A New Digital Arms Race in Southeast Asia

Across Southeast Asia, cloud hyperscalers are committing billions to build data center capacity that supports AI and digital services. These investments also intersect with national goals for economic growth, technology leadership, and data sovereignty.

Malaysia’s Hyperscale Expansion

Microsoft recently opened its first cloud region in Malaysia – “Malaysia West” – as part of a US$2.2 billion investment announced last year. Located in the Greater Kuala Lumpur area, the region has three availability zones and is expected to create more than 37,000 jobs while contributing an estimated US$10.9 billion to the economy by 2028.

The launch aligns with Malaysia’s National Sustainable Data Centre Framework (NSDCF), expected to be formalized by October 2025. Under the framework, all new data center projects will be required to meet a PUE of 1.4 or lower, reinforcing the link between digital growth and sustainability.

Balancing Growth and Data Sovereignty

The push for cloud infrastructure extends across Indonesia, Vietnam, and the Philippines, where governments are introducing data localization laws. These require foreign providers to store citizens’ data within national borders – a move aimed at security, economic control, and reducing reliance on infrastructure concentrated in the U.S. and Europe.

For hyperscalers, building local cloud regions allows them to comply with these rules while deepening market presence. For governments, it ensures that national digital ambitions are supported by infrastructure within their control. This mutual interest is reshaping Southeast Asia’s data center landscape.

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Rex Sayson

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