Landscape and potential of Malaysian Data Centres in becoming the preferred Regional Data Center Hub

Landscape and potential of Malaysian Data Centres in becoming the preferred Regional Data Center Hub Mr. Billy Lee Kok Chi Chairman of Malaysian Data Center Alliance CEO of Free Net Business Solutions Sdn Bhd Billy.lee@fnbs.net

MALAYSIA FACTS Description Capital Multilingual Ethnic groups Area Population GDP (nominal) Kuala Lumpur Information High proficiency in English > 50.4% Malay > 23.7% Chinese > 11.0% Indigenous > 7.1% Indian > 7.8% Other 329,847km₂ 127,355sq mi 28,334,135 (2010 census) 86/km₂ (Density) Total $340.002 billion Per capita $12,243 (2013 estimate) Page 2

MDCA BACKGROUND In 2010 Malaysian Government s Economic Transformation Programme, Data Centre was identified as one of the key industry sector to be developed to increase national Gross National Income (GNI) by 2020 to be a developed nation. The ideal of Malaysia as the preferred Regional Data Center Hub was initiated MDeC has been tasked to oversee the formation of DC special focus group MDCA which will be formed within the Association of Outsourcing Malaysia (OM) to be the forefront in driving the DC industry of Malaysia.

MDeC BACKGROUND MDeC (MSC) is owned and funded by the Malaysia Government. MDeC role is to advise the Malaysian Government on legislation and policies, develop MSC Malaysia-specific practices, and set breakthrough standards for multimedia operations. MDeC also promote MSC Malaysia locally and globally, as well as support companies which are locating and located within MSC Malaysia. MDeC champion the merits of MSC Malaysia, facilitate the entry of companies and partner with the Government and the private sector in realizing both a vision and an opportunity. MDeC ensures that companies interested in entering MSC Malaysia have what they need to succeed. MDeC stands ready to work with investors, foreign and local, big or small, to ensure that MSC Malaysia fulfills its promises.

Outsourcing Malaysia (OM) BACKGROUND Outsourcing Malaysia (OM), an initiative of the outsourcing industry and a chapter of PIKOM the country s national ICT industry association, is envisioned to promote and develop Malaysia s outsourcing services industry as a global hub for high-value outsourcing. OM focuses on enabling both buyers and providers to work together on addressing service needs within the aegis of global best practices and competencies. OM represents the local outsourcing industry to the government and private sectors both locally and globally.

MDCA CHARTER A professional and sustainable alliance that provides a collective voice for the industry with respect to regulation and policy issues that may affect it. A platform for members to contribute to the establishment of best practice, education, industry leadership and technical standards to which the data center industry adheres. The Malaysian voice in the forward development of data centers. Transform Malaysia to be the preferred regional data centre hub.

MDCA OVERVIEW Industry support Advice and Governance

MDCA CORE VALUES & PASSION Core Values Member Driven Develop Credibility Collaborative Participation Passion Malaysia as the preferred regional Data Centre Hub Action Oriented

MDCA FOUNDING MEMBERS NO Company NO Company 01 AIMS Data Centre Sdn Bhd 10 Maxis Telecommunications 02 Basis Bay Services MSC Sdn Bhd 11 My Telehaus Sdn Bhd 03 CRF Computer Recovery Facility Sdn Bhd 12 NTT MSC Sdn Bhd 04 CSF Advisers Sdn Bhd 13 Patimas Outsourcing Services Sdn Bhd 05 Free Net Business Solution Sdn Bhd 14 SKALI Group 06 HDC Data Centre Sdn Bhd 15 Strateq Sdn Bhd 07 HeiTech Padu Berhad 16 Teliti International 08 i-tech Network Solution Sdn Bhd 17 VADS Bhd 09 Jaring Communications Sdn Bhd More than 1 Millions sq. ft. of data center space Captured ~90% of commercial data center space

