Facilitations for data center growth have become major factors to modern country budgets, and Hitachi Sunway Group CEO and director Cheah Kok Hoong is hoping Malaysia is no exception with the upcoming 2019 Budget.
“Malaysia is on a path to rebuild itself and we believe digital transformation such as Internet of Things (IoT) and Artificial Intelligence (AI) will be a driving growth enabler for the nation,” says Hoong.
“However, data management, storage and security require an ecosystem that includes power supply, connectivity and infrastructure.
Hoong has broken down his ‘wishlist' into segments pertaining to different areas of policy that could be of benefit to the nation's data center industry.
The cost of energy
According to Hoong, global businesses with interests in Asia are overlooking Malaysia as an area to build or host data centers as the energy costs in the country account for more than 40 percent of operational costs.
“While the industry is making efforts to implement green technology to reduce consumption and improve energy usage efficiency, the price remains a concern for global data players especially when there are cheaper options nearby,” says Hoong.
“Which is why we urge the government to recognise data centers as key growth enablers and reclassify data centers under the industrial tariff E power supply.
Lower connectivity costs
The government has made strides in other areas, and Hoong congratulates the Ministry of Communications and Multimedia (KKMM) for implementing lower connecitivity costs for consumers.
“We hope that he will now expedite the lowering of broadband costs for data center operators and revoke monopolies in the telecommunication sector that hinders the ministries aspirations for faster connectivity,” says Hoong.
“Faster speeds at lower costs will enable us to attract global investors to choose Malaysia over its neighbours.
Hoong is particularly prickly about the recent reintroduction of Malaysia's sales and services tax (SST), that he asserts has created repercussions for all in the value chain as operational costs increased across the board.
“For example, the compound effect of SST on IT services that were subcontracted or had multiple vendors,” says Hoong.
“Cost also increased on software license subscription maintenance. We hope the government can review this and also provide incentives for the private sector to invest in digital infrastructure to push Malaysia towards Industry 4.0.
Review the Communications and Multimedia Act
Hoong says there are several laws in the Communications and Multimedia Act that impels ISPs and data centers to abide by the restrictions and act against the wishes of the people.
“For example, once an order from the Malaysian Communications and Multimedia Commission (MCMC) is issued, under Section 242 it is an offence to not comply with MCMC's request, even if we know the request was not right,” says Hoong.
“Section 242 handles compliance to the Act, where failure to comply is punishable with a fine not exceeding RM100,000, or prison not exceeding two years, or both. Adherence to such orders are one of the key criterias when the license of a solutions provider is issued. Any deviation of non-compliance of such orders puts the renewal at risk.
In light of this, Hoong urges the government in its 2019 budget to review the act and similar laws, suggesting the government establishes a new committee made up of representatives from both sides to assess future orders so that the wrong order is not sent out.