Johor now the largest data centre market in Malaysia, driven by investments from MNCs: report - MIDA | Malaysian Investment Development Authority
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Johor now the largest data centre market in Malaysia, driven by investments from MNCs: report

Johor now the largest data centre market in Malaysia, driven by investments from MNCs: report

06 May 2024

Resource site Baxtel cites Johor as the largest data centre market in Malaysia now, as multinational corporations (MNCs) with regional presence pour investments into the state, according to a report by Channel News Asia.

The site lists some 13 data centres facilities across more than 1.65 million square feet of land mass in Johor, with another four under construction.

Baxtel ranks Johor as the ninth-largest data centre market in Asia Pacific.

According to digital economy experts, Johor’s data centre boom is fuelled by multinational corporations with regional presence, whereas data centres elsewhere in the country is catered to the domestic market.

Property agency Zerin Properties believs Johor is poised to attract RM17 billion (US$3.6 billion) in new data centre investments this year, building on the RM51.1 billion invested in 2022.

The report said southern Johor in particular is seeing a boom in data centres thanks to its proximity to Singapore, spillover effects of the US-China trade war, as well as cheaper land, water and power.

Major data centre players like Nvidia, AirTrunk, GDS International, YTL Power as well as Princeton Digital Group have set up operations there, and tech giant Microsoft has reportedly purchased land in Kulai to open a data centre.

Zerin Properties highlighted the Malaysian government’s role in actively supporting Johor’s data centre ecosystem by developing industrial parks with suitable infrastructure.

Among the largest are the 745-acre Sedenak Tech Park (STeP) and the 509-acre Nusajaya Tech Park, it said.

Meanwhile, a research report from real estate consultancy Knight Frank predicts that Johor’s data centre market will exceed Greater Kuala Lumpur in terms of “live capacity.”

It said this will be driven by its proximity to land-scarce Singapore which, between 2019 and 2022, paused new data centre development.

It said Johor’s proximity to Singapore has led many multinationals based in the city state to expand across the Causeway to take advantage of Johor’s cheaper land, construction costs as well as operating expenses, particularly electricity tariffs, for their data centres.

“Another factor is United States-China strategic competition, which has spurred corporations from China and the West to diversify and expand in Southeast Asia in the semiconductor and digital infrastructure space,” it said in the report.

The report also highlighted the need to improve the water and power industry in Johor, as some experts have flagged disruptions in both as areas of concern.

The data centre industry is both power and water intensive.

Source: NST