WEBVTT 00:00:00.000 --> 00:00:05.340 The AI boom means that data centers are being built at an unprecedented pace around the world 00:00:05.340 --> 00:00:09.700 and Isaac, one country in Asia where the build-out is really obvious is Malaysia. 00:00:10.140 --> 00:00:14.040 That's right, Mariko. Malaysia has emerged as an AI hub in Southeast Asia. 00:00:14.520 --> 00:00:19.760 The country produces a lot of components that go into chips that help power AI technology. 00:00:20.220 --> 00:00:23.580 The country has also been aggressively building data centers. 00:00:24.080 --> 00:00:27.540 Now, the economy in Malaysia is expanding thanks to this boom, 00:00:27.540 --> 00:00:29.860 but there's some pushback too. 00:00:30.000 --> 00:00:35.000 Yeah, and the big question is whether or not those concerns about data center are justified. 00:00:35.320 --> 00:00:41.680 And also, how is the pushback against them affecting Southeast Asia's effort to get a slice of the AI boom? 00:00:45.540 --> 00:00:51.160 Every application you use, whether it's with AI or without AI, has to come from somewhere. 00:00:51.500 --> 00:00:54.740 It's not just a little computation that's done in the cloud, right? 00:00:55.000 --> 00:00:58.980 The cloud is actually hosted in a physical location called a data center. 00:00:58.980 --> 00:01:12.580 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. 00:01:12.680 --> 00:01:15.700 And usually the facilities are managed by very, very few people. 00:01:15.700 --> 00:01:28.840 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. 00:01:28.980 --> 00:01:35.440 And that is why we need to, because we need data centers and we need large sources of land, 00:01:35.660 --> 00:01:39.660 you're going to see large sources of construction, there is changes in the environment, 00:01:40.440 --> 00:01:44.560 changes in maybe many normal people's daily expenses. 00:01:44.800 --> 00:01:46.280 So that's why it's now become a big subject. 00:01:46.560 --> 00:01:46.960 Yeah, indeed. 00:01:47.360 --> 00:01:52.060 And yeah, because I was looking at, I think in the UK, there were some protests against 00:01:52.060 --> 00:01:55.840 those data centers being built in your backyard, also in the United States. 00:01:55.840 --> 00:02:02.240 But Isaac, here in Asia, Malaysia kind of stands out in terms of the number of data centers being built. 00:02:02.700 --> 00:02:05.960 How did Malaysia become such a hub in terms of this AI boom? 00:02:06.040 --> 00:02:11.480 I think the big contributor is back in 2019 when Singapore implemented this temporary ban. 00:02:11.620 --> 00:02:15.220 So developers had to look elsewhere to put their data centers. 00:02:15.460 --> 00:02:18.000 And so they looked into neighboring Malaysia, Johor. 00:02:18.280 --> 00:02:23.180 Its proximity to Singapore makes it a perfect place to build data centers, 00:02:23.180 --> 00:02:28.120 which you can see now, 85% of Malaysia's data centres are located in Johor. 00:02:28.420 --> 00:02:31.640 Furthermore, the government put out incentives 00:02:31.640 --> 00:02:35.460 that sort of draw in foreign investors to invest in the country. 00:02:35.840 --> 00:02:41.420 So Bernard, Isaac just talked about Singapore's restrictions on data centres back in 2019. 00:02:41.540 --> 00:02:43.060 Can you just explain why that was? 00:02:43.120 --> 00:02:45.600 It's actually not so much a ban, it's kind of a moratorium 00:02:45.600 --> 00:02:49.060 because I think the Singapore government is very prudent 00:02:49.060 --> 00:02:52.420 about how they're thinking about the electricity 00:02:52.420 --> 00:02:55.040 outages that have been going on. 00:02:55.140 --> 00:02:57.360 They're mostly caused because of a spike in demand 00:02:57.360 --> 00:02:58.040 in computing. 00:02:58.760 --> 00:03:01.840 And I think post 2024, 00:03:02.420 --> 00:03:05.500 when there was also the US banning China 00:03:05.500 --> 00:03:07.060 for having the NVIDIA chips 00:03:07.060 --> 00:03:09.060 and a lot of the Chinese founders 00:03:09.060 --> 00:03:11.600 from the Chinese tech companies, 00:03:11.700 --> 00:03:13.280 they require another place 00:03:13.280 --> 00:03:14.220 where they could actually have 00:03:14.220 --> 00:03:16.120 a source of good compute. 