05/11/2025

WEDNESDAY | NOV 5, 2025

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Ű BY HARITH KAMAL newsdesk@thesundaily.com

Ministry to table Bill on increasing state allocations

PETALING JAYA: Penang and Kedah, long recognised as Malaysia’s industrial heartlands, are transforming into vibrant digital hubs, according to Open DC Sdn Bhd founder and managing director Wong Weng Yew. He said traditionally seen as manufacturing powerhouses, these northern states are undergoing a digital transformation that is set to enhance global competitiveness. “Those are strong foundations that continue to drive Malaysia’s economy. What is happening is both industries are going through an important phase of digital transformation, which would enhance their productivity and global competitiveness. “When we first started, most of Malaysia’s data centres and connectivity infrastructure were in the Klang Valley. We saw an opportunity and a responsibility to help bring that growth up north so that places such as Penang and Kedah could also benefit from better digital access and low-latency connectivity.” Founded to bridge the digital divide, Open DC aims to create neutral interconnection hubs that simplify connectivity for underserved regions, reduce latency and enable better collaboration between enterprises, telcos and cloud providers. Wong highlighted the critical, yet PETALING JAYA: The Finance Ministry will table the Capitation Grant Bill in the next parliament session to formalise a 25% increase in federal allocations to state governments. In a written reply to Besut MP Datuk Che Mohamad Zulkifly Jusoh, the ministry said the proposed revision, which was agreed upon during the National Finance Council Meeting chaired by Prime Minister Datuk Seri Anwar Ibrahim on March 6, would involve an additional financial implication of RM547.6 million. The meeting, which was attended by all menteri besars, chief ministers and the Sarawak premier, agreed in principle to revise and amend the capitation grant rate provided under Article 109(1)(a) of the Federal Constitution, which supports states in managing operating expenditures. The ministry said the revised rate would require constitutional amendments through the new Act, Ű BY IKHWAN ZULKAFLEE newsdesk@thesundaily.com

governments, are intended to enhance essential public services, such as education, healthcare and administrative functions. According to the ministry, the decision followed feedback from state governments requesting a review of the long-standing allocation rate, citing higher administrative and service delivery costs. The new system introduces a progressive distribution mechanism based on population tiers, with a 42% increase for the first 100,000 residents, 37% for the next 500,000, 25% for the subsequent 500,000 and

Detailed review for new Science, Technology and Innovation Act KUALA LUMPUR: The Science, Technology and Innovation Ministry is undertaking a comprehensive review to formulate a new Science, Technology and Innovation (STI) Act, said Minister Chang Lih Kang. He said the drafting process is complex, requiring consideration from multiple perspectives to ensure the legislation is effective and future-proof. “A detailed study is being conducted on the STI legal frameworks of developed and regional countries to identify best practices that can be adapted to Malaysia’s STI ecosystem,” he said during the question-and-answer session in the Dewan Rakyat yesterday. He was responding to a question from Lee Chean Chung (PH-Petaling Jaya) on when the ministry intends to table the STI Act, as well as the immediate measures being taken to achieve the target of allocating 2% of GDP for research and development expenditure. Chang said the key aspects being refined include comparative studies and benchmarking, legal harmonisation to address overlapping functions and roles among various government agencies, and the assessment of long-term implications. “This Act would have a significant impact on the governance of the nation’s STI sector. Its long-term implications for the government, including financial, human resource and accountability aspects, must be carefully analysed.” He said comprehensive engagement sessions are being conducted with various stakeholders, such as government agencies, industry players, research institutions, academics and the public, to ensure the Act is comprehensive, inclusive and practical. – Bernama The ministry said this mechanism would help states manage rising costs more effectively while ensuring federal resources are channelled according to each state’s needs and population size. 15% for the remaining population in each state. This progressive approach is designed to ensure fairer distribution, with smaller states such as Perlis and Malacca receiving higher percentage increases, while larger states such as Selangor and Johor receive smaller proportional increases due to their stronger fiscal capacity.

o ‘Move reflects govt commitment to ensuring equitable fiscal distribution across federation’

which is expected to take effect in 2026 and replace the Capitation Grant Act 2002. It added that the move reflects the government’s commitment to strengthening financial support for state administrations and ensuring a more equitable fiscal distribution across the federation. Last September, the Finance

