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0	5340	The AI boom means that data centers are being built at an unprecedented pace around the world
5340	9700	and Isaac, one country in Asia where the build-out is really obvious is Malaysia.
10140	14040	That's right, Mariko. Malaysia has emerged as an AI hub in Southeast Asia.
14520	19760	The country produces a lot of components that go into chips that help power AI technology.
20220	23580	The country has also been aggressively building data centers.
24080	27540	Now, the economy in Malaysia is expanding thanks to this boom,
27540	29860	but there's some pushback too.
30000	35000	Yeah, and the big question is whether or not those concerns about data center are justified.
35320	41680	And also, how is the pushback against them affecting Southeast Asia's effort to get a slice of the AI boom?
45540	51160	Every application you use, whether it's with AI or without AI, has to come from somewhere.
51500	54740	It's not just a little computation that's done in the cloud, right?
55000	58980	The cloud is actually hosted in a physical location called a data center.
58980	72580	One of the things that in these data centers they have is that they will have a lot of network cables, a lot of what they call server racks that is responsible for the computation, and then also the cooling, the energy requirements on there.
72680	75700	And usually the facilities are managed by very, very few people.
75700	88840	So the reason why that has been going was because the compute usage has gone up significantly, probably powered a lot by ChatGPT, Cloud, or every other AI application out there.
88980	95440	And that is why we need to, because we need data centers and we need large sources of land,
95660	99660	you're going to see large sources of construction, there is changes in the environment,
100440	104560	changes in maybe many normal people's daily expenses.
104800	106280	So that's why it's now become a big subject.
106560	106960	Yeah, indeed.
107360	112060	And yeah, because I was looking at, I think in the UK, there were some protests against
112060	115840	those data centers being built in your backyard, also in the United States.
115840	122240	But Isaac, here in Asia, Malaysia kind of stands out in terms of the number of data centers being built.
122700	125960	How did Malaysia become such a hub in terms of this AI boom?
126040	131480	I think the big contributor is back in 2019 when Singapore implemented this temporary ban.
131620	135220	So developers had to look elsewhere to put their data centers.
135460	138000	And so they looked into neighboring Malaysia, Johor.
138280	143180	Its proximity to Singapore makes it a perfect place to build data centers,
143180	148120	which you can see now, 85% of Malaysia's data centres are located in Johor.
148420	151640	Furthermore, the government put out incentives
151640	155460	that sort of draw in foreign investors to invest in the country.
155840	161420	So Bernard, Isaac just talked about Singapore's restrictions on data centres back in 2019.
161540	163060	Can you just explain why that was?
163120	165600	It's actually not so much a ban, it's kind of a moratorium
165600	169060	because I think the Singapore government is very prudent
169060	172420	about how they're thinking about the electricity
172420	175040	outages that have been going on.
175140	177360	They're mostly caused because of a spike in demand
177360	178040	in computing.
178760	181840	And I think post 2024,
182420	185500	when there was also the US banning China
185500	187060	for having the NVIDIA chips
187060	189060	and a lot of the Chinese founders
189060	191600	from the Chinese tech companies,
191700	193280	they require another place
193280	194220	where they could actually have
194220	196120	a source of good compute.
196540	198700	So that also drives in a lot of foreign director
198700	204760	investments into Malaysia as a result. So it's a combination of factors. We also talk about, say,
204900	212020	things like legislation changes. Somewhere between 2019 to 2023, a lot of the Southeast Asia
212020	216600	countries started to have what we call data sovereignty laws. So data sovereignty laws say,
217020	221980	for example, Malaysia said we need to have something like the data must be hosted in Malaysia.
222740	226860	Indonesia certainly say the same. So it also prompts the hyperscalers to say, okay,
226860	232340	we probably need in order to allow our businesses to operate in these countries,
232520	234860	we have to set up the data centers.
235040	239460	And that build up, I think, started as of when that period started.
239660	243320	And I have to say, they don't look that pretty to have in your back garden.
243620	245660	But Isaac, can you explain?
246300	249400	I mean, it's not just geography of where Malaysia was, right?
249460	252240	That all the investments started pouring into the country
252240	256380	because it has been producing a lot of components, tech components.
256860	261800	So how have all these data centers being built? How has it helped the economy?
261980	264940	And can you just explain the background of Malaysia's economy?
265320	268480	Yeah, like billions of dollars are being poured into Malaysia's economy.
268880	277360	And according to the International Monetary Fund, this year alone, it's expected for Malaysia's GDP to grow by at least 4.7%.
277360	282320	Now, the government obviously has a dream of being at the frontier of this AI revolution.
282320	285980	So it's investing a lot. It's offering eligible companies incentives.
285980	290580	For example, some of them could apply for income tax exemptions.
