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Malaysia’s DC landscape: calm before the storm?

Next year is going to be an interesting year for the data centre industry, according to AIMS Bhd’s chief, Chiew Kok Hin.

Granted, the data centre landscape is not looking good at the moment, with more than a handful of data centres closing shop – Patimas, Teliti, Jaring… what went wrong?

But then again, all this movement in the industry is also what makes the landscape interesting to Chiew. “The industry is ready for more data centre businesses either closing down, or consolidating. AIMS is exploring its options!”

AIMS is one of the few data centre players left standing and still growing, despite a pretty rough few years.

Chiew Kok Hin

Chiew Kok Hin

Misperceptions?

With so much going on, a local alliance of Malaysian data centres was formed as a special focus group within Outsourcing Malaysia (OM), which is also a chapter of the National ICT Association of Malaysia or PIKOM. Called the MDCA or the Malaysian Data Centre Alliance (MDCA), it does not stand alone and counts MDeC as an advisor with a governance role as well.

The idea is for MDCA to serve as a collective voice of the industry, in terms of best practices, education, and technical standards that would go towards betterment of the industry on the whole.

One of the other points in its charter, is also to transform Malaysia into the preferred data centre location in Asia.

About two years since its formation, not much has happened however, as fundamental issues like connectivity, electricity and more, have not made any headway during negotiations for lower rates.

Next year is going to be an interesting year for the data centre industry.

For example, Chiew observed that Malaysia’s broadband quality is actually good. But it is just too expensive. “Thailand’s broadband is still cheaper, despite them having a controlled Internet Exchange.”

At one point, a few local players even voiced out that foreign players were offered incentives that would better serve local players who have to contend with thin margins; and therefore; less funds to expand and move up the value chain.

In hindsight, the local DC industry could be prematurely worrying about competition that may never come to our shores.

And yet…!

Chiew observed of MDCA’s efforts, “Nothing is happening. Missions to get foreign customers are also not successful.”

Also, despite the best incentives and conditions Malaysia can offer – labour, land, natural disaster-free geography and more – global DC players are still heading to neighbouring countries like Singapore and Hong Kong. Even when real estate started to become costly in this land-scarce countries, Thailand was a more attractive alternative, for Japanese companies and even global data centre players.

SUPERNAP data centres are Tier IV Gold status data centres that are certified as highest-ranking colocation DCs, with thousands of clients ranging from startups to Fortune 100 companies with mission critical applications.

This recognised data centre service provider opted to build their first data centre facility in Asia, in Thailand over Malaysia.

Ultimate Gaming, Boeing, Wells Fargo, Google, Intel, Cisco, HP, PayPal, EBay and more, count as just a few of their many customers.

This recognised data centre service provider opted to build their first data centre facility in Asia, in Thailand, over Malaysia. This much-awaited data centre is targeted to be ready in 2017.

Perhaps this is a good problem for Malaysia to have.

But for the ecosystem to thrive on the whole and in the long run, this situation must not be allowed to persist. Knowledge transfer must be allowed to happen. The local IT industry must be allowed to absorb and put into practice, learned best practices, by itself.

When the time comes, how do local players remain competitive though?

Chiew opined, “Foreign players will come to Malaysia and half of the local DCs placed under our Economic Transformation Programs or ETP’s EPP (entry point projects) initiatives will die.

“And we still haven’t leveraged our group strength. As a group, we can give foreign providers a run for their money!” Chiew emphasised.

So, it’s a good thing that the industry is about to enter a ‘culling’ and consolidation phase, in the next year.




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