- Malaysia is attracting billions in investments for data centres amid increased demand for cloud and AI services.
- If all of Malaysia’s planned data centre capacity comes on line, it will become one of the largest hubs in Asia.
OUR TAKE
In Malaysia, data centre operating costs are likely to be lower, mainly due to relatively cheap energy prices and abundant land resources. This makes Malaysia one of the ideal options to attract big tech companies to build data centres. With the increasing demand for cloud computing and big data processing, the demand for data centres is also growing, and these emerging markets are gradually becoming the focus of global technology companies due to their cost-effectiveness and potential room for expansion.
–Revel Cheng, BTW reporter
Malaysia is emerging as a data centre powerhouse in Southeast Asia and the continent more broadly as demand surges for cloud computing and artificial intelligence.
What happened
Over the past few years, the country has attracted billions of dollars in data centre investments, including from tech giants like Google, Nvidia and Microsoft.
Much of the investments have been in the small city of Johor Bahru, located on the border with Singapore, according to James Murphy, APAC managing director at data centre intelligence company DC Byte.
Johor Bahru was named as the fastest growing market within Southeast Asia in DC Byte’s 2024 Global Data Centre Index.
The city has 1.6 gigawatts of total data centre supply, including projects under construction, committed to or in the early stages of planning. Data centre capacity is typically measured by the amount of electricity it consumes.
The global pandemic expedited the world’s digital transformation and cloud adoption, leading to surges of demand for cloud providers in emerging markets like Malaysia and India, according to a report from global data centre provider EdgeConneX.
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Why it’s important
Booming demand for AI services also requires specialized data centres to house the large amounts of data and computational power required to train and deploy AI models.
“Increased demand for video streaming, data storage, and anything done over the internet or on a phone, essentially means that there’s going to be more need for data centres,” said Murphy.
While many of these AI data centres will be built in established markets such as Japan, Murphy said emerging markets will also attract investments due to favorable characteristics.
Singapore recently changed its tune and laid out a roadmap to grow its data center capacity by 300 MW on the condition more projects meet green-friendly efficiency and renewable energy standards. Such efforts have attracted investments from companies like Microsoft and Google.
AI data centres require a lot of space, energy and water for cooling. Therefore, emerging markets such as Malaysia — where energy and land are cheap — provide advantages over smaller city-states like Hong Kong and Singapore, where such resources are limited.
