Google recently announced plans to invest $3 billion across Malaysia and Thailand, driven by the increasing demand for cloud services and artificial intelligence (AI) in the region.

Of this, $2 billion will be allocated to build the first data center and cloud region in Selangor, Malaysia, which is expected to create 26,500 jobs by 2030. The facility will serve digital services like Maps and Workspace.

According to Zafrul Aziz, Malaysia’s Minister of Investment, Trade, and Industry, this investment will help industries, particularly small and medium-sized businesses (SMBs), access advanced technologies like AI. Additionally, efforts to develop necessary skills will ensure the workforce is ready for future tech investments.

Google has also partnered with Malaysia's IT services provider DNeX to offer sovereign cloud services in the country. This collaboration aims to support companies in sectors like healthcare, finance, and energy, ensuring compliance with data sovereignty, security, and privacy regulations.

In Thailand, Google will invest the remaining $1 billion to expand cloud infrastructure and data centers in Chonburi and Bangkok. Google is also supporting local AI initiatives, with the project expected to contribute $4 billion to Thailand’s GDP by 2029 and create 14,000 jobs over the next five years. Additionally, Google plans to invest in developing AI skills for the Thai population.

Earlier, another cloud giant, Amazon Web Services (AWS), announced significant investments in Southeast Asia, including $9 billion over the next five years to enhance cloud infrastructure in Singapore.

AWS, which has operated in Singapore since 2010, has invested more than SGD 11 billion to date. AWS also plans to open a new cloud region in Thailand with an investment of more than $5 billion over the next 15 years.

In early May, Microsoft announced a $2.2 billion investment in Malaysia over the next four years to boost cloud and AI-driven digital transformation efforts. This marks the largest investment by the Windows maker in the country in 32 years.

In April, Microsoft CEO Satya Nadella visited Indonesia, Thailand, and Malaysia, during which he announced a $1.7 billion investment in Indonesia over the next four years to build new cloud and AI infrastructure and train 840,000 Indonesians in technology.

These investments come at a time when cloud computing services are experiencing a boom, driven by the increasing application of AI. Alongside AI, the rise of fintech services and e-commerce in Southeast Asia is also fueling cloud demand.

Southeast Asia, with its young, tech-savvy population, is seen as a catalyst for the digital economy. According to a recent Google report, Southeast Asia’s digital economy is expected to generate $100 billion in revenue. Research firm Adroit estimates that the region’s cloud computing market will reach $40.32 billion by 2025.

Singapore no longer the focal point

In the past, cloud service providers primarily focused on Singapore, but this trend is shifting. Matt Walker, Director of Analysis at consultancy MTN, observed that while Singapore was once a hotspot for data center investments due to its role as a regional communications hub and the presence of multinational companies, more providers are now targeting larger Southeast Asian markets, particularly Thailand and Indonesia.

Government initiatives to promote digital economies have also spurred significant cloud investments. For instance, Indonesia has introduced its Digital Indonesia roadmap to accelerate the digital transformation of businesses.

Most of these investments also include technology workforce training programs. Microsoft has committed to providing AI skills training to 2.5 million ASEAN residents by 2025.

AWS has launched its AWS AI Spring program to enhance AI application capabilities and will train 5,000 individuals annually through 2026.

While American cloud companies currently dominate the market, they face increasing competition from Chinese rivals.

Players like Tencent, Alibaba, and Huawei are not only ramping up their cloud investments in the region but also intensifying the price war.

Du Lam