When Malaysia Struggles, Indonesia Could Be Flooded with Investment

Jakarta, CNBC Indonesia — Since last year, Malaysia has frequently been cited as one of the world’s newest data centre hubs. However, the country is beginning to face considerable difficulties.

Malaysia has become one of the major investment options for global technology giants, including Microsoft, Amazon, and Alphabet. Additionally, numerous major Chinese companies such as Tencent, Huawei, and Alibaba have been actively investing in the neighbouring nation.

The country has successfully attracted investors through various facilities on offer, including lower land prices, cheaper electricity, and strong potential demand for artificial intelligence from the local market.

The number of data centres in Malaysia reached 12 facilities located in Johor by December 2024, with total capacity reaching 369.9 MW. In addition, there are a further 28 planned data centres with total capacity reaching 898.7 MW. Johor has also reportedly secured investors for 42 projects valued at 164.4 billion ringgit through the second quarter of 2025.

Despite the massive investment in data centre infrastructure, Malaysia must confront significant challenges arising from the trade war between the United States and China.

Malaysia has been pressured by the US to ban China from using backdoor access to American AI chips.

However, if Malaysia loses China, it loses its largest trading partner.

A Reuters report in 2025 noted that Malaysia has announced regulations requiring permits for American chip activities, including those manufactured by Nvidia. These permits cover exports, re-shipments, and transit of high-performance chips.

This oversight will continue to intensify as Malaysia attempts to conclude a trade agreement with the United States.