There’s a new race in Southeast Asia that has caught worldwide attention, and Malaysia is very much in the thick of it.
The race to build data centres has translated into billions of US dollars in investments. Vantage Data Centers, a leading global provider of hyperscale data centre campuses, is the latest to make its presence felt in Malaysia. The groundbreaking ceremony of its second Cyberjaya campus (KUL2), located some 20km away from the Kuala Lumpur International Airport, was held yesterday. The development of the campus is part of the US$3 billion investment by the company in Malaysia.
Digital Minister Gobind Singh Deo, who was joined by Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz at the groundbreaking ceremony, said the growth in the data centre market in Malaysia has experienced an expected compound annual growth rate (CAGR) of 13.92 per cent from 2023 to 2029, presenting a huge potential for expansion.
For the record, Malaysia approved RM114.7 billion worth of investments in data centres and cloud services between 2021 and 2023.
One company that sees the potential in the data centre industry is Chin Hin Group Bhd. In a filing with Bursa Malaysia that was reported earlier today, the company said it had acquired 500,500 shares, or a 65 per cent stake, in Critical System Specialist Sdn Bhd for RM41.21 million, and 195,000 shares, or a 65 per cent stake, in CSS Engineering and Construction Sdn Bhd for RM10.30 million.
The company said the “target companies are data-centre specialists providing solutions in engineering and construction work”. This simply means that economic opportunities are present even before the laying of the first brick at the data centre.
And the opportunities will continue to grow once a data centre is up and running. This could translate to higher real estate returns, the mushrooming of outlets supplying daily necessities (i.e., hypermarkets, healthcare, educational institutions, and eateries) – the very ecosystem Gobind has been talking about.
Gobind has repeatedly highlighted the three main pillars of his ministry – infrastructure, creating a cyber-safe environment, and developing talents. These are key elements, along with business-friendly government policies, that have attracted the likes of Microsoft, NVIDIA, ByteDance and AWS to enter Malaysia.
There are, without doubt, challenges and concerns. Some wonder if the data centre business is truly sustainable. Others feel that the data centre fad will quickly die.
As land matters fall under the state governments, they too need to play ball to make this work. Plan Malaysia Johor, for example, is drawing up the Johor State Data Centre Development Planning Guidelines to coordinate and monitor data centre development planning.
That too is an ecosystem that includes all stakeholders – from the federal to the state levels – to be on the same page for the industry to grow further. The government is also looking at policies overseeing cloud technology and data centres.
Malaysia knows that there is stiff competition in the region, namely from Indonesia, Vietnam, and Thailand. These nations also see the value of data centres, and more conversations are expected, especially about policies and governance, when Malaysia assumes the Association of Southeast Asian Nations (Asean) chair next year.
According to the Asean Centre for Energy’s May report, titled ‘Building Next Generation Data Centre Facility in Asean’, there are no regional standards for data centre energy efficiency.
Additionally, the majority of Asean countries have not implemented national regulations that directly address data centres, with the prevailing guidelines typically being lumped inside building code requirements.
The report also said that it was important to adopt international best practices to drive uniformity and efficient standards of data centres in the region, adding that harmonised regional standards and regulations can accelerate the implementation of next-generation data centres in the region.
This race to build data centres is, without a doubt, filled with hurdles. But if done right, it will be the next big thing for Malaysia and the region.
