KUALA LUMPUR: Microsoft's US$2.2 billion investment can greatly enhance Malaysia's economy and transform the growth of talent capital, as well as boost the stock market over the long haul, said economists.
The investment also underscored Malaysia's growing appeal as a preferred destination for foreign direct investment (FDI) among global technology firms, they said.
UCSI University Malaysia associate professor of finance and research fellow at the Centre for Market Education, Dr Liew Chee Yoong, said in the short term, the infusion of capital could create jobs and the adoption of technology, thereby generating immediate economic activity and enhancing productivity.
"Initially, the investment is likely to create thousands of direct tech jobs, and even more in ancillary sectors. Microsoft plans to upskill 200,000 individuals, laying the groundwork for a highly skilled workforce adept in artificial intelligence (AI) and cloud technologies." Liew said the investment would have immediate and long-term benefits for the economy by enhancing the overall technological proficiency of the workforce.
"The establishment of robust AI and cloud infrastructures could transform key industries, improve efficiencies and increase the gross domestic product (GDP) through technological advancements."
He highlighted the importance of a dedicated effort to build advanced technology infrastructure, which could enable Malaysia to emerge as a prominent digital economy in the region.
Liew noted that such an environment, supported by governmental initiatives and collaborative ventures with major tech corporations such as Google, Nvidia, Oracle and HP, would pave the way to establishing a stable and cutting-edge technological hub.
"The partnership with Microsoft could propel Malaysia to the forefront of AI revolution. By integrating AI into industries like manufacturing, healthcare and finance, Malaysia could gain a competitive edge in these sectors on the world stage."
Liew, however, said notable risks would be reliance on technology, privacy issues and cybersecurity challenges. "Mitigating these involves robust regulatory frameworks, investing in local talent to reduce dependency on foreign expertise and enhancing cybersecurity measures to protect against data breaches and other security issues." Microsoft's US$2.2 billion investment will be spread over four years to support Malaysia's digital transformation.
This will be the American technology giant's single largest investment in its 32-year history in the country. Microsoft chairman and chief executive officer Satya Nadella said the company aimed to build a "world-class AI infrastructure".
Tradeview Capital fund manager Neoh Jia Man said the investment could be positive for the stock market in the long run. "Given that the investments into cloud and AI is likely to involve data centres, sectors related to such infrastructure and equipment, including technology, utilities and, to a lesser extent, construction, could see stronger growth."
Neoh said a minor impact was expected on investor sentiment given the long gestation period that for the investments to materialise, but the development was undeniably positive. "Microsoft's investment will improve our nation's position in the global tech value chain which will serve to attract more FDI investments.
"Nonetheless, we do not think that this deal alone will have a significant impact on foreign investment in Malaysia's public equities, at least not in the short term," he added.
Malaysian Institute of Economic Research economist Dr Shankaran Nambiar said the whole economy would feel the effects of the investment. "This is going to see a huge transformation in the spin-offs from the investment as well as the growth of talent capital.
There will be a surge in the demand for skills-based employment and workers with talent in coding, AI, machine learning and the like."
Nambiar expects a significant surge in job demand across sectors such as facilities management, cloud computing and network engineering. He also said Malaysia could pivot its focus from the semiconductor industry to more digitally oriented sectors.
"Needless to say, there will also be a big demand for the construction industry and real estate."