As Malaysia embraces cloud, data sovereignty debate intensifies

As businesses build confidence and capabilities in cloud – shifting from curiosity to clarity in approach – data sovereignty is emerging as a decisive factor in future enterprise adoption across Malaysia.

While appetite for innovation remains strong within public and private sectors, the commitment to digitalise through embracing cloud solutions and services comes with a caveat due to the rising importance of data security.

“Data is becoming a valuable asset for both businesses and governments,” observed David Chan, co-founder and CEO of AVM Cloud.

“But as more businesses and governments store sensitive data in the cloud, there is a growing risk of data breaches and cyber attacks. This can have serious consequences for individuals and organisations, including financial losses and reputational damage.”

The concept of data sovereignty is centred on the ability of a nation to control and regulate data within its borders, including the collection, storage and processing of data. In Malaysia, this approach is now carrying weight.

To address rising security and privacy concerns, the Malaysian government has taken steps to promote data sovereignty.

For example, in 2018, the Malaysia Digital Economy Blueprint was launched to promote the use of in-country data centres and encourage the development of local data protection laws. This was supported by plans to establish a national data centre to accelerate the use of secure and local data storage.

“Data sovereignty is becoming an increasingly important issue in Malaysia as more businesses and governments rely on digital services and data storage,” Chan added.

According to Chan, protecting data sovereignty is critical in not only ensuring data security but protecting national security and promoting economic growth. This is in addition to overcoming ongoing uneasiness related to potential foreign interference.

“With more and more data being stored in the cloud, there is a risk that sensitive information could be accessed by foreign governments or organisations,” Chan cautioned. “This could compromise national security and undermine Malaysia’s sovereignty.”

In operating at the heart of an expanding cloud solutions and services industry in Malaysia, AVM Cloud – acquired by Time dotCom in 2021 – is well-placed to assess the ongoing debate linked to digital and data sovereignty.

For Chan, the market is still weighing up the pros and cons of such an approach:

Pros:

• Increased data security: By embracing data sovereignty, Malaysia can ensure that sensitive data is stored and processed within its borders, reducing the risk of data breaches and cyber attacks.
• Economic benefits: This can help Malaysia develop a strong data ecosystem, which could attract foreign investment and create new job opportunities in the technology industry.
• Better protection of national security: By controlling data within its borders, Malaysia can better protect its national security interests, including sensitive government and military data.
• Increased control over data regulation: Offers Malaysia more control over the regulation of data within its borders, reducing the influence of foreign governments and organisations.

Cons:

• Increased costs: Developing a local data ecosystem can be expensive, requiring significant investment in infrastructure and technology.
• Reduced access to global data resources: By embracing data sovereignty, Malaysia could be limiting its access to global data resources, potentially hindering innovation and development.
• Reduced competitiveness: This could reduce Malaysia’s competitiveness in the global digital economy, as it may be seen as a barrier to international business.
• Complexity of data regulation: Developing local data protection laws and regulations can be complex and time-consuming, requiring significant resources and expertise. This could be a challenge for Malaysia as it seeks to establish itself as a leader in the technology industry.

Overall, Chan acknowledged both sides of the debate as cloud-ready businesses seek to extract maximum benefits while mitigating any downside risk – “Malaysia will need to carefully consider these factors as it develops its digital sovereignty strategy”.

Sizing up sovereign cloud

From a go-to-market perspective, AVM Cloud forms the cloud pillar of TIME dotCom’s 3C framework – spanning cloud, connectivity and cyber security – with a specific focus on multi-cloud and hybrid IT environments.

As the largest VMware Cloud Partner in Southeast Asia and Korea, the business operates as an elite VMware Sovereign Cloud Provider in Malaysia. This is in addition to strong cloud and service provider alliances with Veeam and Hewlett Packard Enterprise.

Such expertise has allowed the company to build a viable sovereign cloud approach to tackling data sovereignty challenges in Malaysia.

“Many businesses see sovereign cloud as a way to increase data security and reduce the risk of data breaches and cyber attacks,” Chan highlighted. “They believe that by storing data within Malaysia’s borders, they can better protect sensitive information and comply with local data protection laws.”

Alternatively however, some organisations remain hesitant to embrace a sovereign cloud strategy due to perceived cost implications and technical barriers. Plus, developing a local data ecosystem can be expensive, requiring significant investment in infrastructure and technology.

“There may also be a limited number of service providers with the necessary capabilities to offer a sovereign cloud approach in Malaysia,” added Kenny Lim, co-founder and CTO of AVM Cloud. “This can make it difficult for organisations to find a provider that meets their needs.”

Lack of awareness is another challenge, Lim explained.

“Many organisations may not be aware of the potential benefits and could be hesitant to adopt a new approach without a clear understanding of how it can benefit their operations,” he accepted. “Uncertainty about the future of the country’s political and economic landscape may also make it difficult for organisations to plan for the long-term.”

Despite market sentiment currently mixed on the issue of sovereign cloud, Lim outlined growing interest in the deployment of cloud solutions in Malaysia, with technology now tasked with driving widespread digital transformation initiatives across the country.

This includes adopting cloud-based solutions, implementing data analytics and leveraging emerging technologies such as artificial intelligence (AI) and the Internet of Things (IoT) to streamline operations and improve customer experiences.

Within this context, Lim said cloud migration remains a “key priority” for the majority of organisations during the next 6-12 months, with the enterprise market primarily seeking to improve flexibility, scalability and cost savings.

Adoption also spans core business applications, including enterprise resource planning (ERP) systems and customer relationship management (CRM) software.

“With the increasing frequency and sophistication of cyber threats, organisations in Malaysia are prioritising cyber security,” Lim added. “This includes implementing advanced security measures like multi-factor authentication, data encryption and security analytics to protect against cyber attacks.”

In response to growing demand, Lim said AVM Cloud is increasing investment in the following areas:

• Training and Development: Continued investment in training programs for existing IT system engineers and solution architects to upgrade internal skills and knowledge. This can include attending workshops, online courses or certification programs to remain up-to-date with the latest technologies and trends. In fact, most certifications are now mandatory when providing certain services.
• Innovation and R&D Labs: Leveraging an internal R&D team of IT professionals to experiment and test new technologies. This division is constantly seeking new technologies from strategic technology vendors such as VMware and Veeam, running test scenarios in a cloud environment.
• Partnerships: Maximising an in-house partner program to source potential technology vendors and software-as-a-service (SaaS) players to partner with in order to develop new end-to-end solutions for customers.