Malaysia’s rapid expansion of hyperscale and artificial intelligence (AI)-ready data centres is expected to play a catalytic role in helping local small and medium enterprises (SMEs) accelerate their adoption of Industry 4.0 technologies. According to Malaysian Investment Development Authority (MIDA) chief executive officer Datuk Sikh Shamsul Ibrahim Sikh Abdul Majid, this growing digital infrastructure will significantly reduce entry barriers for manufacturers transitioning towards advanced, automated and data-driven production systems.
Speaking at the Federation of Malaysian Manufacturers (FMM) New Manufacturing Summit, he emphasised that AI-ready data centres serve as the essential computational backbone required for next-generation industrial solutions—including digital twins, real-time analytics, automated quality control, and predictive maintenance. These technologies have proven transformative in global manufacturing hubs, enabling higher precision, reduced downtime, and smarter resource utilisation.
“Malaysia’s development of hyperscale and AI-ready data centres provides the manufacturing sector with scalable computing capacity for digital twins, real-time analytics and cloud-based manufacturing execution systems,” he said during his keynote address at One World Hotel. “This lowers the cost of accessing advanced digital tools, particularly for SMEs, by reducing capital expenditure barriers that would otherwise limit adoption of Industry 4.0 technologies.”
For many years, the cost of upgrading machinery, employing data scientists, and maintaining on-premise computational equipment presented substantial barriers for SMEs. Cloud-based industrial solutions—powered by secure, high-performance data centres—remove much of this burden by offering scalable, subscription-based access to computational technologies. This makes digital transformation more accessible to thousands of smaller firms that form the backbone of Malaysia’s industrial ecosystem.
ESG Compliance Becomes Non-Negotiable in Global Supply Chains
Beyond digital capability, Datuk Shamsul highlighted another critical shift shaping global manufacturing: the rising importance of environmental, social and governance (ESG) compliance. International supply chains are increasingly governed by strict sustainability requirements, with multinational corporations prioritising suppliers who can demonstrate transparency, responsible sourcing and low-carbon operations.
He stressed that companies unable to meet ESG expectations face a real risk of being excluded from major procurement networks. “Global supply chains are increasingly incorporating ESG criteria into sourcing decisions. Companies that cannot demonstrate carbon transparency, responsible sourcing and fair labour practices face exclusion from major contracts,” he said.
Malaysia, he noted, is aligning its policy landscape accordingly. Key frameworks supporting this transition include:
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National Energy Transition Roadmap (NETR)
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Malaysia’s commitment to achieving net zero emissions by 2050
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Large-scale investment in renewable energy infrastructure
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Upcoming carbon pricing mechanisms
He highlighted that carbon pricing—expected to be implemented in 2026 for the iron, steel and energy sectors—will introduce a market-driven system incentivising companies to operate more efficiently while investing in cleaner energy sources.
The integration of digital infrastructure and ESG policies positions Malaysia to remain competitive in a global environment where sustainability and transparency are key procurement criteria.
Manufacturing Investments Fuel Continuous Sector Expansion
Malaysia’s manufacturing sector continues to register strong investor confidence. From January to September 2025, MIDA approved:
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RM285.2 billion in total investments
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RM93.8 billion in manufacturing investments
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Over 800 approved manufacturing projects
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Nearly 73,000 new jobs expected to be created
These investments reinforce Malaysia’s role as a regional manufacturing hub and reflect global confidence in the country’s industrial direction—particularly in sectors driven by high quality, automation and resilient supply chains.
Datuk Shamsul noted that the combination of high-value data infrastructure, sustainability-focused regulatory frameworks and continuous foreign and domestic investment ensures that Malaysia remains attractive to global manufacturers seeking reliability, transparency and long-term scalability.
AI and Data Centres as the Backbone of Malaysia’s Future Industries
AI-ready hyperscale data centres are emerging as one of Malaysia’s most strategic infrastructure investments. For businesses, these facilities provide access to:
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Cloud-based robotics and automation systems
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Predictive maintenance powered by machine learning
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Real-time supply chain visibility
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Advanced simulation tools such as digital twins
Digital twins—virtual replicas of physical systems—enable manufacturers to simulate tasks, troubleshoot issues, and predict performance without disrupting actual operations. This is especially beneficial for SMEs seeking to optimise output without incurring costly downtime.
Moreover, access to such infrastructure supports local innovation, enabling Malaysian firms to develop homegrown solutions for smart manufacturing, logistics efficiency, quality assurance and green industrial transformation.
Malaysia’s Competitiveness Strengthened by Digital Infrastructure
With Malaysia’s strategic location, growing talent pool and strong government support, the country is positioning itself as a leading ASEAN hub for AI, cloud computing and Industry 4.0 manufacturing.
As businesses integrate AI-powered automation and sustainability-driven practices, the manufacturing sector is expected to generate higher-value jobs, increased export competitiveness and long-term economic resilience.
Datuk Shamsul concluded that Malaysia’s focus on advanced digital infrastructure, environmental governance and investor-friendly policies will support a stronger, more innovative industrial ecosystem.
“Malaysia’s policy framework provides manufacturers with the regulatory and physical foundations required for a globally competitive future,” he said.
