New Microsoft cloud region helps drive digital development in Malaysia

Microsoft’s new cloud region in Johor Bahru will support growing demand for advanced workloads and AI services.

Microsoft’s new major project in Johor Bahru, called Southeast Asia 3, is set to support advanced workloads, offer more choices for regional customers, and strengthen Malaysia's role in digital growth.

Once operational, the new cloud region will provide a wide range of Microsoft cloud services built to handle complex needs from both public and private sectors. Malaysia's Minister of Digital, Gobind Singh Deo, said, "This milestone underscores Malaysia's continued progress in the digital economy. We are pleased to collaborate with the industry and Microsoft as a trusted technology partner in building Malaysia's leadership as a secure and reliable location for digital assets of organizations across the region."

Judson Althoff, CEO of Microsoft's Commercial Organization, spoke at the AI Tour in Kuala Lumpur and said, "Southeast Asia is one of the most dynamic regions in the world. Our expanded investment reflects Microsoft's commitment to helping governments, businesses, and communities innovate responsibly, build with confidence, and accelerate their AI Transformation journey—empowering organizations to emerge as Frontier firms."

The Southeast Asia 3 region will join more than 70 existing Azure cloud regions worldwide. It follows the recent launch of Malaysia West in Greater Kuala Lumpur. Together, these cloud regions may help local organizations speed up their AI adoption and support new digital services for the country.

Community and sustainability investments

The project also includes several long-term community programs guided by Microsoft's global Datacenter Community Pledge. In Johor Bahru, recent graduates are taking part in the Skills2Work Datacenter Foundations Program, created with The Asia Foundation and Universiti Teknologi Malaysia. Over the course of a year, 150 participants will receive hands-on data center training, exposure to real industry settings, and support to prepare them for careers in Malaysia's expanding tech sector.

At the same time, Microsoft is working with UNDP Malaysia and BPEN Johor to train 200 trainers from 20 social enterprises. These trainers may help around 10,000 people gain new skills and connections that could improve their social and economic prospects.

Sustainability is also part of the plan. Backup generators in the new cloud region will run on renewable biofuel to help reduce carbon emissions, and the data center's closed-loop chip-level cooling system aims to minimize water use by circulating water without the need for constant refills.

Additional efforts focus on access to clean water, including the installation of rainwater harvesting systems at 42 schools in Johor, supporting more than 20,000 people with water for sanitation and teaching students about conservation.

Environmental restoration is another priority. Local partners are leading efforts to restore mangrove habitats in Kampung Sungai Melayu and the Perapat River, helping support sustainable fisheries, eco-tourism activity, and environmental education.

AI adoption in Malaysia

Enterprises in the country are already developing AI-driven workflows. AFFIN Group has deployed a cloud-based core banking platform on Azure. PETRONAS is exploring ways to embed AI into decision-making and innovation. RHB Bank uses Azure OpenAI within Microsoft Teams to help employees retrieve information faster in both English and Bahasa Malaysia.

A national upskilling program called AIForMYFuture aims to equip 800,000 Malaysians with AI-related skills by the end of 2025. As of October 2025, more than 734,000 people have taken part across government, education, startups, and the general workforce.

Laurence Si, Managing Director of Microsoft Malaysia, said, "As a trusted technology partner to Malaysia for over 33 years, Microsoft is committed to empowering the nation's workforce with the skills needed to thrive in the AI economy."

National AI innovation

A broader effort called BINA AI Malaysia includes a National AI Innovation Center operated with EY, the National AI Office, and the PETRONAS Leadership Centre. One early initiative involves working with the Employees Provident Fund to design an AI-powered platform that may improve financial literacy and retirement planning for 16 million members.

Together, these efforts aim to build a foundation for inclusive AI adoption, new jobs, and better digital services across Malaysia.