The rapid growth of digital infrastructure in Malaysia is making the nation an increasingly attractive hub for data centres and investment. This development is propelled by enhanced investments in components such as cable landing stations, additional underwater cables, 5G, and upgraded fibre connectivity.
As per JLL’s new Global Data Centre Outlook, leading sites in Malaysia currently include Selangor, Johor, Penang, Kedah, and Sarawak. The increasing reliance on cloud computing and artificial intelligence (AI) technologies is fuelling the data centre sector’s expansion.
Most of the demand, accounting for 79%, is driven by hyperscalers – predominantly global cloud service providers – and edge data centres, the smaller facilities located near the populations and infrastructure they support. Hyperscalers are expected to increase by 20% from 2021 to 2026, thanks to the continuous rise in demand for data processing and storage influenced by increasing social media consumption in China and India.
In the past five years, the build size for data centres has doubled from 50 megawatts (MW) to 100 MW. The Asia Pacific region currently contributes 26% to the global hyperscale data centre capacity. Capacity gaps in mature markets such as Singapore, Hong Kong, Tokyo, Shanghai, and Sydney are quickly being filled with large new builds.
An Australian Securities Exchange 100-listed tech company, NEXTDC Ltd, recently joined the Malaysian data centre market. With a commitment to invest RM3 billion over the next five to ten years, NEXTDC plans to develop Kuala Lumpur 1 (KL1), a Tier IV-certified data facility in Petaling Jaya. KL1, a 65 MW colocation data centre, aims to serve cloud platform providers, corporations, and government users.
KL1, the first Tier IV accredited data centre above five MW in Peninsular Malaysia, is poised to attract global tech service providers due to its Tier IV competence. Malaysia will also support NEXTDC’s broader expansion into other Asian markets through a new multidisciplinary regional operations centre.
Despite supply chain issues, geopolitical uncertainties, and inadequate readiness for significant utilities, the influx of data centre investments in Malaysia is driving utility service providers to step up to meet demand, implying the necessity for more substantial capital investments. So far, Malaysian utility providers have effectively handled the demands of the new data centre investments.