MDCA COMMITTEE MEMBERS No. Committee Member MDCA Post Company Designation in Company 1 Mr. Billy Lee Kok Chi Chairman Free Net Business Solutions Sdn Bhd CEO 2 Mr. T. Rajan Deputy Chairman Basis Bay Sdn Bhd Technical Director 3 Mr. Chiew Kok Hin Committee (Business Development) AIMS Data Centre Sdn Bhd CEO 4 Mr. Alan Kam Poh Kwan Committee (Connectivity) NTT MSC Sdn Bhd Chief Strategy Officer 5 Mr. Edwin Ng Committee (Green Tech Standards) 6 Mr. Wan Shahriman Committee (Energy) 7 Mr. Phan Yoke Hin Committee (Standards & Policies) 8 Mr. Andy Yau Committee (PIKOM/OM Representative) VADS Berhad CRF Sdn Bhd HDC Data Centre Sdn Bhd Data Centre Advisory Sdn. Bhd. General Manager CEO Vice President CEO

MDCA KEY INITIATIVES & 2013 ACTIVITIES Business Development Connectivity Energy Green Tech Standards Standards & Policies CommunicAsia, SG Asia Pacific Outsourcing Summit, MY MDCA Annual Conference, MY Competitiveness of DCs IP transit prices, Access and Backhaul costs Work closely with TNB / KETTHA Conduct survey to find out industry electric usage Green Data Centre Forum General awareness forum Engage and adapt best practices Data Centre World Asia 2013, SG Fiber access to all DCs Power diversity / Self power generation Green Tech Lab Code of conduct & SOP

MALAYSIA THE DESTINATION FOR YOUR DC & WHY? Factors Geographical Advantage Demographics of Malaysia Economic Stability

MALAYSIA THE DESTINATION FOR YOUR DC & WHY? Factors Demand Driven Matured Utilities Infrastructure Generous Government Support

GEOGRAPHICAL ADVANTAGE 1.) Since the dawn of civilization in this region, Malaysia has been the focal point of both trade and culture exchange. 2.) Ironically, it is also free from natural disaster (earthquake and volcanic activity). 3.) Vast amount of land = competitive land value, 330,000 sq. km of it. 4.) Purposed-built data centers on top of strategically designated IT zones.

DEMOGRAPHICS OF MALAYSIA 1.) Multi-ethnic, multicultural and multilingual society. 2.) About 58.4% (17.04 million) people, mostly still young and able. 3.) Constitution guarantees freedom of religion. 4.) Highly & easily re-trained population. 5.) The average monthly salary of ICT professionals in Malaysia was USD 2,125 (RM 6,800) in 2012.

DEMOGRAPHICS OF MALAYSIA Figure 3:- Average Salary of ICT Professionals:- 2006 2013 Source:- Jobstreet.com and PIKOM, 2013 Salary increase in 2012:- 8.7% from RM6,240 to RM 6,784; Projected growth in 2013:- 8.9% to RM7,387

DEMOGRAPHICS OF MALAYSIA Table 1:- Average Salary of ICT Professionals by Job Category:- 2010 2012 Source:- Jobstreet.com and PIKOM, 2013 Gap is widening between lower and higher job categories when benchmarked against fresh graduates who typically get lower increments in comparison to their counterparts in higher categories.

ECONOMIC STABILITY 1. Economic Performance ranking improved to 7 th place out of 59 economies in 2012 1 2. One of the 20 largest trading nations worldwide 2 3. Top 5 most competitive nations in the Asia-Pacific region 3 4. Economic Transformation Programme (ETP) will lift Malaysia s Gross National Income (GNI) to US$523 billion by 2020, and raise per capita income from US$6,700 to at least US$15,000 4 5. Malaysia rises 19 places in World Bank 2014 report for ease of doing business to 6 th place 6. 2012 FDI Confidence Index from AT Kearney, has rated Malaysia business prospects very favorably. 7. Malaysia leaps 3 position to 16 th in Data Center Risk Index 2013 5 1 Malaysia s economy attains 7th position, New Straits Times, 20th May 2011. 2 Ibid. 3 Ibid. 4 Forbes.com, 21st September 2011. 5. W&C Data Center Risk Index 2013

