EP-142: Malaysia's Digital Magnet Effect Drives Record Investment Surge in Q2
The main contributor to this surge was Malaysia’s data center and cloud sector.
Malaysia has swiftly transformed into ASEAN’s digital magnet, drawing global capital at warp speed.
In the second quarter of 2025, Malaysia registered a remarkable milestone as it secured MYR 29.47 billion (US$ 6.19 billion) in foreign digital investments, more than doubling the MYR 13.11 billion (US$ 2.75 billion) it attracted in Q1 2025, according to the Malaysia Digital Economy Corporation (MDEC).
The lion’s share of this influx came from Singapore-based investors, who alone accounted for MYR 13.91 billion, approximately one-third of the total investment pie. The US followed with MYR 6.44 billion while China contributed MYR 2.97 billion. Such overwhelming cross-border interest highlights Malaysia’s burgeoning appeal as a regional hub for digital growth.
The main contributor to this surge was Malaysia’s data center and cloud sector. In Q2, these verticals attracted a staggering MYR 30.95 billion of investment, with data center outfits alone contributing MYR 13.45 billion.
The global AI boom is fueling demand for robust, high-speed computing environments, turning Malaysia into one of the region’s most sought-after sites for hyperscale infrastructure.
In 2024, the country had already pulled in over MYR 86 billion in data center investments, establishing itself as Southeast Asia’s top data center market with around 77 facilities. Top-tier tech giants have been making big bets on Malaysia: Microsoft’s launch of three new cloud data centers by mid‑2025 and Google’s earlier commitment of US$2 billion underline the country’s rising strategic value.
Malaysia’s data center boom serves a triple purpose: supporting AI and cloud expansion, creating skilled jobs, and integrating the nation more deeply into global digital supply chains.
But it’s not without challenges.
Analysts warn these facilities consume vast quantities of power and water. Crucially, the government and investors are addressing these concerns through smart policy, renewable energy integration, and efficiency mandates aimed at balancing growth with sustainability.
Beyond hardware, MDEC has taken a holistic approach to strengthen Malaysia’s digital ecosystem. Its flagship Malaysia Digital initiative supports companies at various growth stages fostering innovation and deepening sectoral impact. As of June this year, 261 companies under this initiative have committed a cumulative MYR 42.58 billion in investments, with projected creation of 17,495 knowledge-sector jobs over the next five years.
These efforts align closely with MDEC’s goal to propel the digital economy’s contribution to GDP to at least 25.5% by year‑end.
Launched earlier this year, this ambition underscores a national push to embed digital at the heart of Malaysia’s economic engine. Already, digital sectors account for over 23% of GDP, and the country aims to exceed the 25% mark through leaps in productivity and high-value services.
Looking ahead, the mix of hyperscale infrastructure, global investment, and supportive policy makes Malaysia a standout digital frontier in Southeast Asia. But its true potential lies in translating capital into sustainable growth, jobs, and innovation-led competitiveness.
On that note, let’s dive into this week’s recap.
Buzzing Deals
➤ Indonesia-based AI-led credit analysis startup Sxored has raised an undisclosed amount of funding from East Ventures. The company will use the fresh capital to fast-pace product development and deepen the integration of its AI and machine learning solutions. Additionally, the company will expand its services to work with a wider range of client segments and financial use cases. Sxored provides an all-in-one solution for lenders by combining intelligent OCR and an AI-powered copilot to automate and enhance credit document extraction and analysis.
➤ Singapore-based health tech company Rebee Health has secured an undisclosed amount of funding from 1337 Ventures, a Malaysian VC firm. The company will utilize the capital to accelerate the enhancement and scaling of its technology, forge more partnerships with healthcare providers, and develop AI-led rehabilitation systems to automate patient monitoring. Rebee Health helps patients with faster recovery from post surgery or injury with in-app physiotherapy guidance and supports healthcare providers in delivering better care.
