Summary Bullets:
• Alibaba Cloud is expanding its presence in Malaysia with a new data center and wider ecosystem.
• It is closing the competitive gap in cloud and AI, but still lacks local references.
Local Expansion
At the recent Alibaba Cloud AI Tech Day 2025 in Malaysia, Alibaba Cloud shared its latest initiatives in the country including the development of its third facility there (the first opened in 2017). This is part of its $53 billion investment in global AI and cloud within the next three years. The Chinese hyperscaler is also expanding its ecosystem in the country to strengthen its presence and further penetrate the market. For example, it has groomed over 50 ISVs with AI and expanded its partner network with key players such as YTL, Agmo, PIKOM, and National AI Consortium (KAIN). At the event, the hyperscaler announced two MoUs: with Permodalan Nasional Berhad (PNB), a local investment firm, and with HiSEVEN, a regional digital marketing provider headquartered in Malaysia. Alibaba Cloud is also actively driving programs to build skillsets especially in new technologies such as AI and cloud. It has trained over 21,000 talents in the country and announced Alibaba Cloud AI Hackathon this year – the first in Malaysia.
AI
Alibaba Cloud also showcased its latest AI capabilities. It released its latest LLM, Qwen2.5-Max, to compete against leading models such as DeepSeek-V3 and GPT-4o. It also launched Qwen2.5-VL, an open-source multi-modal model. Both Qwen2.5-Max and Qwen2.5-VL are based on its Qwen model which supports 72 billion parameters. The latest releases support reasoning to address complex queries. Both models are available through Qwen Chat (Alibaba conversational platform) while APIs are accessible by developers via Alibaba Cloud. Based on open source, Qwen has been downloaded over 187,000 times and has about 90,000 derivative models. The provider also shared its agentic AI capabilities that cover various business functions from customer support to sales, marketing, HR, and operations. Alibaba Cloud views agentic AI as an evolution from SaaS. Early use cases include business intelligence, market analytics, and chatbots. The hyperscaler offers an agent builder to address enterprises’ diverse needs such as for a specific language or market. Successful deployments include creating LLMs for Japanese language for commercial use and a collaboration with Shiseido China to enhance customer interaction by enabling human-like chatbots.
Closing the Competitive Gap
Alibaba Cloud’s third data center will be key for the provider to offer highly resilient services to enterprises especially in addressing critical applications. The new facility is also important for Alibaba to counter competitors such as AWS which launched a region in the country last year with three availability zones. Besides, Alibaba Cloud’s new facility is also important for the provider to counter the upcoming new regions by other players such as Google Cloud and Microsoft Azure. It also enables the provider to stay ahead of other Chinese hyperscalers such as Huawei Cloud and Tencent Cloud.
In AI/GenAI, while Alibaba Cloud is still catching up with other leading players, the provider can point to its full-stack AI capabilities (from infrastructure including cloud, storage, and database, to platforms and models) to counter competitors. Besides, it can also highlight its open-source models which can offer higher transparency and efficiency as well as drive wider innovations with enterprises and developers.
The new facility combined with its latest AI capabilities will also strengthen Alibaba Cloud’s position as an AI and cloud provider and enable the provider to capture the growing market opportunity in the country. AI and GenAI are still new in the country, but the demand is picking up rapidly driven by government initiatives as well as collaborations by major industry players. GlobalData ICT Customer Insight Survey 2024 shows that over two-thirds of Malaysian enterprises are prioritizing AI platforms, applications and services within the next two years. This is driving the AI and cloud market to grow by 55.1% CAGR to $3.2 billion in 2028 and by 25.6% CAGR to $7.6 billion (2028) respectively.
Another key area is Alibaba Cloud’s broader domestic ecosystem as a result of its wider collaborations with local partners and players. For example, Agmo and Redant which specialize in AI/ML, applications, analytics, and UI/UX design; PAIX in financial operations, Wonderlist Technology in learning management systems, and Milestone in video and computer vision. These partnerships can drive innovation by co-developing solutions tailored for the local enterprise needs. It also enables Alibaba Cloud to penetrate further into the market, not only with Chinese MNCs and large organizations, but also with the SMBs.
As the cloud leader in China, Alibaba Cloud shared several successful use cases for its cloud and AI solutions. However, most of its deployments are in its home country. There is still a lack of references China in other markets including in Malaysia. This could be a competitive disadvantage for Alibaba Cloud as enterprises often look for established solutions and providers who understand local businesses and regulations. There was also limited focus on other key areas such as cybersecurity, ethical AI and ESG, at least at the event. Cybersecurity has been the top concern in the market driven by the drastic increase in cyberattacks. Meanwhile, ethical AI is crucial for enterprises especially in addressing data security and privacy concerns. ESG is also becoming more important in the country. Enterprises are developing ESG strategy and aligning their technology adoption with carbon emissions.