Microsoft’s data centre region project needs data security laws

Govt could set up regulations against the seizure of equipment or surrendering of data to authorities, among others


MICROSOFT Corp’s US$1 billion (RM4 billion) investment to establish its first data centre region in the country will need to be supported by more robust data security regulations in Malaysia.

Bar Council’s Information Technology and Cyber Laws Committee deputy chairman Foong Cheng Leong said new regulations should be introduced to protect such data centres once they are opened to the general public.

For example, he said the government could set up regulations against the seizure of equipment or surrendering of data to authorities, as well as laws to protect against intermediary liabilities.

Additionally, he said the data centre region would promote further data localisation, particularly for the government to improve data safety and protection.

“It may also be useful for the government to direct its agencies to store their data in such local data centres. Many data these days are held overseas and we do not know where they are stored.

“A data localisation requirement would be useful in helping Malaysians protect their personal data,” Foong told The Malaysian Reserve (TMR) recently.

Last month, Microsoft announced the US$1 billion digital initiatives with the Malaysian government over the next five years, including the setting up of the first data centre region in the country. Called “Bersama Malaysia” (Together with Malaysia), the project will establish a data centre region in the Greater Klang Valley.

The locality will comprise a set of data centres deployed within a latency-defined perimeter and connected through a dedicated regional low-latency network.

The Bersama Malaysia initiative includes Microsoft’s plans to skill one million Malaysians by December 2023 to create opportunities in the digital economy.

The Malaysian government also appointed Microsoft as a cloud service provider to the administration.

The US$1 billion investment is a boost to the country as a destination for foreign direct investment, after suffering a 68% drop last year to US$2.5 billion, according to a report by the United Nations Conference on Trade and Development.

It was the most significant decline in South-East Asia, more than twice the rate for Asean at 31%.

Putra Business School Assoc Prof Dr Ahmed Razman Abdul Latiff said the digital projects by Microsoft would boost investors’ confidence for the foreseeable future.

“The initiatives announced bode well for Malaysia. Although it is seen first as a physical infrastructure investment of the data centre, the ripple effect will be positive.

“It will help upskill many Malaysian and generate additional revenue along its supply chain with Malaysian partners,” Ahmed Razman told TMR.

Microsoft’s investment in Malaysia could generate up to US$4.6 billion in new revenues for the ecosystem of local partners and cloud-consuming customers in Malaysia over the next four years, according to International Data Corp’s research.

The research also estimated Microsoft, its partners and cloud-using customers to create over 19,000 new direct and indirect jobs.

SME Association of Malaysia president Datuk Michael Kang Hua Keong said the data centre region investment may facilitate digitalisation efforts by small and medium enterprises (SMEs).

He, however, said the licence fee to use the facility must be affordable for SMEs.

He said SMEs need to develop talents and know-how to operate digital systems such as Microsoft, hence the latest digital initiatives may provide the platform.