Rise of data centres in Malaysia - MIDA | Malaysian Investment Development Authority
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Rise of data centres in Malaysia

Rise of data centres in Malaysia

09 Jun 2023

Malaysia is fast becoming a regional data centre and an appealing investment destination as a result of increased digital infrastructure expenditures, including cable landing stations, more underwater cables, 5G, and improved fibre connectivity.

According to JLL’s new Global Data Centre Outlook, the current favourite sites are Selangor, Johor, Penang, Kedah, and Sarawak.

JLL said that greater use of cloud computing and artificial intelligence (AI) is propelling growth in the data centre sector.

Hyperscalers, which are mostly worldwide cloud service providers, and edge data centres, which are smaller facilities located near the populations and infrastructure they support, account for 79 per cent of total demand, resulting in the market’s fastest-growing sector. 

According to JLL, hyperscalers are predicted to rise 20 per cent from 2021 to 2026 as more tech businesses seek to address rising demand for data processing and storage due to China and India’s continued social media consumption. 

“Just five years ago, campus build sizes were commonly around 50 megawatts (MW). Today, it is not uncommon to see builds of 100 MW or more. Asia Pacific currently makes up 26 per cent share of global hyperscale data centre capacity in 2022. 

“In mature markets like Singapore, Hong Kong, Tokyo, Shanghai and Sydney, we are witnessing a huge gap in capacity, and it is being bridged quickly with large new builds,” JLL Asia Pacific data centres head managing director Christopher Street said.

“Furthermore, emerging edge markets are receiving strong interest from cloud providers and hyperscalers. Given the region’s influence in the global economy, a significant opportunity now exists in this market,” Street said.

NEXTDC Ltd is the most recent newcomer in Malaysia’s data centre market. It is an Australian Securities Exchange 100-listed technology company with a nationwide network of the most sophisticated Tier IV data centre facilities.

The company plans to invest RM3 billion over the next five to 10 years in the development of Kuala Lumpur 1 (KL1), a Tier IV-certified data facility in Petaling Jaya.

KL1, a 65 MW colocation data centre in Malaysia, will serve cloud platform providers, corporations, and government users.

According to the Australian High Commission Malaysia (AHCM), KL1, the first Tier IV accredited data centre above five MW in Peninsular Malaysia, will be the most technologically advanced, fault-tolerant, secure, and sustainable by industry standards.

It said that the new KL1 data centre would attract worldwide tech service providers looking for Tier IV competence.

“We also welcome the announcement that NEXTDC will launch its new multidisciplinary regional operations centre, with Malaysia facilitating the company’s wider expansion into other Asian markets. NEXTDC sees continued potential in the region as many Asian economies experience rapid uptake of digital services,” AHCM said.

Meanwhile, JLL said that despite a lack of readiness for major utilities, supply chain issues, and geopolitical uncertainties, the flood of data centre investments in Malaysia has raised the need for utility service providers to keep up with demand, necessitating higher capital investment. 

 It said that Malaysian utility providers have been able to meet the demands of new data centre investments properly. 

Source: NST