Demand boom, resources make Johor fit as data centre hub - MIDA | Malaysian Investment Development Authority
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Demand boom, resources make Johor fit as data centre hub

Demand boom, resources make Johor fit as data centre hub

24 Jun 2024

Johor’s potential as a data centre hub is largely driven by its strategic location near Singapore and the resources it offers in terms of energy, water, transportation and suitable land, according to Malaysia Digital Economy Corp (MDEC).

MDEC digital industry acceleration head Wan Murdani Wan Mohamad said when demand for more data centre capacity exceeded the neighbouring region’s resources, global companies started looking beyond – to Batam and Jakarta in Indonesia, the Philippines, Bangkok in Thailand, and Malaysia.

He said Johor offers the perfect solution due to its geographical closeness, allowing companies to leverage Singapore’s established digital ecosystem while benefiting from the ability to expand and grow in the region.

“This proximity ensures minimal latency and high-speed connectivity, which are essential for data centre operations.

“These factors collectively create a favourable environment for the establishment and growth of data centre operations, positioning Johor as a key player in the regional data centre landscape,” he told Bernama.

Wan Murdani opined that the increasing demand for artificial intelligence (AI), cloud computing and data storage presents significant opportunities for Malaysia to advance in the digital economy.

“As more businesses transition to cloudbased services and leverage AI, the need for scalable compute and data storage solutions will drive further investments in data centres, particularly in strategic locations like Johor.

“These investments will enhance Malaysia’s digital infrastructure and attract global companies seeking cost-effective and well-connected hubs,” he said.

In attracting more investments, MDEC has established close collaborations with various federal and state agencies such as Iskandar Regional Development Authority, Invest Johor, Jcorp, Plan Malaysia Johor, and Koridor Utiliti Johor to streamline and enhance the experience for both current and potential investors.

“By working closely together, MDEC and these agencies ensure that investors’ requests and requirements are promptly addressed and effectively met,” said Wan Murdani.

Establishing data centres in Johor will significantly increase demand for commercial real estate, including new facilities and the retrofitting of existing buildings.

Another key attraction for Johor potentially becoming a data centre hub is the state’s power and water infrastructure readiness to handle large-scale data centres.

According to Wan Murdani, MDEC has been providing technical advice and assistance to state governments, Tenaga Nasional Bhd (TNB) and investment promotion agencies since 2010 in preparation for these data centre investments.

“The availability of locations with ready infrastructure in Johor, such as Sedenak Technology Park (STEP), Nusajaya Tech Park (NTP) and SILC (Southern Industrial and Logistics Clusters) allowed for the rapid development of expansive data centre facilities without the prohibitive costs seen in more densely populated areas.

“Additionally, while Malaysia’s energy costs are competitive, it was TNB’S infrastructure readiness for hyperscale data centres that enabled companies to expedite their construction plans, which played a major role,” he noted.

As data centres and digital infrastructure consume significant energy, there will be an increasing emphasis on developing eco-friendly renewable energy solutions.

Investments in renewable energy sources, energy-efficient technologies and sustainable practices will ensure that the growth of the digital economy aligns with environmental goals, positioning Malaysia as a leader in both technological and sustainable development.

Wan Murdani said Malaysia has passed the Energy Efficiency and Conservation Act, which aims to ensure energy-intensive industries, including data centres, are operated to maximise energy efficiency as much as possible.

He said MDEC has facilitated engagements between the Energy Commission and the industry.

Source: The Star