Why new Google SE Asia office is in Malaysia, not Indonesia

Google has made significant news in Southeast Asia after announcing plans to open a new office in Kuala Lumpur, Malaysia, which will accompany its existing premises in Singapore and South Korea which were both opened in 2007.

The Next Web Asia has more details:

The company announced that it is opening a new office in Kuala Lumpur, Malaysia where it controls 70% of the search market and has been seeing a tremendous growth over the years.

More than a year after Google’s dispute with China, the company says it remains committed to the country as it sets its sights on Southeast Asia for further growth. It is reassuring that the search company plans to hold on to one of the biggest Internet markets in the world, where they claim to be doing well actually.

A Google spokesman said that the company plans to hire more than 500 people in Asia this year, around a fifth of them in Southeast Asia. The company is in talks with content providers in Malaysia to bring more locally-relevant content in the country.

The move is an interesting one given that ‘local relevance’ is one trend tipped by many to be significant in digital this year. The theory comes in response to the growing popularity of western internet services, like Facebook and Twitter, who have taken the region by storm despite a limited local presence. Adopting a local-based approach, according to the theory, will differentiate a competitor from the western competition and provide a stronger, more compelling user experience, or at least a complimentary service to the established social media networks.

In search terms, Yahoo and Microsoft are credible rivals in some Southeast Asian countries where they enjoy a strong local presence, such as Yahoo in Vietnam and Indonesia and Microsoft in Thailand, but in general – as the TNW article states – the Google move backs up its overall dominance in the region.

Given the rising digital influence of Indonesia and its dominance of Southeast Asia’s internet scene, is it a surprise that the company isn’t looking to Jakarta rather than Kuala Lumpur?

In short, as the below excerpt from Malaysian news agency Bernama states, Indonesia lags behind Malaysia in terms of digital infrastructure, making it a more feasible location in business terms.

He [Google’s Southeast Asia Managing Director Julian Persaud ] said Malaysia has now reached 17 million Internet users and high growth was expected from the wireless markets as the online environment in Malaysia was growing rapidly with significant developments taking place in both broadband Internet access and e-commerce activities.

In welcoming the opening of the local office, [Deputy International Trade and Industry Minister Datuk] Mukhriz said Google’s local presence was a commitment to Malaysia and proved its suitability as a regional multimedia hub.

“We hope that Google’s entry will encourage more local business to go online and tap into international markets,” he said.

Meanwhile, Google’s Country Manager for Malaysia Sajith Sivanandan said Malaysia was a significant country in terms of its digital economy and tech-savvy population.

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Household broadband penetration in Malaysia now stood at 55.6 per cent surpassing last year’s target of 50 per cent.