291000	294420	Others could even apply, could get like investment allowances.
294780	299660	So all these incentives are the government's steps to make that dream a reality.
300380	305340	But of course, there has been quite a lot of protests and you actually spoke to somebody.
305460	309360	So can you just tell us what she told you, what her concerns are?
309780	311340	Yeah, I spoke to Itha Malayana.
311480	313280	She's a 26-year-old English teacher.
313280	318000	So in July, she saw the news that a data center was being proposed in her community.
318560	321700	And she basically just said, no, not in my backyard.
322120	328080	And that concern is because she saw what's happening in the US, the huge backlash against
328080	331280	data centers, and she didn't want that to be in her community.
331400	334080	So she goes online and she creates this petition.
334460	339140	And what really stood out for me is that in that petition, she started with a really famous
339140	345080	quote about how when the last tree falls, people will realize that they can't eat money.
345080	346180	And I asked her about that.
346180	351600	She said that quote basically encapsulates everything that she's standing against the
351600	353020	data centers.
353020	354660	And this is what she has to say.
354660	361060	One of the justifications of data centers is that local industry workers would get trained
361060	364480	and hopefully get to develop this industry in Malaysia.
364480	369560	But I think I've read very briefly on this, but it seems like that's not going to be the
369560	370220	case at all.
370320	374140	Like they're just going to set up these servers and then have a few people managing it.
374200	376680	But it's not really going to be like a skill transfer thing.
377140	382920	I could justify using AI in like medicine or like, I don't know, astrophysics.
382920	389040	But why do we need it to decide what we want for lunch or solve a relationship problem?
389400	391660	Bernard, what do you think about what Aoife said?
391660	397660	I think there are a few parts of what it comes to when a data center comes online.
398240	403100	So before the data center is actually built, that actually brings in what we call construction jobs.
403540	406640	Now, once the data center is complete and completed,
407080	411520	then the management of the data center is taken over by, say, the hyperscaler.
411800	415160	They typically, it's actually very few people, as she rightfully pointed.
415160	429180	So what happens here is that then you have a few workers that is actually able to, if there's any anomalous things happening within the data center, they will be the person to resolve the issues on that.
429480	434580	But then when you look out to the bigger economy, right, then you think about what the data center is actually driving.
434940	440000	The data center, the real focus is actually to drive more what we call the digital economy.
440560	443420	So the digital economy could be in the form of, say,
443920	446040	maybe knowledge-based work.
446160	449900	It could be new kinds of jobs that may be created out of this AI.
450000	452320	I know we are now in what we call a transition stage.
452900	459300	And so the big fear is the job displacement is larger than the job creation.
460000	460520	Yeah.
460780	464460	The only answer to what she's saying is the creation of new jobs.
464620	466540	Is there going to be more than or less?
467120	467960	That question, I don't know.
467960	472800	I would prefer to be much more humble to say I don't know.
473020	478640	But I think we've seen different iterations of technological change.
480000	482260	And so far, every time it happened,
482420	484240	we seem to end up creating more jobs.
484800	487920	If you're just looking at this current time period,
488020	488960	when's the data center built?
489540	490820	She's effectively right on that.
490820	493600	But how the data center creates value
493600	495540	for the digital economy within that country,
496120	497700	that is not so clear to me.
497800	499520	But would that be within that country?
499760	502880	Because couldn't you argue that those new jobs created,
503000	506180	thanks to the AI boom, might be outside of Malaysia?
506280	509200	So that was the whole reason why every country
509200	510880	now has their own Data Sovereignty Act.
511120	514100	Yes, you can host other data from other parts of the world,
514100	517700	but you still have a sustainable holding.
518120	520280	And every business out there who needs,
520380	521700	whether it's a neocloud or hyperscaler,
521700	526500	they have to invest in Malaysia in order to get that part of the economy.
526720	528260	And they have to drive the local economy
528260	532300	because what they don't really want is having everyone,
532560	535140	the local communities holding pitchforks and say,
535240	537180	hey, you know, we want to burn down the data center.
537280	540140	That is also a cause of concern for them.
540600	543500	And I think that stability also becomes part of the conversation.
544080	548540	How has the Malaysian government been speaking about this ambition,
548540	554860	their ambition to be the AI hub, but also concerns from those local residents over jobs,
554860	560460	but also about the environment. I previously mentioned that Johor currently houses about 80
560460	566060	to 85% of the data centers in Malaysia. So in the state of Johor, the government has banned two tiers
566060	571900	of data centers. First is a tier one and tier two. Those are data centers which consume about 50
571900	579820	million litres of water a day. And that amount is basically about, it could satisfy the people's
579820	587000	daily drinking needs above 25 million people. So the government has stopped those data centres
587000	592500	from being built. It has also introduced penalties where if the data centre operator said that
592500	598620	this is the amount of electricity it's going to use per year, if it doesn't need 85% of it,
598620	600540	they're going to find the operator.