Demand Driven Top 3 preferred outsourcing destination in the world Source: A.T. Kearney s Global Services Location Index (GSLI) 2004 2011

Demand Driven MNCs operating in Malaysia as outsourcing destination

DEMAND DRIVEN Malaysia Data Center industry revenue growth Revenue growth Increased by 38% 2011 2012

DEMAND DRIVEN Data Center export revenue YOY growth rate at 44% Revenue split 9% 2011 Domestic Foreign +44% 91%

DEMAND DRIVEN Revenue by verticals Healthcare Transportation & Logistics Oil & Gas Manufacturing State Government 1% 2% 2% 2% 2% Federal Government 5% Banking, Finance Services 12% Telecommunications 15% Others 19% Content & Technology Companies 40%

MATURED INFRASTRUCTURE State-of-the-Art telecommunications and power infrastructure and services 63% broadband penetration, 133% Cellular penetration, with aggressive FTTH rollouts in urban areas, and LTE entering the market High capacity, competitive, reliable and resilient power infrastructure, primarily gas fueled (Single digit SAIDI in IT Zone). Rank #3 in C&W DC Risk Index for Energy Security. High capacity connections through modern submarine cable systems (AAG, SMW4, ASE and APG due in 2014) with terrestrial diversity through Singapore

MATURED INFRASTRUCTURE Most data centers located at IT designated area with single digit SAIDI Comparison of Electricity Tariff

MATURED INFRASTRUCTURE Data Centre Cost Variable by Categories Source:- IDC Research July 2012

MATURED INFRASTRUCTURE IP Transit Industry changes since 2011 Enable more local traffic exchange Malaysia Internet Exchange (MYIX) a.) Extended peering membership to content provider (ASP) b.) Member grew from 28 to 51 as of 2012 c.) Allow oversee content provider peering like FB, Google etc. d.) Reduction of peering cost ALL major MYIX pops are hosted within MDCA s DC facility Approximately 90% of MYIX members are MDCA s customer IP Transit Industry Changes since 2011

MATURED INFRASTRUCTURE IP Transit Industry changes since 2011

MATURED INFRASTRUCTURE IP Transit Industry changes since 2011 Lower ISP cost Konsortium Rangkaian Serantau (KRS) 1.) Consortium of 24 Malaysia Telco's 2.) To aggregate IP Transit bandwidth 3.) Approximately 90% of MYIX members are MDCA s customer

MATURED INFRASTRUCTURE IP Transit Industry in near Future Direct connection to the world New submarine cables systems - Cahaya Cable & ASE (Q4 2012) - APG (Q4 2014) - Bay of Bengal Gateway (Q4 2014) - Serantau [direct US cable] (TBA) - New cable to Sarawak & Sabah (TBA)

MATURED INFRASTRUCTURE Asia Submarine Cable Express (ASE ) New Route into Malaysia (Direct) Connects My directly with Asia Total Capacity: 1.5 Tbps Capacity into My: 40Gbps JV among NTT Communications, Telecom Malaysia, Star Hub (Singapore), PLDT (Philippines) Operation started in 4Q 2012 Conventional Route into Malaysia (Via Singapore)

MATURED INFRASTRUCTURE Asia Pacific Gateway (APG) Landing point:- Kuantan, Malaysia Cable length:- 10,400km Connecting:- China, Hong Kong, Japan, South Korea, Malaysia, Taiwan, Thailand, Vietnam, Singapore RFS : Q4 2014 Source: Telegeography

MATURED INFRASTRUCTURE Bay of Bengal Gateway:- Landing points:- Penang Cable length:- 8,000km Oman, UAE, Mumbai, Chennai, Sri Lanka, Malaysia, Singapore RFS: Q4 2014 Source: Telegeography

