News

KUALA LUMPUR: With Malaysia’s data centre industry projected to reach RM3.6 billion in revenue by 2025, it’s more important than ever to prepare local industry players for the expected growth and strategically place data centres throughout the country, accelerating the industry’s development. Recently, Deputy Communications Minister Teo Nie Ching said that Malaysia is on the right track in its aspirations to become a regional data centre hub. “RM76 billion worth of data centre-related investments have been approved by the Investment, Trade and Industry Ministry via the Malaysian Investment Development Authority (MIDA) from 2021 to March 2024. “From this, we see that more industry players are investing in the digital economy and a lot of existing data centre operators here are expanding their operations,” he said. “This is an opportunity to create more high-value jobs for Malaysians and at the same time, to ensure our place as a digital economy leader in ASEAN,” she added. According to Teo, creating an ecosystem for data centres and cloud services could potentially increase the number of industry suppliers in the country. Leading global provider of hyperscale data centre campuses, Vantage Data Centres is one that is making its presence known in Malaysia, with the development of the campus being part of the US$3 billion investment that was injected into the country. Digital Minister Gobind Singh Deo said that the growth in the data centre market in Malaysia experienced an expected compound annual growth rate (CAGR) of 13.92% from 2023 to 2029, presenting a huge potential for expansion. Attractive Market Among the many factors of Malaysia being an attractive location for data centre operations include the low electricity tariff, which is the lowest in ASEAN. On this, Savills Malaysia Managing Director Datuk Paul Khong said, “The average electric tariff in Thailand and Singapore are now well priced at 51 sen per kWh (THB3.99) and RM1.11 per kWh (S$0.3247) respectively. In comparison, Malaysia charges 33.7 sen per kWh and 20.2 sen per kWh during peak and off-peak periods, respectively, for high-voltage industrial usage.” Khong also added that favourable government policies in Malaysia, with tax incentives and subsidies, are an added bonus, saying, “Notable incentives given include a 100% tax exemption to eligible data centres and cloud business investments.” Furthermore, the abundance of industrial land in the north and south of the peninsula increases Malaysia’s attractiveness. “These industrial parks provide competitive land prices, alongside investment incentives supported by the government,” he added. Having this in mind, a prominent investment outfit, Qew Group Bhd is also making its mark in the telecommunications industry which further contributes in the digital landscape of the country. Currently, the Group operates 59 telco towers in Klang Valley, Sabah and Labuan with an asset value of RM59 million and generating an annual revenue of RM6.24 million. Having 37 sites fully operational and an additional 22 monopole structures scheduled for completion by 3Q 2024, the assets are under a 10-year contract with the option for renewal. “We are also involved in the fibre network operations in Kelantan, KELNET with a capital investment of RM45 million. To date, KELNET’s projected revenue and asset value are estimated to reach RM278 million over a period of 5 years,” said Qew Group Bhd Group Executive Chairman, Dato’ Dr Muhamad Iqbal. Additionally, Dato’ Iqbal highlighted that Phase 2 of the project anticipates the completion of 127 new towers and the deployment of a 100km fibre network by 2026, which is expected to generate an annual commercialisation value of RM5 million. These projects are outlined in one of the Group’s 3 strategic pillars, dubbed Bright Future, which also includes real estate development.

KUALA LUMPUR: Global credit rating agency, AM Best has maintained a stable outlook on Vietnam’s non-life insurance segment, citing accelerating non-life premium growth and increased demand for commercial lines insurance. In its latest Best’s Market Segment Report, ‘Market Segment Outlook: Vietnam Non-Life Insurance’, the rating agency notes the country’s Insurance Business Law as a recent regulatory reference supporting the stable outlook, as the newly adopted requirements on risk management, internal controls, internal audits and actuarial standards are expected to enhance risk governance and strengthen financial conduct. Property insurance was a key business growth driver in 2023, in which government spending on renewable energy, transportation, and other large-scale infrastructure projects are likely to drive greater demand for insurance coverage going forward. Vietnam’s non-life insurance market growth also should continue to benefit from the country’s reputation as an attractive destination for foreign direct investment (FDI). AM Best Senior Financial Analyst, Ken Lau said FDI inflows are expected to continue as one of the growth engines of the country’s economy, which in turn will bolster demand for commercial lines insurance. “Vietnam remains a magnet for FDI, as investors continue to seek global supply chain diversification,” he said in a statement. At the same time, market competition has eroded the underwriting profit margins of the motor and health insurance segments, owing partly to looser underwriting. Near-term pricing competition in these lines could constrain technical margins. The non-life insurance industry’s earnings also may be dampened by lower investment yields over the near term. The State Bank of Vietnam lowered the policy interest rate multiple times in the first half of last year and is expected to maintain an accommodative monetary policy stance over 2024. — BERNAMA