00:03:16.540 --> 00:03:18.700 So that also drives in a lot of foreign director 00:03:18.700 --> 00:03:24.760 investments into Malaysia as a result. So it's a combination of factors. We also talk about, say, 00:03:24.900 --> 00:03:32.020 things like legislation changes. Somewhere between 2019 to 2023, a lot of the Southeast Asia 00:03:32.020 --> 00:03:36.600 countries started to have what we call data sovereignty laws. So data sovereignty laws say, 00:03:37.020 --> 00:03:41.980 for example, Malaysia said we need to have something like the data must be hosted in Malaysia. 00:03:42.740 --> 00:03:46.860 Indonesia certainly say the same. So it also prompts the hyperscalers to say, okay, 00:03:46.860 --> 00:03:52.340 we probably need in order to allow our businesses to operate in these countries, 00:03:52.520 --> 00:03:54.860 we have to set up the data centers. 00:03:55.040 --> 00:03:59.460 And that build up, I think, started as of when that period started. 00:03:59.660 --> 00:04:03.320 And I have to say, they don't look that pretty to have in your back garden. 00:04:03.620 --> 00:04:05.660 But Isaac, can you explain? 00:04:06.300 --> 00:04:09.400 I mean, it's not just geography of where Malaysia was, right? 00:04:09.460 --> 00:04:12.240 That all the investments started pouring into the country 00:04:12.240 --> 00:04:16.380 because it has been producing a lot of components, tech components. 00:04:16.860 --> 00:04:21.800 So how have all these data centers being built? How has it helped the economy? 00:04:21.980 --> 00:04:24.940 And can you just explain the background of Malaysia's economy? 00:04:25.320 --> 00:04:28.480 Yeah, like billions of dollars are being poured into Malaysia's economy. 00:04:28.880 --> 00:04:37.360 And according to the International Monetary Fund, this year alone, it's expected for Malaysia's GDP to grow by at least 4.7%. 00:04:37.360 --> 00:04:42.320 Now, the government obviously has a dream of being at the frontier of this AI revolution. 00:04:42.320 --> 00:04:45.980 So it's investing a lot. It's offering eligible companies incentives. 00:04:45.980 --> 00:04:50.580 For example, some of them could apply for income tax exemptions. 00:04:51.000 --> 00:04:54.420 Others could even apply, could get like investment allowances. 00:04:54.780 --> 00:04:59.660 So all these incentives are the government's steps to make that dream a reality. 00:05:00.380 --> 00:05:05.340 But of course, there has been quite a lot of protests and you actually spoke to somebody. 00:05:05.460 --> 00:05:09.360 So can you just tell us what she told you, what her concerns are? 00:05:09.780 --> 00:05:11.340 Yeah, I spoke to Itha Malayana. 00:05:11.480 --> 00:05:13.280 She's a 26-year-old English teacher. 00:05:13.280 --> 00:05:18.000 So in July, she saw the news that a data center was being proposed in her community. 00:05:18.560 --> 00:05:21.700 And she basically just said, no, not in my backyard. 00:05:22.120 --> 00:05:28.080 And that concern is because she saw what's happening in the US, the huge backlash against 00:05:28.080 --> 00:05:31.280 data centers, and she didn't want that to be in her community. 00:05:31.400 --> 00:05:34.080 So she goes online and she creates this petition. 00:05:34.460 --> 00:05:39.140 And what really stood out for me is that in that petition, she started with a really famous 00:05:39.140 --> 00:05:45.080 quote about how when the last tree falls, people will realize that they can't eat money. 00:05:45.080 --> 00:05:46.180 And I asked her about that. 00:05:46.180 --> 00:05:51.600 She said that quote basically encapsulates everything that she's standing against the 00:05:51.600 --> 00:05:53.020 data centers. 00:05:53.020 --> 00:05:54.660 And this is what she has to say. 00:05:54.660 --> 00:06:01.060 One of the justifications of data centers is that local industry workers would get trained 00:06:01.060 --> 00:06:04.480 and hopefully get to develop this industry in Malaysia. 