Malaysia: Data Centre Nirvana

In 2012, Malaysia had made its first appearance in a data centre risk index, and moved up 3 places to 16th placing out of 30 countries. This is the result of efforts by MDCA (Malaysia Data Centre Alliance) of which MDeC is an advisor.  Wan Murdani Mohamad, Director of MDeC’s Digital Enablement Division talks about MDeC’s further efforts and challenges.

MDeC was mandated by the Government to develop the data centre industry under the Economic Transformation Program, specifically under the Entry Point Project 3 (EPP3). MDeC’s role is to market Malaysia as a data centre location hub – to build local industry players and put Malaysia on the global map through our programmes to build credibility, capability and capacity.

Malaysia has a unique positioning – we have a geologically secure location, free from natural disasters, our oil and gas reserves rank us highly in terms of energy security, and our energy cost, is still competitive. We have an abundant water supply, large areas of land available and some of the best physical infrastructure in the region.

However, one of the biggest challenges in positioning Malaysia as an attractive location for data centres is the cost and diversity of high speed connectivity. Typically at wholesale level, we are 2-3 times more costly for IP transit than Singapore and Hong Kong. As connectivity is the lifeblood for data centres, this has presented us with a serious challenge. One of the initiatives to mitigate this issue is that we have engaged with the telco industry to come up with some DC- specific packages. This is still a work in progress but we hope the results will be positive.

The other major challenge is that of perception. Malaysia is relatively new to the DC scene and is quite unknown to the rest of the world. We have been working to raise Malaysia’s profile as a DC location through various media channels and to highlight successes in the industry. So far, we have been getting an increased number of inquiries from potential investors. Also in 2012, Malaysia made its first appearance in Cushman and Wakefield’s Data Center Risk Index and in 2013, we moved up 3 ranks to 16th out of 30 countries.

Partnerships and synergies
The MDCA was formed in February 2013 consisting of 17 data centre service provider companies with Outsourcing Malaysia acting as the secretariat and MDeC as the advisor. MDCA’s objectives are aligned with EPP3’s own objectives; that is to position Malaysia as the region’s data centre hub.
To achieve this, 5 committees were formed under MDCA to focus on 5 major areas of the industry, which are: 1) Business Development 2) Connectivity 3) Energy 4) Green Tech Standards and 5) Standards & Policies.

Under the leadership of Billy Lee, the elected Chairman of MDCA, each committee has their own activities and targets to be achieved each year, centred around making Malaysia an attractive location for data centres.

Outsourcing Malaysia (OM) has been our partner in EPP3 since the very beginning. They have played a significant role in the formation of MDCA and currently acts as the secretariat for MDCA to ensure its smooth running. Aside from that, OM is also focused in organising marketing missions for MDCA’s members to market themselves internationally.

We have also forged a strong partnership with PEMANDU and MIDA, to focus on bringing in foreign direct investments into Malaysia through facilitation of potential investors’  due diligence processes and the coordination of various parties (land owners, energy, water, telcos).

The biggest “partner” we have is actually the DC industry represented by MDCA. One area which we’d like to see is for our data centres to raise their capability and be recognised and certified by bodies and global standards such as The Uptime Institute, TIA, LEED, GBI etc. A certification by any of these standards ensures that the facility is up to a certain globally accepted standards in terms of operations, security and efficiency.

We’d also like to see the players market more aggressively in the region, to export their products and services to neighbouring countries and capture more of the foreign market’s share.

Top challenges
Bandwidth cost and diversity is the single biggest challenge facing the industry, and in fact, the whole country. One issue holding us back is the very definition of broadband. Currently our definition of broadband is anything faster than 384 Kbps. However this is an archaic definition and the world has moved on. The ITU-T as far back as 2003 defined broadband as 1.5 Mbps (US Standard) or 2 Mbps (European standard). In 2010 the FCC in the US raised the minimum to 4 Mbps.

How is this holding us back? In the recently released 2013/2014WEF Global Competitiveness report, our ranking of Internet bandwidth per internet user is 77th, on par with Timor-Leste, Ivory Coast, Albania, Cambodia, and Vietnam.  Our neighbours in Thailand and Indonesia have jumped ahead of us. If we continue to measure ourselves on such a low standard, we will continue to fall back.

Today we still have data centres having connections of a few Mbps. Even a 100 Mbps connection, which is normal bandwidth for residential broadband in Singapore, Japan, Korea, HK, is considered a huge capacity here in Malaysia. This year several foreign cloud players have made enquiries for dark fibre and the kinds of bandwidth unheard of here, in the 100s of Gigabits and even Terabits which is normal in competing economies. Our HSBB is still limited to 20 Mbps.

It is time we revised our baseline to consider broadband should be at least 10 Mbps and above and this should be reviewed and revised if necessary on an annual basis and by 2020 we should be considering 100 Mbps as the minimum standard.

Once this new baseline is set, only then can we review the true state of broadband in Malaysia and set goals to truly raise our game and become competitive.

The other challenge is the international connectivity from Malaysia to the rest of the world and is related to the issues with broadband above. The challenge in this case is that few submarine cable operators choose to land their cables in Malaysia. Singapore for example has far more submarine cable capacity and diversity and that has positively impacted the attractiveness of Singapore as business location.

There have been some positive developments in Malaysia such as the completion of the Cahaya Malaysia Cable (a branch of NTTs Asean Submarine Cable Express, ASE) with an initial capacity of 500 Gbps and the announcement of the Asia Pacific Gateway (APG) submarine cable system which is a 10,000 km international fibre optic cable system connecting Malaysia to Korea and Japan. Scheduled to be ready in 2014, this cable will bring more much-needed capacity to Malaysia. However, we need to see many more cables land in Malaysia and we should be actively pursuing this with cable operators.

Meanwhile to mitigate these issues the DC industry is working closely with telco providers and other stakeholders to address the concerns on the high cost and connectivity issues.

Globally, the Cloud Computing hype is large and strong, but at the moment we do not have much visibility into the size of the local market for cloud apps and the cost and available speed of broadband may be a speed bump for cloud adoption in terms of local cloud providers.

Conversely the impact of the Cloud Giants in Singapore is directly affecting the local cloud services and even co-location and hosting market in Malaysia by attracting away Malaysian business.

Power, cooling and energy efficiency will always be a challenge for data centres globally and seen from where the industry giants choose to construct their data centres where renewable energy is available and cold air is available for free cooling. In Malaysia, while we are fortunate to be sheltered from the worst natural disasters, it also means we do not have access to energy sources such as geothermal and wind.

Also our cloud cover which blesses us with high rainfall, makes solar energy a challenge. At this time, only fossil fuels and to a limited extent, hydroelectric power will be the primary source of energy for data centres. This presents a long term challenge for Malaysia.