MATURED INFRASTRUCTURE Source: Telegeography, KRS

MATURED INFRASTRUCTURE Backhaul & Access Connectivity Inter Data Centre Network Immediate initiative to address backhaul and access is to link up all MDCA members data center as one network Individual Member initiative AIMS inter-dc network SuperJaring TM My1Hub on VADS data center Many other MDCA s individual member inter DC MDCA Initiative MDCA s inter-dc fiber project Our aim is to have affordable 1Gbps and 10 Gbps connectivity to promote interconnection within all DCs - 1 Gbps @ ~RM10,000/month (SDG 3,800)

MATURED INFRASTRUCTURE Backhaul & Access Connectivity

MATURED INFRASTRUCTURE Backhaul & Access Connectivity

MATURED INFRASTRUCTURE Backhaul & Access Connectivity New Inter-DC connectivity could potentially encourage adoption of various Enterprise s IT implementation; WAN Backup & Archive to reduce tape operation nightmare Storage to Storage online replication to enhance disaster recovery Virtual Machine workload migration Integration with public/private cloud provider DC to DC load balancing 2 active DCs environment Multiple DCs with different SLA

Generous Government Support Grant for DC related Certifications Subsidy for Talent Certifications Type of supports Provision of MSC Incentives Incentives from various Government agencies

DATA CENTRE RISK INDEX 2013 Malaysia #16 on Data Centre Risk Index 2013 Source:- Cushman & Wakefield, Data Centre Risk Index 2013

DATA CENTRE RISK INDEX 2013 2013 Rank Index Score IST=100 Country Energy Cost Int l Bandwidt h Tier 1 Ease of Doing Business 2012 Rank Position Change 6 72.63 Hong Kong 27 3 2 7 1 15 72.49 Singapore 23 14 1 17 2 16 68.96 Malaysia 7 28 9 19 3 19 66.73 Thailand 12 23 14 15-4 25 58.91 China 10 13 26 26 1 26 55.12 Japan 29 8 16 20-6 28 46.37 Indonesia 14 25 28 28 0 29 40.85 India 25 16 30 29 0 Source:- Cushman & Wakefield, Data Centre Risk Index 2013

DATA CENTRE SOUTH EAST ASIA MARKET SHARE

LANDSCAPE OF DC MALAYSIA IN SUMMARY Future of Malaysia DC Industry 1.) More foreign companies outsource regional DC Hub 2.) Competitive IP Transit & Inter-DC bandwidth within DCs 3.) Better standards, guidelines, case study and reference

Thank You 谢 谢 Source: www.tourism.gov.my Page 44

Thank You www.mdca.org.my

MDCA LEADERSHIP STRUCTURE Wan Murdani MDeC (Advisor) Billy Lee FREENET (Chair) T. Rajan Basis Bay (Deputy Chair) Justin OM (Secretariat / Treasurer) Chiew AIMS (Committee) Business Development Alan NTT (Committee) Bandwidth Edwin VADS (Committee) Green Tech Standards Wan CRF (Committee) Energy Phan HDC (Committee) Standards & Policies Andy Yau (PIKOM / OM rep)

MDCA MEMBERSHIP CRITERIA No Membership Type Description 1 Ordinary A. Applicant is a company registered under the registrar of Companies of Malaysia; and B. The applicant is a commercial Data Centre operator with white floor space of more than 5,000 sq. ft. 2 Affiliate A. Applicant is a company registered under the registrar of Companies of Malaysia; and B. The applicant is a commercial Data Centre operator with white floor space of more than 2,000 sq. ft. and not more than 5,000 sq. ft. 3 Associate A. Applicant is a company registered under the registrar of Companies of Malaysia; and B. The applicant is a commercial Data Centre operator with white floor space of less than 2,000 sq. ft. or C. The the applicant is a service provider related to a Data Center operations or non-commercial (captive) Data Centre operator