Global technology companies must prepare to pay premium rates for energy and water resources to operate data centres in Malaysia, according to the country’s environment minister, as the surge in artificial intelligence infrastructure places unprecedented demands on national resources.
The Southeast Asian nation has witnessed remarkable growth in data centre investments, securing more than £16 billion in commitments from industry leaders including Amazon, Nvidia, Google, Microsoft and ByteDance over the past year. These investments predominantly target the southern state of Johor, strategically positioned alongside Singapore.
Nik Nazmi Nik Ahmad, Malaysia’s minister of natural resources and environmental sustainability, emphasised the government’s increasingly selective approach following the recent expansion in data centre development. The minister highlighted the substantial pressure these facilities place on the country’s utilities infrastructure whilst acknowledging data’s position as “the new oil of the 21st century”.
Malaysia’s emergence as a data centre hub stems from its competitive advantages, including abundant affordable land, cost-effective labour, and prime geographical location. The nation’s attractiveness increased following Singapore’s temporary moratorium on new data facilities between 2019 and 2022, driven by energy consumption concerns.
In a significant policy shift, Malaysia began allowing data centre operators to source energy directly from green power producers in 2024, bypassing traditional grid systems. This strategic move supports the country’s renewable energy development, as technology companies invest in securing reliable clean power supplies.
The current landscape in Johor comprises 22 operational data centres, with eight additional facilities under construction. Industry experts suggest the region could potentially accommodate up to 90 data centres, contingent upon successful expansion of clean energy generation capacity. Malaysia aims to achieve 70 per cent renewable energy capacity by 2050, marking a substantial increase from its current 25 per cent.
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