By Zarul Effendi Razali and Durratul Ain Ahmad Fuad KUALA LUMPUR: The MADANI Economy framework is viewed as an integral part of the government’s continuing rollout of policies and programmes that help to sustain the growth and resilience of the Malaysian economy. Malaysian Economic Association President Dr Yeah Kim Leng said the framework is seen as the fundamental policy framework that provided the setting to guide the formulation of various plans, roadmaps and blueprints that were subsequently rolled out. “Efforts under the framework to raise production, boost productivity and move up the value chain in the supply-side or production sector, along with a steady rise in employment, wage and incoming in the household or consumption sector, will translate into poverty eradication, improved livelihood and well-being, and higher overall gross domestic product (GDP). “Thus far, the country’s median income growth has kept pace with inflation although the B40 and the lower half of the M40 income groups may grapple with the rising cost of living, depending on their geographical location, lifestyle, family size and age group,” he told a local news agency. Year of Implementation The National Council of Professors fellow Prof Dr Azmi Hassan concurs with Finance Minister III Datuk Seri Amir Hamzah Azizan’s statement that 2024 is the starting point for the execution of the MADANI Economy framework. “I think the (framework) is still in the works in the first 6 months of the year so there is not enough to gauge the progress. “But looking at the economic growth via GDP, which grew at a higher rate of 4.2% in the first quarter of 2024 compared with 2.9% in the fourth quarter of 2023, there was a lot of improvement,” he said. In February this year, Amir Hamzah said 2024 will be about executing the MADANI Economy framework and all the policies that the government put out last year, as the government has established clear guidelines for the economy to move forward. “We are confident that we will be able to move along the path to execute the MADANI Economy framework this year and all the policies that we put out last year,” Amir Hamzah said. Additionally, Azmi opined that government will or political will is very important for the implementation of the MADANI Economy framework, adding that the implementation of the Fiscal Responsibility Act (FRA), which was passed in Parliament in October last year, would portray an efficient and responsibility government under Anwar’s leadership. “The government knew that targeted subsidies for diesel would be a sensitive issue but the subsidy (rationalisation) was implemented for a better future. “According to the FRA, the government wants to reduce the fiscal deficit to four per cent this year and 3% in the next 2 years. “The government is also committed to reducing the national debt to 60% of GDP. I think that’s a strong message from the government that it wants to implement the MADANI Economy framework,” he said. Enhancing fiscal position, people wellbeing On the targeted diesel subsidy implementation, Yeah said the move, besides strengthening the government’s financial and fiscal positions, also resulted in a more efficient allocation of scarce resources due to reduced leakages and more productive spending on development rather than subsidising consumption. In addition, he said the economy will also be more resilient in withstanding future oil price shocks. Bank Muamalat Malaysia Bhd Chief Economist Dr Mohd Afzanizam Abdul Rashid said the government is cognisant of the plight faced by society as prices continue to remain elevated. This, he said, has led to greater allocation on cash transfer programmes such as the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) in order to alleviate the financial burden experienced by low-income households. “The Employees Provident Fund Account 3 withdrawal is also being implemented, as the government recognises the need to accord the rakyat some flexibility to use their retirement savings. “On that note, the short-term needs have been looked at. Now it’s about how to use the savings from the subsidy rationalisation to improve our education, healthcare and infrastructure. Again, it will take some time for us to see the results,” he said. According to Mohd Afzanizam, cash transfer programmes such as STR and SARA, along with targeted subsidies have been the main tools for the government to minimise the impact on the rakyat arising from the policy changes on subsidies and taxes. “Such policy changes are not easy to implement, but it is the right thing to do in order to reduce leakages and ensure only those who are deserving will get the financial aid. “The lifting of diesel subsidies was more like the government demonstrating its commitment to fiscal discipline, which should create more space for spending in areas that will bring better productivity gains in the mid to long term. This may include spending on education, healthcare and infrastructure,” he said. Medium-term targets and NIMP 2030 Anwar, who is also Finance Minister, said the MADANI Economy: Empowering the People initiative is a comprehensive plan for Malaysia to address various challenges and issues related to its competitiveness and investment attractions, as well as outlining actions to address current issues that affect people’s lives. The initiative sets 7 key performance indicators as medium-term targets to be achieved within 10 years. They include Malaysia being in the top 30 of the world’s largest economies, the top 12 in the Global Competitiveness Index, the top 25 in the Human Development Index and the top 25 in the Corruption Perception Index. Other targets are increasing labour share of income to 45%, raising women’s labour participation rate to 60%; and achieving fiscal sustainability with a fiscal deficit of 3% or lower. Meanwhile, the New Industrial Master Plan (NIMP) 2030 is a key component of the MADANI Economy as it will support the realisation of economic reforms. According to Anwar, NIMP 2030 will revitalise the manufacturing sector to ensure Malaysia remains resilient amid growing challenges and megatrends. With a short window of 7 years, 4 missions have been formulated