Malaysia invests in data centers to boost exports

Despite rising imports, investment in data centers is expected to drive Malaysia’s export growth in the second half of 2025.

At a press conference on the country’s economic performance in the second quarter of this year, Malaysia’s central bank (BNM) Governor Datuk Seri Abdul Rasheed Ghaffour attributed the import increase mainly to data center construction and upgrades.

Malaysia boasts a skilled workforce and adequate machinery to meet production demands, aiming to improve efficiency, business operations, and boost exports soon.

Several data centers have started serving overseas clients. While export results remain modest, investors anticipate significant contributions to Malaysia’s export revenues from late 2025 onward.

Malaysia’s economy grew 4.4% year-on-year in the second quarter, matching the previous quarter’s growth but slightly below the 4.5% forecast.

Facing ongoing global trade uncertainties, BNM revised its full-year GDP growth forecast down to 4.0-4.8%, from the prior 4.5-5.5% range.

In July, the central bank of Malaysia cut interest rates for the first time in five years to address economic challenges. Inflation remains subdued, with consumer prices rising just 1.1% year-on-year in June 2025, the slowest in over four years.

Governor Abdul Rasheed acknowledged export challenges, including a 19% U.S. tariff imposed on Malaysian goods in early August 2025 and semiconductor tariffs that could reach 100%.

Nonetheless, Malaysia’s economy retains significant untapped potential. Increasing global demand for electrical and electronic products and a rebound in tourism are expected to support exports moving forward.

However, Malaysia faces challenges such as a sharp drop in its current account surplus, which fell to MYR 16.7 billion ($3.97 billion) in the second quarter from MYR 38.5 billion ($9.15 billion) in the first quarter.

Foreign direct investment also declined sharply, with net inflows dropping to MYR 1.6 billion ($380 million) in the second quarter from MYR 15.6 billion ($3.71 billion) the previous quarter.