Ministry confirmed the 25% increase in capitation grants for 2026, in line with the federal government’s financial capacity. The revised allocation represents an additional RM109.2 million compared with the previous rate, which has remained unchanged for 23 years since 2002. The grants, distributed to state

‘Penang, Kedah developing into digital hubs’

often unseen, role of data centres in driving technological advancement. “Data centres and interconnection platforms are the backbone of this transformation, enabling everything from seamless communication to advanced technologies to thrive.” He said the northern region is witnessing positive momentum from this shift, with local businesses enjoying robust network connectivity and access to cloud infrastructure, allowing them to scale faster and operate more efficiently. “This shift is not just about technology. It is also about economic empowerment, enabling communities and businesses to participate fully in Malaysia’s digital future.” He also said Malaysia’s digital economy continues to show strong progress under the Malaysia Digital initiative, with total approved investments reaching RM16.2 billion between January and April this year, reflecting global investor confidence in the nation’s digital ecosystem. The Northern Corridor Economic Region (NCER), encompassing Kedah and Penang, has long been a beacon of growth, attracting high-value investments and fostering private sector participation. Led by the Northern Corridor Implementation Authority, the NCER is transforming into a world-class economic and technology hub. “With a strategic focus on

Wong highlighted the critical, yet often unseen, role of data centres in driving technological advancement. – AI-GENERATED IMAGE BY AZURA ABAS/THESUN

manufacturing, agribusiness and green innovation, the region offers a dynamic ecosystem for businesses to grow and innovate.” Kedah recorded RM20.38 billion in realised investments in 2024, up from RM11.6 billion the previous year. “Penang is known globally for its manufacturing excellence while Kedah is emerging as a strategic location for infrastructure expansion. “When we looked at the digital landscape, we saw a clear opportunity to complement that strength with digital infrastructure, particularly data centres that could support local

experts and facility operators are forming the backbone of the region’s digital growth. “These are roles that did not exist at scale a few years ago, and now they are driving the next generation of talent in Penang and Kedah.” Wong stressed that responsible growth is essential to setting a benchmark for northern Malaysia’s digital industry, particularly as AI-driven data centres become more resource-intensive. He said Open DC is exploring strategic partnerships with regional and international players to strengthen connectivity within Malaysia and across Southeast Asia. – BY IKHWAN ZULKAFLEE “Designed to serve enterprises, technology providers and hyperscale customers, PE2 embodies the company’s vision for a connected and resilient northern digital ecosystem. “Our expansion with PE2 in Penang is part of that vision to build a connected ecosystem that positions the northern region as a key digital gateway for Malaysia and the region.” industries and international demand.” Wong added that Open DC’s PE2 data centre, located in Bayan Lepas Technology Park, is a significant step towards strengthening Malaysia’s data centre ecosystem.

Northern region combines traditional, modern strengths PETALING JAYA: The northern region is set to play a pivotal role in supporting Malaysia’s ambition to become a leading digital hub in Asean, with Penang and Kedah emerging as key growth centres for the country’s digital infrastructure. completion in early 2026. Designed as a green facility, D8-1 reflects the company’s commitment to energy efficiency and environmental responsibility while meeting the rising demands of AI and high-performance workloads. move to drive balanced growth beyond the Klang Valley, opening new development opportunities for industry players, such as Open DC. “The company’s internship programmes provide fresh graduates with early career exposure to operations, management and

Open DC Sdn Bhd founder and managing director Wong Weng Yew said the region’s transformation is underpinned by a combination of traditional industrial strengths and modern digital capabilities. “For Open DC, our vision is to continue building bridges not just between data centres, but also between people and opportunities.” He said the development of D8-1, a data centre in Kedah, is scheduled for

Wong explained that AI would play a key role in optimising energy use and reducing wastage. “The northern region is poised to become a hub that connects Asean’s supply chains and digital ecosystems,” he said, highlighting the government’s RM2.7 billion Delapan project in Bukit Kayu Hitam, Kedah. He said this was included in the 2026 “Fourth Madani Budget: People’s Budget”, which described it as a critical

innovation within data centres, helping to cultivate the next generation of digital professionals.” He also said Open DC practises a “fail-fast” approach that allows young talent to learn from mistakes under the guidance of experienced engineers, building resilience and practical skills. “Roles such as data engineers, network specialists, sustainability