KUALA LUMPUR: Microsoft Corp’s commitment to invest a staggering US$2.2 billion (US$1=RM4.74) in Malaysia is undoubtedly a stimulus to upgrade the country’s technological capability as well as emerge as a renowned centre for innovation.

To facilitate the transfer of technology from the US software giant, the government must also invest by providing the right infrastructure to build a critical ecosystem to support growth of artificial intelligence (AI), cloud systems and cyber security capabilities.

Universiti Utara Malaysia School of Economics, Finance and Banking senior lecturer Muhammad Ridhuan Bos Abdullah said Malaysia should leverage on the tech giant’s commitment to speed up the transition of the economy to higher value-added complex operations as opposed to traditional linear practices.

A linear practice follows a "take-make-waste” pattern without consideration for recycling or reuse while higher value-added complex operations which is part of a circular economy is a system where products and materials are reused, repaired, and recycled to reduce waste and lessen the impact on the environment and society.

"Nevertheless, this effort requires significant investment from the government, and as outlined in the New Industrial Master Plan (NIMP 2030), talent, provision of infrastructure as well as incentives and the creation of a conducive ecosystem are very critical," he told Bernama.

He highlighted that the growth of the electrical and electronics (E&E) sub-sector could be accelerated in a short period using AI technology, for which policymakers should identify specific areas within this sub-sector to boost export production and ultimately expand the gross domestic product growth.

"This means that with Microsoft's capital investment support, technological advancement will accelerate, and 300,000 individuals integrated with AI technology will enhance productivity (human capital).

"Microsoft's investment will benefit talent and the combination of resources (capital and talent), or upskilling will provide advantages in terms of innovation/production and positively impact the country's exports," he further explained.

Like in Malaysia, Microsoft announced its commitment to invest US$1.7 billion in Indonesia while also sounding its commitment to invest in Thailand for which the sum has yet to be announced.

Muhammad Ridhuan said Microsoft has identified the competitive advantages and synergistic links of the three Asean countries (Malaysia, Indonesia and Thailand).

"I view this positively because, in terms of market (population), regulations and investment climate, synergy can be created among these countries,” he explained.

Last week, the US software giant announced additional investment amounting to RM10.5 billion (US$2.2 billion) in Malaysia over the next four years, which is the largest single investment by the company in its 32 years of operations in Malaysia.

This investment covers the development of cloud systems and infrastructure and AI, the creation of AI skill opportunities for an additional 300,000 people, the establishment of a National AI Centre of Excellence, enhancing the nation's cyber security capabilities, and supporting the growth of the system developer community in Malaysia.

The tech company has reportedly purchased land in Kulai, Johor, to develop a data centre.

At the moment, Johor has 13 data centre facilities across more than 1.65 million square feet of land. The state is also ranked as the largest data centre market in Malaysia and ninth-largest in Asia Pacific.

Commenting on the creation of AI skills for 300,000 people, Muhammad Ridhuan emphasised that synergies between policymakers and the supply side need to be parallel.

Meanwhile, economic analyst at the Putra Business School, Universiti Putra Malaysia, Associate Prof Dr Ahmed Razman Abd Latiff, said the plans to establish a National AI Centre of Excellence and boost Malaysia's cyber security capabilities would lure more international technology companies to invest in Malaysia as the entire ecosystem was being developed and enhanced.

"The project, which will be made possible through Microsoft and the Malaysian government joining hands, will indicate clear and focused investor-friendly policies with opportunities for innovation.

"It is not just providing the basic infrastructures for investors (but) would give a clear signal that Malaysia wants more technology investors to come into the country,” he told Bernama.

He said that there will be opportunities for innovation and sufficient human capital to support the whole industry with a strong economic base and critical support from the government. - Bernama