As of May 2024, Malaysia has established itself as a rising star in the global digital economy with at least 30 colocation data centers set up across the country. The majority of these centers are located in Kuala Lumpur and Johor, regions that have quickly become the fastest-growing markets for data centers in the country. This rapid expansion signals Malaysia’s readiness to position itself as one of the largest data center hubs in Southeast Asia.
The Rise of Johor as a Data Center Hub
Johor, in particular, stands out as a key player in this digital transformation. The region’s growth is evidenced by the increasing number of job vacancies for operations and technical engineers in cities like Johor Bahru, Iskandar Puteri, and Kulai. This surge in demand for skilled workers highlights Malaysia’s preparedness to meet the industrial needs of data centers and further cements its status as a global digital infrastructure leader.
According to recent reports, the data center industry in Malaysia generated an impressive RM114.7 billion in approved digital investments between 2021 and 2023. This influx of capital has created nearly 40,000 jobs, providing a significant boost to the local economy and enhancing Malaysia’s global competitiveness in the digital space.
Malaysia’s Digital Transformation: Cloud Computing Takes Center Stage
In the broader context of digital transformation, cloud computing is the driving force behind Malaysia’s ambitious goals. Global tech giants like Google Cloud, Amazon Web Services (AWS), and Microsoft Corp have all announced plans to invest billions of dollars in Malaysia’s cloud infrastructure over the next decade. AWS, for example, has committed to investing up to US$6 billion (RM28.16 billion) in Malaysia by 2037, underscoring its long-term vision for the country.
The Human Factor: Job Creation in the Data Center Industry
A common misconception about data centers is that their operations require minimal human involvement due to automation. However, the reality in Malaysia is quite different. The data center industry is generating a wide array of job opportunities across multiple disciplines, from engineering and IT to project management and legal compliance.
Mahadhir Aziz, CEO of the Malaysia Digital Economy Corporation (MDEC), explains that data centers are fundamentally engineering-driven enterprises. They require a broad spectrum of engineering roles throughout their lifecycle, including design, planning, site acquisition, construction, testing, and commissioning. These roles span various engineering disciplines such as civil, electrical, cooling, mechanical, fire mitigation, and physical security.
In addition to technical roles, data centers also create opportunities in non-technical areas like project management, human resources, finance, procurement, and legal compliance. The ICT infrastructure that underpins data centers further amplifies job creation, with roles in ICT operations, cybersecurity, and client services becoming increasingly critical as the industry expands.
Boosting the Manufacturing Sector
The growth of data centers in Malaysia has also had a positive ripple effect on the manufacturing sector. The construction of data centers drives demand for materials, components, and technology, creating significant opportunities for local manufacturers. This includes the production of critical equipment like diesel generators, which are essential for backup power in data centers.
For instance, a hyperscale data center with a capacity of 100MW may require approximately 52 units of 2MW gensets. With data centers under construction in Johor demanding nearly 2,000MW of power, there is a compelling case for establishing local manufacturing facilities to meet this demand.
Malaysia’s Strategic Position in the Global Supply Chain
Malaysia’s strategic location and established strengths in the semiconductor industry position it well to attract investments from global companies in the data center supply chain. Companies like Taiwan’s Wiwynn and the U.S.-based Supermicro have already set up operations in Johor, manufacturing servers and AI servers that are critical to data center operations.
The growing interest in Malaysia as a landing point for submarine cables further enhances its international connectivity. This interest is partly driven by the Malaysian government’s decision to exempt submarine cable deployment and repair from cabotage laws, making it easier for international companies to invest in the country.
The Ripple Effect on the Broader Economy
The expansion of data centers is not only transforming Malaysia’s digital economy but also creating spillover benefits for other sectors. The construction industry, in particular, is experiencing a positive ripple effect as demand for construction services and materials increases. Additionally, the logistics, transport, and support services sectors are also benefiting from the growth of the data center industry.
Pirabagaran Balasingam, a partner at global sustainability consultancy firm ERM, notes that the data center industry’s growth can spur innovation and research and development in the manufacturing sector. As demand for renewable energy and energy efficiency solutions grows, Malaysia is well-positioned to lead in developing sustainable technologies for the data center industry.
Conclusion: Malaysia’s Future as a Data Center Hub
Malaysia’s rapid growth as a data center hub is a testament to its strategic vision and commitment to digital transformation. With significant investments from global tech giants, a skilled workforce, and a robust manufacturing sector, Malaysia is well on its way to becoming one of the largest data center hubs in Southeast Asia.
As the industry continues to grow, Malaysia will not only create thousands of new jobs but also drive innovation and economic development across multiple sectors. The future looks bright for Malaysia’s digital economy, and the country is poised to play a leading role in the global data center landscape.