00:06:04.480 --> 00:06:09.560 But I think I've read very briefly on this, but it seems like that's not going to be the 00:06:09.560 --> 00:06:10.220 case at all. 00:06:10.320 --> 00:06:14.140 Like they're just going to set up these servers and then have a few people managing it. 00:06:14.200 --> 00:06:16.680 But it's not really going to be like a skill transfer thing. 00:06:17.140 --> 00:06:22.920 I could justify using AI in like medicine or like, I don't know, astrophysics. 00:06:22.920 --> 00:06:29.040 But why do we need it to decide what we want for lunch or solve a relationship problem? 00:06:29.400 --> 00:06:31.660 Bernard, what do you think about what Aoife said? 00:06:31.660 --> 00:06:37.660 I think there are a few parts of what it comes to when a data center comes online. 00:06:38.240 --> 00:06:43.100 So before the data center is actually built, that actually brings in what we call construction jobs. 00:06:43.540 --> 00:06:46.640 Now, once the data center is complete and completed, 00:06:47.080 --> 00:06:51.520 then the management of the data center is taken over by, say, the hyperscaler. 00:06:51.800 --> 00:06:55.160 They typically, it's actually very few people, as she rightfully pointed. 00:06:55.160 --> 00:07:09.180 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. 00:07:09.480 --> 00:07:14.580 But then when you look out to the bigger economy, right, then you think about what the data center is actually driving. 00:07:14.940 --> 00:07:20.000 The data center, the real focus is actually to drive more what we call the digital economy. 00:07:20.560 --> 00:07:23.420 So the digital economy could be in the form of, say, 00:07:23.920 --> 00:07:26.040 maybe knowledge-based work. 00:07:26.160 --> 00:07:29.900 It could be new kinds of jobs that may be created out of this AI. 00:07:30.000 --> 00:07:32.320 I know we are now in what we call a transition stage. 00:07:32.900 --> 00:07:39.300 And so the big fear is the job displacement is larger than the job creation. 00:07:40.000 --> 00:07:40.520 Yeah. 00:07:40.780 --> 00:07:44.460 The only answer to what she's saying is the creation of new jobs. 00:07:44.620 --> 00:07:46.540 Is there going to be more than or less? 00:07:47.120 --> 00:07:47.960 That question, I don't know. 00:07:47.960 --> 00:07:52.800 I would prefer to be much more humble to say I don't know. 00:07:53.020 --> 00:07:58.640 But I think we've seen different iterations of technological change. 00:08:00.000 --> 00:08:02.260 And so far, every time it happened, 00:08:02.420 --> 00:08:04.240 we seem to end up creating more jobs. 00:08:04.800 --> 00:08:07.920 If you're just looking at this current time period, 00:08:08.020 --> 00:08:08.960 when's the data center built? 00:08:09.540 --> 00:08:10.820 She's effectively right on that. 00:08:10.820 --> 00:08:13.600 But how the data center creates value 00:08:13.600 --> 00:08:15.540 for the digital economy within that country, 00:08:16.120 --> 00:08:17.700 that is not so clear to me. 00:08:17.800 --> 00:08:19.520 But would that be within that country? 00:08:19.760 --> 00:08:22.880 Because couldn't you argue that those new jobs created, 00:08:23.000 --> 00:08:26.180 thanks to the AI boom, might be outside of Malaysia? 00:08:26.280 --> 00:08:29.200 So that was the whole reason why every country 00:08:29.200 --> 00:08:30.880 now has their own Data Sovereignty Act. 00:08:31.120 --> 00:08:34.100 Yes, you can host other data from other parts of the world, 00:08:34.100 --> 00:08:37.700 but you still have a sustainable holding. 00:08:38.120 --> 00:08:40.280 And every business out there who needs, 00:08:40.380 --> 00:08:41.700 whether it's a neocloud or hyperscaler, 00:08:41.700 --> 00:08:46.500 they have to invest in Malaysia in order to get that part of the economy. 00:08:46.720 --> 00:08:48.260 And they have to drive the local economy 00:08:48.260 --> 00:08:52.300 because what they don't really want is having everyone, 00:08:52.560 --> 00:08:55.140 the local communities holding pitchforks and say, 00:08:55.240 --> 00:08:57.180 hey, you know, we want to burn down the data center. 