companies in AI model development, data analytics and the migration of business systems to the cloud. Oracle opened its Malaysia West 2 cloud region in Kulai, Johor, in February and has begun providing services.

Funding from AWS and Google Also Flows In

Amazon Web Services (AWS) opened its first cloud region in Malaysia, the AWS Asia Pacific (Malaysia) Region, in August 2024 and began providing local services. Major customers include Malaysian state-owned energy company Petronas, stock exchange Bursa Malaysia and telecommunications company CelcomDigi. Expecting substantial economic benefits from its long-term investment, AWS plans to invest a total of USD 6.2 billion (approximately USD 6.32 billion) by 2038 in the region’s construction, operations and related activities.

Google announced in May 2024 that it would invest USD 2 billion (approximately USD 2.04 billion) in Malaysia to build a local data center and Google Cloud region. The data center will support the operation of existing digital services such as Google Search, Maps and Workspace, while the cloud region will provide local companies and public institutions with AI model development, data analytics and cloud computing services. In August, Google subsequently said construction of the data center was proceeding as planned and that it expected operations to begin within the following nine months.

Table 1. Global Technology Companies’ Investments in Malaysia

Malaysia’s Cost Competitiveness

Competitive electricity costs are a key reason companies are flocking to Malaysia to invest in AI. According to energy consultancy Wood Mackenzie, electricity prices for data centers in Malaysia stood at USD 133 (approximately USD 136) per megawatt-hour (MWh) last year, about 25% below neighboring Singapore’s USD 178 (approximately USD 181). That gap has persisted recently. Industrial electricity prices calculated by data center market intelligence provider Datacentres.com using data as of June this year showed that Johor’s rate was USD 0.130 (approximately USD 0.13) per kilowatt-hour (kWh), 32% below Singapore’s USD 0.192 (approximately USD 0.19).

Favorable conditions for securing land are another attraction. In its Global Data Center Market Comparison report published last year, global real estate consultancy Cushman & Wakefield identified Johor as the location with the best land availability among major data center markets worldwide, based on the area of land transacted in 2024. The relative ease of securing large sites is seen as advantageous for expanding data centers in stages or developing dedicated substations and cooling facilities alongside them. Land prices are also relatively low. Transaction data from Malaysia’s National Property Information Centre (NAPIC) showed that the average transaction price of industrial land in Johor last year was MYR 86 (approximately USD 21.45) per square foot. Market estimates put transaction prices for data center sites equipped with infrastructure such as grid connections and water supply at MYR 120–160 (approximately USD 29.93–39.91) per square foot.

Low Barriers to Hiring Local Talent

An abundant English-speaking workforce is another factor lowering barriers to entry for foreign companies. According to the English Proficiency Index (EF EPI) released last year by global education company Education First (EF), Malaysia ranked 24th among the 123 countries and territories surveyed. Its score of 581 was well above the global average of 488, and it ranked highest among the Asian countries and territories surveyed. English proficiency among information technology (IT) professionals was particularly strong, at 590, exceeding Malaysia’s overall average. This makes tasks such as writing technical documents in English and communicating with overseas headquarters and partner companies relatively straightforward.

Government policy support is also underpinning investment demand. Malaysia and Singapore signed an agreement in January last year to establish the Johor–Singapore Special Economic Zone (JS-SEZ), launching efforts to attract investment centered on advanced manufacturing and digital industries. Support measures announced at the time by Malaysia’s Ministry of Finance included a special corporate tax rate of 5% for up to 15 years for eligible companies making new investments in designated fields within the zone, including AI and quantum computing supply chains. This represents a substantial tax incentive given Malaysia’s standard corporate tax rate of 24%. Eligible skilled professionals working in the special economic zone will also receive a special income tax rate of 15% for 10 years.