Malaysia is becoming a top destination for multiple data centres, attracting billions in investments from tech giants building advanced digital infrastructure.
 

With rising demand for data centre services, streaming, and e-commerce, Malaysia’s strategic advantages are solidifying its role as a regional digital leader.

 

What is a data centre?

 

A data centre is a facility that stores, manages, and processes digital information for tech-driven businesses. It houses servers, networking equipment, and storage devices.

Data centres range from small server rooms to large data centre warehouses and include backup systems for power, cooling, and security to ensure continuous operation and protect data.

Types of Data Centres
 

• Enterprise Data Centre: Operated and owned by a single company for their internal IT operations.
   
• Managed Services Data Centre: Outsourced to a service provider that manages and maintains the facility for multiple clients.
   
• Colocation Data Centre: A shared facility where companies rent space, power, cooling, and network services from a provider.
   
• Cloud Computing Data Centre: Virtual data centres used to deliver cloud computing services over the internet.

 

Data Centres Market Growth in Malaysia
 

Malaysia is home to 102 data centres, with the majority concentrated in Cyberjaya. This hub accounts for approximately 75% of the nation's total data centre capacity.

The Malaysia Data Center Market, valued at ~$4 (RM17) billion in 2024, is projected to grow to ~$14 (RM60) billion by 2030, with an annual growth rate of 22.38%.

In October 2024, the government approved the Data Centre Planning Guidelines (GPP), developed by PLANMalaysia, to standardise data centre development nationwide.

Tech giants Google, Microsoft, and AWS are making major investments in Malaysia with new data centres. These projects aim to drive the digital economy.

 

• Google Data Centre: 
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  • Google is building Malaysia's first data centre at Elmina Business Park, Selangor, with a ~$2 (RM9) billion investment. The facility will support AI and cloud services with energy-efficient cooling. It’s expected to add ~$3 (RM13) billion to Malaysia's GDP and create 26,500 jobs by 2030, boosting the nation’s digital economy.
     
  • Additionally, Google has awarded a ~$236 million (RM1 billion) contract to Malaysian construction leader Gamuda. The deal includes mechanical, electrical, and plumbing works for Pearl Computing's data centre, marking a major step in Google's expansion in Malaysia.
     

• Microsoft Data Centre:
   
  • Microsoft will launch its first cloud region in Malaysia by mid-2025, with three data centres near Kuala Lumpur. This follows a ~$2 (RM9) billion investment announced in May 2024 to expand cloud and AI services. The Malaysia West Cloud is projected to generate ~$11 (RM47) billion in revenue and create over 37,000 jobs in four years.
     

• Amazon Web Services (AWS) Data Centre:
  • AWS will open its first data centre in Malaysia, investing ~$6 (RM26) billion over 15 years. This aims to drive Malaysia’s digital transformation, boost economic growth, provide advanced cloud solutions, and create jobs.

 

Hidden Costs of the Data Centre Boom

While Johor’s surging data centre capacity signals economic progress, it creates a delicate balance between digital expansion and resource sovereignty.

Malaysia is often branded a rising "digital powerhouse", yet this narrative masks the heavy strain on environmental and energy systems.

By rushing to capitalise on Singapore’s previous moratorium, the current approach risks favouring short-term gains over long-term sustainability and equitable growth.

 

Key Sustainability and Economic Risk Factors

 

• Surging Energy Demands: Projected to require over 5GW of power by 2035, data centres could monopolise national energy. This demand may consume more than half of Malaysia’s 2023 renewable capacity. With 95% of the energy mix tied to fossil fuels, this expansion threatens climate goals and grid stability for other sectors.
   
• Limited Job Growth: Despite high expectations, data centres are largely automated. Reports from Good Jobs First indicate most facilities support only 30 to 50 permanent roles, while even massive hyperscale sites peak at 200. This low employment yield raises questions about the massive allocation of national resources.
   
• Climate-Driven Resource Strain: Malaysia’s tropical heat requires significant water and energy for cooling. This puts pressure on local water supplies already strained by urbanisation. Furthermore, the land footprint is immense; one 40MW facility can equal seven football fields, creating high opportunity costs for housing and farming.
   
• The Threat of Digital Colonialism: Analysts warn of "digital colonialism," where multinational corporations extract local power, water, and land while offshoring profits. This dynamic mirrors historical extraction economies, leaving the host nation with depleted resources and minimal long-term value.
   
• Lessons from Singapore: In 2019, Singapore paused data centre growth after these facilities hit 7% of total electricity use. By absorbing the overflow Singapore rejected, Malaysia risks falling into the exact resource crisis its neighbour worked to avoid.

 

A Call for Calculated Growth

Dominating the Southeast Asian digital ecosystem is a gamble. Without enforceable regulations and a transparent cost-benefit analysis, Malaysia risks an energy-deficit future.

A "growth at all costs" strategy may leave behind server farms that drain the power grid while providing negligible local benefits.

To ensure national resilience, Malaysia must pivot toward strict sustainability guidelines and demand higher economic returns.
 

Guide to Build a Data Centre in Malaysia

 

Step 1: Register and incorporate a company.

To open a data centre in Malaysia, register and incorporate your business through the Suruhanjaya Syarikat Malaysia (SSM) or Company Commission of Malaysia (CCM) online platforms.

 

Step 2: Register with the Inland Revenue Board of Malaysia (LHDN)

To meet data centre goals, forming a Sdn. Bhd. or Berhad is recommended for liability protection and legal status.

After incorporation, businesses must register with the Inland Revenue Board of Malaysia for a Sales Tax licence.