00:08:57.280 --> 00:09:00.140 That is also a cause of concern for them. 00:09:00.600 --> 00:09:03.500 And I think that stability also becomes part of the conversation. 00:09:04.080 --> 00:09:08.540 How has the Malaysian government been speaking about this ambition, 00:09:08.540 --> 00:09:14.860 their ambition to be the AI hub, but also concerns from those local residents over jobs, 00:09:14.860 --> 00:09:20.460 but also about the environment. I previously mentioned that Johor currently houses about 80 00:09:20.460 --> 00:09:26.060 to 85% of the data centers in Malaysia. So in the state of Johor, the government has banned two tiers 00:09:26.060 --> 00:09:31.900 of data centers. First is a tier one and tier two. Those are data centers which consume about 50 00:09:31.900 --> 00:09:39.820 million litres of water a day. And that amount is basically about, it could satisfy the people's 00:09:39.820 --> 00:09:47.000 daily drinking needs above 25 million people. So the government has stopped those data centres 00:09:47.000 --> 00:09:52.500 from being built. It has also introduced penalties where if the data centre operator said that 00:09:52.500 --> 00:09:58.620 this is the amount of electricity it's going to use per year, if it doesn't need 85% of it, 00:09:58.620 --> 00:10:00.540 they're going to find the operator. 00:10:00.800 --> 00:10:03.220 There's actually a metric to look at data centers. 00:10:03.340 --> 00:10:05.220 It's called power usage effectiveness, 00:10:05.580 --> 00:10:06.840 what they call the PUE metric. 00:10:07.480 --> 00:10:09.720 So if you think about, say, 00:10:10.020 --> 00:10:12.240 currently Singapore is mandating 00:10:12.240 --> 00:10:15.160 that all data centers must be below 00:10:15.160 --> 00:10:17.400 what is called 1.25 PUE. 00:10:17.920 --> 00:10:18.000 Okay. 00:10:18.580 --> 00:10:20.220 Malaysia, I think it's 1.4. 00:10:20.560 --> 00:10:22.460 So there are two aspects of the problem. 00:10:22.560 --> 00:10:23.820 So one of them is the water problem. 00:10:24.260 --> 00:10:26.120 The water problem is real 00:10:26.120 --> 00:10:31.360 if they do not try to recycle the water for the data center's cooling. 00:10:31.820 --> 00:10:36.200 So there are actually already known solutions to that. 00:10:36.400 --> 00:10:38.360 So there is something called StatePoint Liquid Cooling. 00:10:38.800 --> 00:10:40.880 A couple of companies actually started in the US. 00:10:41.160 --> 00:10:42.160 But how do they do it? 00:10:42.160 --> 00:10:44.120 So basically, you reflux the water. 00:10:44.600 --> 00:10:47.960 There is an entire recycling technology on that. 00:10:48.420 --> 00:10:51.780 The more concerning part of this is actually energy. 00:10:52.900 --> 00:10:55.460 Because of the usage of AI is exponentially growing, 00:10:55.460 --> 00:10:58.180 the energy usage is also growing exponentially 00:10:58.180 --> 00:11:00.860 and we are actually filling it. 00:11:01.200 --> 00:11:05.640 So a lot of it is due to poor demand forecasting of power. 00:11:05.840 --> 00:11:07.420 If you think about, look at the region as a whole, 00:11:07.740 --> 00:11:09.940 countries, I mean, Singapore is already doing that. 00:11:10.160 --> 00:11:11.580 The next data centre you build, 00:11:11.700 --> 00:11:13.640 you have to have a certain energy, 00:11:14.820 --> 00:11:16.060 that means the energy you use, 00:11:16.240 --> 00:11:18.080 some parts of it must come from renewables. 00:11:18.560 --> 00:11:20.580 Then as you go to say Malaysia, for example, 00:11:20.720 --> 00:11:21.860 then the question is what kind of, 00:11:22.160 --> 00:11:23.520 they definitely have energy, 00:11:24.000 --> 00:11:25.100 they have petroleum, oil, 00:11:25.460 --> 00:11:29.860 so they can hydrocarbon so you can power some part of it then the question is do they want to 00:11:29.860 --> 00:11:36.820 rely on other mixes because the there is no way now that uh just by using a carbon they are able 00:11:36.820 --> 00:11:42.420 to run that they also you also bring about the increase of climate change as well and malaysia 00:11:42.420 --> 00:11:47.620 has