Google’s Major Investment in Southeast Asia

Google has unveiled its intention to invest $3 billion in Malaysia and Thailand, aiming to cater to the rising need for cloud services and AI technologies.

A significant portion, $2 billion, will focus on building the inaugural data center and cloud region in Selangor, Malaysia. This infrastructure is projected to generate 26,500 employment opportunities by 2030 and will support digital services such as Maps and Workspace.

Malaysia’s Minister of Investment, Trade, and Industry, Zafrul Aziz, highlighted that this investment is crucial for industries, especially small and medium-sized businesses (SMBs), to gain access to cutting-edge technologies like AI. Furthermore, initiatives aimed at skill development will prepare the workforce for future technology investments.

In addition, Google is partnering with DNeX, a Malaysian IT services provider, to deliver sovereign cloud services in the country. This alliance is designed to assist businesses in sectors such as healthcare, finance, and energy while adhering to data sovereignty and security regulations.

In Thailand, the remaining $1 billion investment will enhance cloud infrastructure and establish data centers in Chonburi and Bangkok. Google’s support for local AI projects is projected to add $4 billion to Thailand’s GDP by 2029 and create 14,000 jobs in the next five years, alongside efforts to boost AI education for the Thai workforce.

Amazon Web Services (AWS) previously revealed plans for a substantial $9 billion investment in Southeast Asia over five years, focusing primarily on strengthening cloud infrastructure in Singapore, where AWS has been operational since 2010, investing over SGD 11 billion.

Additionally, AWS will establish a new cloud region in Thailand, backed by more than $5 billion over the next 15 years.

Earlier this year, Microsoft disclosed a $2.2 billion investment in Malaysia aimed at enhancing digital transformation via cloud and AI technologies, marking its most considerable investment in Malaysia in over three decades.

Microsoft’s CEO, Satya Nadella, also recently announced a $1.7 billion investment in Indonesia during his visit to Southeast Asia, focused on developing cloud and AI infrastructure and training technology skills for 840,000 Indonesians over four years.

Such investments are emerging during a significant growth phase for cloud computing services, largely influenced by the rising role of AI. The establishment of fintech and e-commerce platforms in Southeast Asia is further increasing the demand for cloud solutions.

With a youthful and tech-savvy population, Southeast Asia is positioned as a key driver for the digital economy, with projections from Google estimating the region’s digital economy could achieve $100 billion in revenue. According to Adroit research, the cloud computing market in the region is anticipated to reach $40.32 billion by 2025.

Historically, cloud service investments were concentrated in Singapore, but this focus is shifting. Analyst Matt Walker from MTN Consultancy noted that while Singapore has been a central hub for data center investments, providers are increasingly looking towards larger markets like Thailand and Indonesia.

National initiatives promoting digital economies have significantly influenced cloud investments as well. For example, Indonesia has launched the Digital Indonesia roadmap for a faster digital transition in businesses.

Moreover, many of these investments emphasize technology workforce training. Microsoft aims to equip 2.5 million residents in ASEAN with AI skills by 2025.

AWS is also enhancing AI capabilities through its AWS AI Spring initiative, planning to train 5,000 individuals each year until 2026.

While American cloud companies currently lead the market, they’re encountering rising competition from Chinese firms such as Tencent, Alibaba, and Huawei, which are escalating their investments and intensifying market competition.