Licences can be applied for through the government’s Pihak Berkuasa Melesen (PBM) portal and are issued by federal or state authorities, depending on the region.

The three primary categories of business licences in Malaysia are as follows:
 

• General
• Industry or sector-specific
• Activity specific

 

Depending on your data centre's structure, some licences may overlap. These cover the following pairings:
 

• Obtaining a permit/licence from the domain of telecommunications 
• Approvals issued by the Occupational Health and Safety Administration 
• Approvals for machinery fitness, building plans, etc 
• Pollution control certification, etc 

 

Factors to Consider in Data Centre Building and Location

 

Image via tmone.com.my

 

• Risks of Natural Disasters: Data centre outages can disrupt applications, data availability, reputation, and finances. Natural disasters like floods, landslides, and droughts pose serious risks. As climate events worsen, it's crucial to avoid high-risk areas or design flood-resistant data centre facilities. Even with precautions, disasters can damage infrastructure or block access. Flood-prone centres may keep running but risk becoming inaccessible due to local damage.
   
• Costs & Reliability of Power: Power costs for machinery and cooling are a key factor in data centre construction. High energy demands make operating in areas with expensive electricity challenging. Building near energy sources like coal plants or solar farms can lower costs and reduce transmission issues. For companies aiming to cut carbon footprints, access to renewable energy is key. Reliable, stable electricity infrastructure is also essential for data centres.
   
• Connectivity Options: Data centres need fast, reliable internet to run smoothly. Relying on one ISP risks outages and DDoS attacks. Negotiating better rates with local ISPs is difficult, so picking a location with strong network access offers more flexibility and long-term success.
   
• Proximity to Users: Data centre developers often build in areas with high real estate and energy costs to stay close to densely populated regions. This reduces latency and improves user experience. However, some data centres are located in less ideal spots for power or connectivity to stay near customers.
   
• Availability of Labour: Data centres need skilled teams, which are easier to find in tech-focused markets. Attracting talent to rural areas can be costly. To address labour challenges in emerging markets, automate tasks and use remote workers. Identify which roles need on-site staff and which can be automated or done remotely.

 

Components of a Data Centre Design and Infrastructure

 

• Power Supply: Data centres require a steady power supply for servers and equipment. Key components include Uninterruptible Power Supply (UPS) for outages, generators for extended downtime, and Power Distribution Units (PDUs) to power IT equipment. Redundancy ensures uninterrupted power.
  
  
• Cooling System: Data centre equipment generates heat and needs efficient cooling to stay at optimal temperatures. Common methods include CRAC units with hot/cold aisle design, chilled water or liquid cooling, and free-cooling using outside air. Backup cold-water tanks ensure cooling during power outages.
  
  
• Networking Infrastructure: Network infrastructure allows devices in a data centre to connect and communicate with external networks. This includes switches, routers, firewalls, and cabling. A reliable network design is essential for maintaining connectivity within the data centre and to end-users, focusing on redundancy, load balancing, and physical security.
  
  
• Storage Infrastructure: Data centre storage includes Storage Area Networks (SANs) and servers. It often uses mirrored RAID discs for improved speed and fault tolerance.

 

How to Calculate Data Centre Size

 

Calculating the required size for a data centre involves more than just accounting for server racks.

It’s a strategic process that balances the space for core IT equipment with essential support systems. Here’s a practical methodology for a facility designed to house 100 racks:
 

• White Space (Main Server Floor): For the main server floor, allocate approximately 2,500 to 3,000 square feet. This estimate assumes standard-sized racks (2 ft x 3.3 ft) configured in a hot/cold aisle layout to optimise cooling efficiency. This configuration allocates 25–30 square feet per rack, ensuring sufficient clearance for technician access and equipment maintenance.
   
• Grey Space (Support Infrastructure): An additional 1,000 square feet (approximately 30-40% of the white space) must be designated as "grey space." This area is crucial for housing critical support infrastructure, including power distribution units (PDUs), cooling systems, and other mechanical equipment essential for uninterrupted data centre operations.
   
• Total Gross Area: The combined white and grey spaces result in a total facility footprint of approximately 4,000 to 4,500 square feet. This figure represents a realistic estimate for a fully operational 100-rack data centre.

 

Key Design and Planning Considerations

Beyond square footage, several critical factors will influence the final layout and operational efficiency of your data centre.
 

• Power Density: The power consumption per rack is a primary design driver. High power densities (exceeding 10kW per rack) enable greater computing capacity within a smaller footprint but also generate significant heat. This necessitates more advanced and space-intensive cooling infrastructure to maintain optimal operating temperatures.
   
• Floor Loading Capacity: The structural integrity of the building must be verified to support the substantial weight of fully populated server racks. A single rack can weigh between 1,500 and 3,000 pounds, requiring the floor to be engineered to handle this concentrated load without risk of structural failure.
   
• Ceiling Height: A clear ceiling height of at least 9 to 10 feet is imperative for effective data centre design. This vertical clearance facilitates proper heat dissipation, accommodates overhead cabling trays, and allows for the installation of other critical infrastructure without creating operational constraints or safety hazards.
   

Repurpose Your Commercial or Industrial Property Into a Data Centre Investment

 

Image via bridgedatacentres.com

 

Building a modern data centre from scratch is often better than repurposing existing buildings. Retrofitting can be costly, complicated, and may not meet regulations.

New builds offer design flexibility, advanced technologies, and energy-efficient systems, reducing costs and improving performance.

Industrial Malaysia connects investors with prime properties in Malaysia’s growing data centre market. Contact us via WhatsApp to start exploring opportunities today.

 

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