SoftBank pursues USD 50 billion in new AI investment in Malaysia
Microsoft, Oracle, AWS and Google also expand infrastructure in Malaysia
Cost savings and ease of recruiting highlight investment competitiveness

Investment from global technology companies is pouring into Malaysia. Factors lowering barriers to entry for foreign companies include electricity costs lower than those in neighboring Singapore, a large English-speaking workforce, and ready access to 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 large-scale investment plans with SoftBank Chairman Masayoshi Son via videoconference. “Chairman Son said he had selected Kuching in Sarawak and Peninsular Malaysia as investment locations,” 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, “The investment will focus on AI, new technologies and data centers,” emphasizing that it would “provide better jobs, particularly for the younger generation.” 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 to develop AI and digital infrastructure with Grab, Southeast Asia’s largest super-app operator, and Petroleum Sarawak (PETROS), the state-owned energy company of Malaysia’s Sarawak state. The plan is to build AI computing infrastructure and digital platforms using Sarawak, with its abundant hydropower and natural gas resources, as a base, and to develop Malaysia into a major AI infrastructure hub in Southeast Asia. Son, Grab CEO Anthony Tan and PETROS CEO Janin Girie personally signed the agreement, and the three companies agreed to jointly formulate phased infrastructure development plans.

Global Big Tech Investment Pours In

Beyond SoftBank, numerous global technology companies are investing in AI and cloud infrastructure in Malaysia. For example, Microsoft 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 operations since then. In May last year, it opened Malaysia West, the country’s first cloud region, in the greater Kuala Lumpur area. In November last year, it also unveiled plans to establish 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) to establish public cloud infrastructure in Malaysia. To meet local demand for AI and cloud services, it plans to offer more than 150 cloud and software services and support companies in developing AI models, analyzing data and migrating business systems to the cloud. Oracle opened its Malaysia West 2 cloud region in Kulai, Johor, in February and has begun providing services.

AWS and Google Funding 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. Anticipating substantial economic benefits from its long-term investment, AWS plans to invest a total of USD 6.2 billion (approximately USD 6.32 billion) in constructing and operating the region through 2038.

Google announced in May 2024 that it would invest USD 2 billion (approximately USD 2.04 billion) to build a local data center and Google Cloud region in Malaysia. The data center will support existing digital services such as Google Search, Maps and Workspace, while the cloud region will provide AI model development, data analytics and cloud computing services to local companies and public institutions. 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 driving companies’ demand for AI investment in Malaysia. According to energy consultancy Wood Mackenzie, electricity rates for data centers in Malaysia stood at USD 133 (approximately USD 136) per megawatt-hour (MWh) last year, about 25% lower than in neighboring Singapore, at USD 178 (approximately USD 181). This gap has persisted recently. Industrial electricity rates 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% lower than Singapore’s USD 0.192 (approximately USD 0.19).

The ease of securing land is 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 considered advantageous for expanding data centers in phases or building 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 for 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 power grid connections and water supplies at MYR 120–160 (approximately USD 29.93–39.91) per square foot.

Low Barriers to Hiring Local Workers

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) workers was particularly strong, with a score of 590, exceeding Malaysia’s overall average. This makes it relatively easy to write technical documents in English and communicate with overseas headquarters and business partners.

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) and began seeking investment focused on advanced manufacturing and digital industries. Incentives 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 zone will also receive a special income tax rate of 15% for 10 years.