Malaysia is emerging as a data center powerhouse amid booming demand from

Malaysia is rising as an information heart powerhouse in Southeast Asia and the continent extra broadly as demand surges for cloud computing and synthetic intelligence.

Over the previous few years, the nation has attracted billions of dollars in data center investments, together with from tech giants like Google, Nvidia and Microsoft. 

A lot of the investments have been within the small metropolis of Johor Bahru, situated on the border with Singapore, in line with James Murphy, APAC managing director at knowledge heart intelligence firm DC Byte.

“It seems like within the house of a few years, [Johor Bahru] alone will overtake Singapore to change into the biggest market in Southeast Asia from a base of primarily zero simply two years in the past,” he mentioned. 

Johor Bahru was named because the quickest rising market inside Southeast Asia in DC Byte’s 2024 Global Data Centre Index. 

The report mentioned the town has 1.6 gigawatts of whole knowledge heart provide, together with initiatives underneath building, dedicated to or within the early levels of planning. Knowledge heart capability is often measured by the quantity of electrical energy it consumes.

If all deliberate capability comes on-line throughout Asia, Malaysia will solely be surpassed by the bigger international locations of Japan and India. Till then, Japan adopted by Singapore presently lead the area when it comes to dwell knowledge heart capability. 

The index didn’t present an in depth breakdown of information heart capability in China. 

The overwhelming majority of information heart infrastructure and storage investments have historically gone to the established markets of Japan and Singapore, in addition to Hong Kong. 

Nevertheless, the worldwide pandemic expedited the world’s digital transformation and cloud adoption, resulting in surges of demand for cloud suppliers in rising markets like Malaysia and India, in line with a report from global data center provider EdgeConneX.

“Elevated demand for video streaming, knowledge storage, and something completed over the web or on a cellphone, primarily implies that there’s going to be extra want for knowledge facilities,” mentioned Murphy. 

Booming demand for AI providers additionally requires specialised knowledge facilities to deal with the massive quantities of information and computational energy required to coach and deploy AI fashions.

Whereas many of those AI knowledge facilities might be inbuilt established markets corresponding to Japan, Murphy mentioned rising markets will even appeal to investments as a result of favorable traits. 

AI knowledge facilities require quite a lot of house, vitality and water for cooling. Due to this fact, rising markets corresponding to Malaysia — the place vitality and land are low cost — present benefits over smaller city-states like Hong Kong and Singapore, the place such sources are restricted.

Thus, quite a lot of funding and deliberate capability has been redirected from Singapore to the bordering Johor Bahru over time.

Singapore not too long ago modified its tune and laid out a roadmap to develop its knowledge heart capability by 300 MW on the situation extra initiatives meet green-friendly effectivity and renewable vitality requirements. Such efforts have attracted investments from firms like Microsoft and Google. 

Nonetheless, Singapore is simply too small for wide-scale inexperienced energy technology, thus there stay quite a lot of limitations in the marketplace, mentioned DC Byte’s Murphy. 

Whereas the increase in knowledge facilities has helped carry Malaysia’s financial system, it’s additionally created issues about vitality and water necessities. 

Kenanga Funding Financial institution Analysis estimates that potential electrical energy demand from knowledge facilities in Malaysia will hit a total maximum demand of 5 GW by 2035. The current installed electrical capacity for all of Malaysia is about 27 GW, in line with Malaysian electrical energy firm Tenaga Nasional Berhad.

Native officers are more and more involved in regards to the extent of this energy utilization, as quoted in a recent report from The Straits Times.

Johor Bahru metropolis council mayor Mohd Noorazam Osman reportedly mentioned knowledge heart investments shouldn’t compromise native useful resource wants, given the town’s challenges with its water and energy provide.

In the meantime, a Johor Funding, Commerce, and Client Affairs Committee official informed ST that the state authorities would implement extra pointers on inexperienced vitality use for knowledge facilities in June.