Malaysia poised to become Asia’s third-biggest data centre market, says Juwai IQI

• He attributed this growth to the country's strategic location, favourable government policies, proximity to Singapore, as well as attractively priced land, power, and water.

KUALA LUMPUR (July 16): As one of the fastest-growing data centre markets in Southeast Asia in the third quarter of 2024 (3Q2024), Malaysia is poised to become Asia’s third-biggest data centre market after Japan and India, according to a press statement by global real estate property technology group Juwai IQI Holdings on Tuesday.

In the statement, Juwai IQI co-founder and group chief executive officer Kashif Ansari said, “The global data centre industry is growing quickly this year because of demand from artificial intelligence (AI), machine learning, e-commerce, and cloud computing. Malaysia is transforming from an also-ran to a top contender in data centres so quickly that they call Malaysia a data centre powerhouse."

He attributed this growth to the country's strategic location, favourable government policies, proximity to Singapore, as well as attractively priced land, power, and water.

“The country has transformed its economy from a dependency on raw material exports into a diversified economy with a large services sector. Services now make up more than half of gross domestic product. [In terms of] government policies, the government has offered tax incentives, grants, and regulatory support to attract data centre investments.

“The Malaysian Investment Development Authority (Mida) and Malaysia Digital Economy Corporation (MDEC) have together established a single point of governmental contact for investors to facilitate digital investments. They have also created the Green Lane Pathway to enable new data centres to obtain power in as little as 12 months,” Kashif said, adding that Malaysia’s developed telecommunications infrastructure ensures high-speed internet connectivity and low latency, which are both essential for data centre operations.

He also revealed that in Malaysia, the data centre market development in the pipeline consists of 1.2 GW, which represents 600% growth over the next five years. Some investors in the country include major cloud service providers, such as Amazon Web Services, Microsoft, Nvidia, and Google.

Kashif also listed out strategic locations and ongoing data centre developments in the country. “Early-stage planned construction of new data centres is almost entirely focused on Greater Kuala Lumpur and Johor. About 55% of new projects are planned for the Kuala Lumpur area, while the other 45% will go into Johor.

“The Greater Kuala Lumpur region, which includes Cyberjaya, has a strategic location, robust infrastructure, and government support. Some benefits of Cyberjaya are its competitively priced land and stable power supply, as well as the presence of major cloud providers in the region. [Meanwhile,] Johor is the fastest-growing market in Southeast Asia, driven by spillover demand from Singapore. Besides proximity to the city state, key factors contributing to Johor's emergence include the ample available land and reliable power supply.”

For Malaysia’s data centre market outlook, Kashif said with more than 3,000MW of data centres underway or in planning and a pipeline of 1,200 MW underway, the market is expected to grow by a factor of nine from its current capacity.

“One of the key challenges will be ensuring a reliable and sufficient power supply to support the rapid growth of data centres. Investments in power infrastructure and renewable energy sources will be crucial to address this challenge. Additionally, it would pay to develop more submarine cable networks to improve connectivity between Malaysia and the rest of the world.

“For working-age Malaysians, growth in the data centre industry is great news. The industry requires many skilled workers, and provides the opportunity to learn new skills and earn higher salaries. As a country, we need to invest in education and training, so that our people have the skills they need for this well-paid work. Given sufficient power and a capable workforce, the outlook for Malaysia's data centre market is brighter than in any other Southeast Asian country,” Kashif added.

Looking to buy a home? Sign up for EdgeProp START and get exclusive rewards and vouchers for ANY home purchase in Malaysia (primary or subsale)!