By Joseph Wong
MALAYSIA is emerging as the frontrunner in Southeast Asia’s data centre market, swiftly outpacing many of its neighbouring competitors while upping its game to become the Top 3 Asian destination for this fast-growing industry.
“Malaysia is transforming itself from an also-ran to a top contender in data centres so quickly that they are calling Malaysia a data centre powerhouse. If all the region’s planned new data centres come online, Malaysia will be Asia’s third biggest market, behind only Japan and India. That will create tens of thousands of skilled local jobs,” said global real estate and proptech powerhouse Juwai IQI’s co-founder and group chief executive officer Kashif Ansari.
Marking a significant shift, he highlighted the global surge in the data centre industry driven by artificial intelligence (AI), machine learning, e-commerce and cloud computing. These sectors are major consumers of data centre computational power, fueling the expansion of hyperscale facilities - some as big as Vatican City.
The exponential growth in AI's computational demands underscores the sector's increasing electricity consumption, anticipated to comprise half a percent of global electricity usage within two and a half years. Addressing this demand poses a significant challenge, influencing data centre growth strategies worldwide.
“Data centres use so much power… AI’s need for computational power is doubling roughly every 100 days. The demand for power is so great that power availability has become a significant constraint on data centre growth in every major market, from Singapore to Virginia. Developers are responding by building new data centres near existing power plants or by constructing new power plants alongside their new data centre projects,” said Ansari.
Malaysia’s rapid growth
Malaysia’s ascent in the data centre sector is propelled by strategic advantages. Its prime location, favourable government policies, proximity to Singapore and cost-effective resources such as land, power and water have catalysed its expansion. The country's data centre market is set to experience a remarkable 600% growth over the next five years, reflecting robust economic performance and diversified sectors, with services constituting over half of the GDP.
Government initiatives, including tax incentives and regulatory support facilitated by agencies like the Malaysian Investment Development Authority (MIDA) and Malaysia Digital Economy Corporation (MDEC), further bolster Malaysia's appeal to global tech giants. The establishment of the Green Lane Pathway expedites data centre projects, ensuring swift power availability within 12 months.
Malaysia’s advanced telecommunications infrastructure ensures high-speed internet connectivity critical for data centre operations, underscoring its readiness to support digital investments.
Market metrics
Presenting key metrics, Ansari outlined Malaysia's current and planned data centre capacities. The country currently sustains 280 MW of operational capacity, with an additional 2.941 MW in various stages of development, including construction and planning phases.
- Total Live Capacity: 280 MW
- Total Under Construction Capacity: 159 MW
- Total Committed Capacity: 766 MW
- Total Early-Stage Capacity: 2,016 MW
Major players like NTT Global Data Centres, AWS, Microsoft, Google, TIME dotCom and Bridge Data Centres are pivotal in driving this growth, primarily concentrated in Greater Kuala Lumpur and Johor.
Looking ahead, Malaysia’s data centre market is projected to expand significantly, with ongoing developments poised to increase its capacity ninefold by the end of the decade. Addressing challenges such as power supply reliability and infrastructure enhancements will be critical to sustaining this growth trajectory.
As Malaysia prepares to capitalise on its data centre potential, the industry promises substantial employment opportunities and economic benefits. Investments in education and workforce development will be essential to equip Malaysians with the skills required for these burgeoning sectors.
Not all rosy
However, alongside their advantages, there are notable drawbacks that must be considered. Some challenges encompass issues of control, service quality variability, security limitations, cost implications and reliance on support personnel. The drawbacks include:
Lack of control: Companies that utilise resources from data centre providers may lack complete local control because both human resources and hardware are located remotely.
Connectivity issues: The performance and reliability of data centre services can be influenced by the quality of internet connectivity at the customer's location.
Security limitations: Data centre service providers may impose limitations on the security features they offer.
Hidden costs: Some companies levy technical support fees on customers. When troubleshooting issues arise, customers must depend on support staff employed by data centre providers and the resolution of these issues hinges on the skills and knowledge of the support team.
Understanding these factors is essential for making informed decisions about data centre utilisation and management strategies. So even as Malaysia stands at the forefront of Southeast Asia's data centre revolution, it must redefine its role as a pivotal player within the global data economy. Only then, will it stand out as the data centre powerhouse it deserves to be.
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