the ambition to be that ai hub in southeast asia and it really wants to achieve that so i 00:11:47.620 --> 00:11:52.420 think the government needs to balance between addressing the people's concerns while also 00:11:52.420 --> 00:11:58.180 taking realistic steps to make those dreams a reality of being an AI hub. So the Malaysian 00:11:58.180 --> 00:12:04.660 government, the Prime Minister announced that the young people will be able to access a three-month 00:12:04.660 --> 00:12:10.500 free subscription to some of the AI models and that is basically to allow them to explore the 00:12:10.500 --> 00:12:17.460 AI models, play with it and even to perhaps boost their creativity and improve their digital skills. 00:12:17.460 --> 00:12:22.520 So the government is taking an active step into making the country embrace AI. 00:12:22.740 --> 00:12:26.980 But I guess we'll see how the government addresses the people's concerns. 00:12:27.760 --> 00:12:33.180 Will they keep building data centers for now with, I guess, stricter regulations, Isaac? 00:12:33.440 --> 00:12:37.200 I think so, honestly, because the people's concerns about data centers are valid. 00:12:37.200 --> 00:12:43.600 And for example, you heard from Ether herself that she said that she doesn't want Malaysia to become like the US, 00:12:43.600 --> 00:12:47.160 where the people actively push back against data centers 00:12:47.160 --> 00:12:52.460 because she's questioning why is data centers, AI, relevant or even important? 00:12:52.460 --> 00:12:56.420 Because we've heard from the AI company CEOs themselves 00:12:56.420 --> 00:12:59.100 that they say that this AI revolution is inevitable. 00:12:59.620 --> 00:13:00.980 But she's questioning that. 00:13:01.320 --> 00:13:05.580 So I think we'll hear more and more people having similar concerns as Ether. 00:13:06.000 --> 00:13:09.700 One interesting example of a country that's in this AI revolution 00:13:09.700 --> 00:13:12.560 that's not very much we would think about is China. 00:13:12.560 --> 00:13:15.820 so where China is pretty effective 00:13:15.820 --> 00:13:17.520 is the energy infrastructure 00:13:17.520 --> 00:13:18.480 so they have built up 00:13:18.480 --> 00:13:20.060 most of the energy infrastructure 00:13:20.060 --> 00:13:21.300 they have built up 00:13:21.300 --> 00:13:22.080 most of the 00:13:22.080 --> 00:13:23.460 renewable energy mix 00:13:23.460 --> 00:13:24.620 what they don't have 00:13:24.620 --> 00:13:25.340 is now the chips 00:13:25.340 --> 00:13:27.160 and the AI models are lagging 00:13:27.160 --> 00:13:28.820 basically 3 to 6 months 00:13:28.820 --> 00:13:30.060 depending on who you talk to 00:13:30.060 --> 00:13:31.120 on that 00:13:31.120 --> 00:13:32.820 but if you look at say 00:13:32.820 --> 00:13:34.400 there was a survey done 00:13:34.400 --> 00:13:36.420 80% of Chinese 00:13:36.420 --> 00:13:38.320 are hopeful about the AI future 00:13:38.320 --> 00:13:40.600 and then if you do the same survey 00:13:40.600 --> 00:13:42.080 in the US it's only 31% 00:13:42.080 --> 00:13:44.180 So the question is, what's the big difference, right? 00:13:44.440 --> 00:13:48.300 So I think a lot of it is in whether we're optimistic 00:13:48.300 --> 00:13:52.820 that the AI will bring about sort of a growth of a new economy. 00:13:53.660 --> 00:13:59.520 And there are some things that I think people take it to the logical extreme. 00:13:59.840 --> 00:14:03.860 If AI was to do everything of this, then what should humans do, right? 00:14:04.180 --> 00:14:07.920 I think the way I would probably want to moving ahead, 00:14:07.920 --> 00:14:12.260 I think that there is actually human creativity is actually infinite. 00:14:12.580 --> 00:14:14.620 The demand for human creativity is actually infinite. 00:14:15.440 --> 00:14:20.760 And I think for that, because of that, even if AI can automate most of the things, 00:14:21.100 --> 00:14:22.360 there are still things for us to do. 00:14:22.640 --> 00:14:23.960 Yeah, really insightful conversation. 00:14:24.120 --> 00:14:26.240 Thank you so much for joining me, Bernad and Isaac.