Incentives aplenty to promote data centres - MIDA | Malaysian Investment Development Authority
contrastBtngrayscaleBtn oku-icon


plusBtn crossBtn minusBtn


This site
is mobile


Incentives aplenty to promote data centres

Incentives aplenty to promote data centres

24 Jul 2023

Corporate Malaysia is expected to see an estimated investment of US$2.25bil (RM10.2bil) in local data centres by 2028.

The government’s proactive and timely policies have provided the much needed catalysts for the data centre business.

EdgeConneX vice-president in real estate and site development for Asia-Pacific Chi Yee Ling said the regulations have played a pivotal role in attracting new investments into the country.

The initiatives include plans to establish a smart grid and increase the proportion of renewable energy to 31% in 2025 and 40% in 2035 in total power production.

“This will address concerns regarding sustainable power scalability and, at the same time the needs of hyperscalers and data centre providers will be met,” Chi told StarBiz.

The move to promote the adoption of cloud services and encouraging businesses to embrace the technology will be a boon to the development of data centres, according to Chi.

EdgeConneX is one of the leading global providers of data centre infrastructure with its headquarters in Northern Virginia, the United States, Singapore, and Amsterdam.

Ongoing initiatives, including MyGovCloud, aim to upgrade the services of the Public Sector Data Centre to cloud computing solutions supported by a hybrid cloud infrastructure.

Malaysia’s Digital Economy Blueprint is also driving transformation in the public sector, with a target of achieving 80% utilisation of cloud computing storage last year.

Moreover, the government’s efforts to develop a skilled workforce will contributed to the country being a hub for the data centre industry in Asia-Pacific.

A sustainable foundation for digitalisation has already been built, Chi said.

“The ongoing digital transformation across various sectors necessitates robust data infrastructure.

“Additionally, the increasing Internet penetration and smartphone adoption rates will result in the need for data centres to handle the growing volume of online data and services.

“The Covid-19 pandemic has also accelerated the adoption of cloud computing by businesses which will further fuel the demand for such centres.

“Malaysia is also reaping the benefits from the spillover effect of the moratorium on data centre development in Singapore, thus shifting the attention towards the country.

“While the traditional tier-one data centre markets are facing high construction and power costs, Malaysia has several advantages which will favour the country over other competitors in the region,” he said.

The country has among the lowest development cost in the region and a reliable power resource at a reasonably low price.

“Parcels of land can be acquired at a fraction of the price compared with those in other countries.

“Malaysia is also keen to develop its green energy capabilities. It is straddled at the heart of the region with deep-rooted connectivity through 20 international submarine cable systems that have a global reach.

“While Singapore has recently lifted a moratorium on data centre construction, the fact remains that the vacancy rate remains at only 2%,” he added.

To ensure that the data centre industry is sustainable, Chi said it must not only address the increasing demands of the digital economy but also prioritise sustainability.

To achieve this, data centres must explore strategies to minimise energy consumption across various operational aspects by implementing liquid cooling solutions, incorporating on-site prime power generation through fuel cells and renewable energy such as hydrogen.

Prime Minister Datuk Seri Anwar Ibrahim had announced that two more national strategic energy roadmaps – the National Energy Transition Roadmap and Hydrogen Economy and Technology Roadmap – would be launched in the second half of this year.

The roadmaps will ensure Malaysia achieves long-term energy security that is environmentally sustainable, and the data centre industry can play a role in new solutions and technologies.

On the challenges facing the industry, Chi said: “Like many growing markets in the region, the acceleration of data centre construction poses the challenge of finding a steady stream of skilled professionals with expertise in management, networking, security, cloud computing and virtualisation.

“Data centre providers need to develop a strong programme with a continued focus on skill upgrading, education and understanding cross-industry knowledge transfer.”

For foreign entrants, he said regulatory compliance would add another layer of complexity.

However, according to Chi, there is an opportunity for data centres to be more sustainable as the country ramps up efforts to make power grids greener in the near to medium term.

Source: The Star