Malaysia is emerging as a data center powerhouse in Southeast Asia and the continent more broadly as demand surges for cloud computing and artificial intelligence. Over the past few years, the country has attracted billions of dollars in data center investments, including from tech giants like Google, Nvidia, and Microsoft. Much of these investments have been in Johor Bahru, located on the border with Singapore.

According to James Murphy, APAC managing director at data center intelligence company DC Byte, Johor Bahru will soon overtake Singapore to become the largest data center market in Southeast Asia. The city is named the fastest growing market within Southeast Asia in DC Bytes’ 2024 Global Data Centre Index.

The report indicates that Johor Bahru has 1.6 gigawatts of total data center supply, including projects under construction or in planning stages. If all planned capacity comes online, Malaysia will be one of the largest hubs in Asia, surpassed only by Japan and India. Currently, Japan and Singapore lead the region in terms of live data center capacity.

The global pandemic expedited the world’s digital transformation and cloud adoption, driving demand for cloud providers in emerging markets like Malaysia and India, as noted in a report by global data center provider EdgeConneX. The increased demand for AI services also requires specialized data centers, prompting additional investments.

Malaysia’s favorable characteristics, such as cheap energy and land, make it a compelling market for these data centers. Friendly policies, including the Green Lane Pathway initiative launched in 2023, streamline power approvals for data centers, reducing lead time significantly. Spillover investment from Singapore has also contributed to Malaysia’s rise as a data center hub.

Singapore, with its strong talent pool and fiber connectivity, began moderating its data center capacity growth in 2019 due to energy and water consumption concerns. This led to a redirection of investment to Johor Bahru. However, Singapore recently announced plans to grow its data center capacity by 300 MW under new green-friendly efficiency and renewable energy standards.

Source: Malaysia is emerging as a data center powerhouse amid booming demand from AI.