➤ Indonesian waste management company Sirsak has raised US$600,000 in a pre-Seed round of funding that was led by Openspace Ventures along with participation from The Radical Fund. The latest funding will allow the company to develop an improved traceability system, research and develop low-value packaging, and expand its recycling partner network. It plans to achieve 4,000 tonnes of waste recovery and grow to 1,000 waste collection points in the coming months. Sirsak is a tech platform that digitizes waste collection, offering traceability for post-consumer packaging and connecting brands with waste pickers, aggregators, and recyclers.
➤ Singapore-headquartered laser communication tech company Transcelestial has received an undisclosed amount of funding co-led by NTT Finance and Paspalis Capital, a venture capital firm focused on Northern Australia. Other investors included Golden Egg Ventures, In-Q-Tel, David Wilson (Tyr Ventures), Beyond Earth Technologies, and Non Public. The company, which has raised US$30.7 million to date, will use the new funding to support telecom, defense, and space infrastructure projects in Australia and in Japan, where it will develop disaster-resilient networks, secure defense solutions, and expand space-based capabilities through a satellite communication network. Transcelestial provides high-speed internet and connectivity via laser beam, without using underground cables or radio frequency-based devices.
➤ Singapore-based robotics startup Augmentus has raised US$11 million in a Series A+ round of funding led by Woori VP. The funding saw participation from new investor EDBI, as well as existing backers Sierra Ventures and Cocoon Capital. The company will allocate the capital to accelerate regional deployment of its fully autonomous robotic surface finishing and welding systems, fulfill demand from marquee manufacturing customers, and advance R&D into hyper-adaptive, AI-driven robotic systems built for the factory floor. Augmentus offers a no-code platform that lets manufacturers automate complex industrial processes using 3D scanning, auto-generated toolpaths, and adaptive robotic motion without needing coding or robotics expertise.
➤ Chinese automobile manufacturer CalmCar has raised US$69.7 million (500 million Yuan) in a Series D round of funding. While the company did not disclose its new investors the funding round saw participation from its existing backers which include German auto parts maker ZF Friedrichshafen AG, SAIC Motor Corp and Beijing Automotive Group (BAIC Group), China TransInfo Technology; and China Unicom. Founded in 2016, the company uses AI to develop vision-based sensing solutions for autonomous driving and driver assistance systems that help with tasks like parking, lane changes, and avoiding collisions.
What Stood Out This Week
➤ South Korean electronics major Samsung is set to acquire American healthcare company Xealth as it expands its mobile healthcare service business. The companies did not disclose the financial details of the deal. This acquisition will allow Samsung to tap into Xealth’s digital health platform to power its wearable tech offerings. Xealth operates digital health services by linking users with healthcare providers with more than 500 US hospitals.
➤ Malaysia is working on releasing new guidelines for the use of artificial intelligence (AI) by media, public relations, and digital content creators. Malaysia’s Communications Minister Fahmi Fadzil said the upcoming Guidelines for Responsible AI Communication will provide a critical framework to the country's professionals in key areas. The guidelines aim to support the National AI Roadmap and promote ethical, transparent, and trustworthy communication.
➤ Singapore’s sovereign wealth fund Temasek reported a rise in its net portfolio value to US$339 billion for the financial year ending 31 March 2025, up from US$35.13 billion from the previous year. Temasek said while its NPV remained strong, it sees geopolitical tensions as a huge risk which might affect global growth. The firm's positive performance is a direct result of the strong growth shown by its listed Singapore-based Temasek Portfolio Companies (TPCs) and its investments in China, the US, and India.
➤ Malaysia’s sovereign wealth fund Khazanah Nasional Bhd is in talks with the French and Italian sovereign wealth funds for cross-border collaboration, particularly in the field of artificial intelligence (AI). The discussions were centered around how the three funds could work together as geopolitical dynamics change and rapid technological innovations. Khazanah Nasional’s managing director Amirul Feisal Wan Zahir said the three funds are facing similar challenges of being globally competitive using AI and innovation, and to find new markets.
And that’s the wrap for this edition of #ICYMI. Every week, we recap the latest developments in the Southeast Asian startup ecosystem, along with a commentary on what catches our eye.