Google is latest U.S. tech company to invest in Southeast Asia with $2 billion Malaysia pledge

On Thursday, Google committed to investing $2 billion in Malaysia, including developing a data center and cloud facility. The investment, Google’s largest so far in Malaysia, is expected to support 26,500 jobs and add up to $3.2 billion to the economy, according to Bernama, the country’s state news agency.

Google’s investment follows a similar pledge from its competitor Microsoft made earlier this month. While on a trip to Kuala Lumpur, the country’s capital, Microsoft CEO Satya Nadella promised to spend $2.2 billion in the Southeast Asian country, including offering AI skills training to 200,000 Malaysians and establishing a national AI “Center of Excellence.”

Since 2022, the Malaysian government has offered tax incentives for technology-related investments, including data centers. The country also features cheaper land, power and water compared to neighboring Singapore. Companies increasingly considered Malaysia as an option for data center investments after Singapore, the region’s data hub, imposed a three-year pause on new developments between 2019 and 2022, citing concerns over energy and land requirements for digital infrastructure.

Malaysia is also trying to move up the semiconductor value chain, with Prime Minister Anwar Ibrahim this week touting the country’s “neutral and non-aligned” position between the U.S. and China.

A wave of Southeast Asian tech investments

U.S. tech giants are ramping up their investments in Southeast Asia, hoping to tap into the region’s young workforce, rising incomes, and more neutral geopolitical position.

In addition to its $2.2 billion investment in Malaysia, Microsoft will also invest $1.7 billion in Indonesia over the next four years, targeting new cloud and AI infrastructure. The company also pledged to make “significant commitments” towards Thailand’s cloud and AI industries.

Amazon is pumping about $9 billion into Singapore over the next five years to grow the city-state’s cloud infrastrucutre sector.

Apple CEO Tim Cook also visited the region earlier this year. The company promised to increase its spending on Vietnam-based suppliers, and pledged $250 million to expand its Singpaore operations. Analysts suggested Cook’s visit was an effort to “hedge [Apple’s] supply chain bets” and create a runway for possible future investments in the fast-growing region.

More broadly, tech firms and manufacturers are shifting their supply chains to the region amid a fractious U.S.-China relationship. Chipmakers like Intel, Infineon, GlobalFoundries and Samsung have recently committed investment to Southeast Asian countries like Malaysia, Singapore, and Vietnam.