Malaysia holds strong as regional data centre investment hotspot

New Straits Times

2 days ago

KUALA LUMPUR: Malaysia remains an attractive destination for data centre-related investments in the region, despite geopolitical risks and rising demands on energy and infrastructure capacity.
JLL Malaysia Director of Data Centre Transactions Kent Seet Tiong Hong said this puts the country in a favourable position compared to many of its global peers, which are facing similar pressures amid tightening regulations and rising costs.
He noted that Malaysia remains a very suitable location for building data centres, supported by several factors.
According to him, factors such as being free from natural disasters, having a sufficient supply, and having lower energy and water costs compared to other countries are key attractions for data centre development.
Furthermore, he said, in terms of the political situation, Malaysia has a stable government, and government agencies are also actively promoting data centres.
"Another advantage is our workforce. Our workforce is proficient in English compared to other countries," he said at the sidelines of the Bursa Malaysia–HLIB Stratum Focus Series, themed "Data Centre 2.0: The Ecosystem and What's Next for Malaysia?" held recently.
In his presentation, Seet highlighted that Malaysia's data centre capacity is projected to expand significantly, growing more than threefold based on current projections.
He said that as of the first quarter of 2025 (1Q25), the country has completed an estimated 522 megawatts (MW) of capacity, with 1,250 MW under construction and over 3,750 MW in the pipeline.
He also pointed out that Malaysia's completed capacity of 522 MW places it ahead of key Southeast Asian peers such as Indonesia (270 MW) and Thailand (140 MW), although it remains behind Singapore, which has 1,000 MW.
He noted that in Greater Kuala Lumpur, key data centre locations include Cyberjaya, Bukit Jalil, Kuala Lumpur City Centre, Petaling Jaya, Sungai Buloh and Puncak Alam.
He said among them, Cyberjaya has the largest footprint, with 90 MW completed, 320 MW under construction, and 950 MW in the pipeline.
However, Seet said land acquisition is beginning to slow down, largely due to the rising cost of land in prime locations.
He added that constrained utilities and the lack of ready land in established data centre locations, driven by overwhelming demand, have led to the flow of data centre investments into new industrial areas such as Sungai Buloh, Puncak Alam, Kulai, Ulu Tiram and Iskandar Puteri.
Commenting on the impact of the revised electricity tariff set to take effect from July 1, 2025, to Dec 31, 2027, Seet believes it will not dampen investment interest in data centres in the country.
In fact, he said the adjustment could help curb speculative activity by ensuring that only serious and committed players remain in the market.
However, he acknowledged that operational costs will rise, as electricity tariffs make up a significant portion of data centre expenses.
"To what extent it will impact them (data centres), I think it is still manageable.
"I believe it will not reduce investments coming into Malaysia. If anything, it will curb speculators, which is a positive development.
"Hence, only quality players will continue to grow," he said.