600800	603220	There's actually a metric to look at data centers.
603340	605220	It's called power usage effectiveness,
605580	606840	what they call the PUE metric.
607480	609720	So if you think about, say,
610020	612240	currently Singapore is mandating
612240	615160	that all data centers must be below
615160	617400	what is called 1.25 PUE.
617920	618000	Okay.
618580	620220	Malaysia, I think it's 1.4.
620560	622460	So there are two aspects of the problem.
622560	623820	So one of them is the water problem.
624260	626120	The water problem is real
626120	631360	if they do not try to recycle the water for the data center's cooling.
631820	636200	So there are actually already known solutions to that.
636400	638360	So there is something called StatePoint Liquid Cooling.
638800	640880	A couple of companies actually started in the US.
641160	642160	But how do they do it?
642160	644120	So basically, you reflux the water.
644600	647960	There is an entire recycling technology on that.
648420	651780	The more concerning part of this is actually energy.
652900	655460	Because of the usage of AI is exponentially growing,
655460	658180	the energy usage is also growing exponentially
658180	660860	and we are actually filling it.
661200	665640	So a lot of it is due to poor demand forecasting of power.
665840	667420	If you think about, look at the region as a whole,
667740	669940	countries, I mean, Singapore is already doing that.
670160	671580	The next data centre you build,
671700	673640	you have to have a certain energy,
674820	676060	that means the energy you use,
676240	678080	some parts of it must come from renewables.
678560	680580	Then as you go to say Malaysia, for example,
680720	681860	then the question is what kind of,
682160	683520	they definitely have energy,
684000	685100	they have petroleum, oil,
685460	689860	so they can hydrocarbon so you can power some part of it then the question is do they want to
689860	696820	rely on other mixes because the there is no way now that uh just by using a carbon they are able
696820	702420	to run that they also you also bring about the increase of climate change as well and malaysia
702420	707620	has the ambition to be that ai hub in southeast asia and it really wants to achieve that so i
707620	712420	think the government needs to balance between addressing the people's concerns while also
712420	718180	taking realistic steps to make those dreams a reality of being an AI hub. So the Malaysian
718180	724660	government, the Prime Minister announced that the young people will be able to access a three-month
724660	730500	free subscription to some of the AI models and that is basically to allow them to explore the
730500	737460	AI models, play with it and even to perhaps boost their creativity and improve their digital skills.
737460	742520	So the government is taking an active step into making the country embrace AI.
742740	746980	But I guess we'll see how the government addresses the people's concerns.
747760	753180	Will they keep building data centers for now with, I guess, stricter regulations, Isaac?
753440	757200	I think so, honestly, because the people's concerns about data centers are valid.
757200	763600	And for example, you heard from Ether herself that she said that she doesn't want Malaysia to become like the US,
763600	767160	where the people actively push back against data centers
767160	772460	because she's questioning why is data centers, AI, relevant or even important?
772460	776420	Because we've heard from the AI company CEOs themselves
776420	779100	that they say that this AI revolution is inevitable.
779620	780980	But she's questioning that.
781320	785580	So I think we'll hear more and more people having similar concerns as Ether.
786000	789700	One interesting example of a country that's in this AI revolution
789700	792560	that's not very much we would think about is China.
792560	795820	so where China is pretty effective
795820	797520	is the energy infrastructure
797520	798480	so they have built up
798480	800060	most of the energy infrastructure
800060	801300	they have built up
801300	802080	most of the
802080	803460	renewable energy mix
803460	804620	what they don't have
804620	805340	is now the chips
805340	807160	and the AI models are lagging
807160	808820	basically 3 to 6 months
808820	810060	depending on who you talk to
810060	811120	on that
811120	812820	but if you look at say
812820	814400	there was a survey done
814400	816420	80% of Chinese
816420	818320	are hopeful about the AI future
818320	820600	and then if you do the same survey
820600	822080	in the US it's only 31%
822080	824180	So the question is, what's the big difference, right?
824440	828300	So I think a lot of it is in whether we're optimistic
828300	832820	that the AI will bring about sort of a growth of a new economy.
833660	839520	And there are some things that I think people take it to the logical extreme.
839840	843860	If AI was to do everything of this, then what should humans do, right?
844180	847920	I think the way I would probably want to moving ahead,
847920	852260	I think that there is actually human creativity is actually infinite.
852580	854620	The demand for human creativity is actually infinite.
855440	860760	And I think for that, because of that, even if AI can automate most of the things,
861100	862360	there are still things for us to do.
862640	863960	Yeah, really insightful conversation.
864120	866240	Thank you so much for joining me, Bernad and Isaac.