Malaysia’s Data Center Bet: New Planning Guidelines Set to Drive Growth

The government of Malaysia recently approved new Data Center Planning Guidelines (GPP), marking a significant step toward standardizing the nation’s data center development process.

The guidelines (PDF) aim to streamline application and planning approval processes for stakeholders and could help to make Malaysia a more attractive location for data centers than ever before.

The GPP specifically targets data center developments exceeding 1 MW capacity, covering both new areas and existing buildings. A key feature includes strict zoning requirements, limiting data center construction to commercial and industrial areas, with mandatory buffer zones near residential areas to minimize noise disturbance.

Currently, Malaysia hosts 32 operational data centers with 19 more under construction, primarily concentrated in Cyberjaya, Kuala Lumpur, and Johor.

With strategic investments and supportive policies, Malaysia’s digital economy is primed for growth (Image: Alamy)

The country’s strategic data center initiatives have already attracted major tech giants including Amazon, Google, and Oracle. In May, Google detailed its plans to invest $2 billion into the Malaysian data center and cloud industry. Amazon announced in August that it was investing $6.2 billion in Malaysia. In October, Oracle announced its own $6.5 billion investment to help grow in Malaysia.

“Malaysia has a number of key advantages, its location and proximity to Singapore means that the undersea cables connecting it to the rest of the world are accessible," Roy Illsley, chief analyst at Omdia, told Data Center Knowledge.

Related:Tracking the Explosive Growth of India’s Data Center Market

“It has more land available than Singapore for building data centers, and the government has committed to increase the renewable energy to 70% by 2050, it has a target of 31% by 2025.”

Why the Malaysia Data Center Planning Guidelines Matter

The Malaysian data center planning guidelines have the potential to really accelerate growth.

Omdia analyst Siraj Aziz explained that the guidelines for data centers will become one of the conditions for applying for government incentives. The guidelines include power usage effectiveness (PUE), water usage effectiveness (WUE), and carbon usage effectiveness (CUE).

“This is definitely the right move at the right moment for Malaysia,” Aziz said. “We have heard concerns regarding potential water supply constraints in Johor due to the massive amount of data centers being built there. So, it is important that there’s clarity in policy direction.”

Malaysia’s expanding role in Asia’s digital infrastructure market is attracting tech giants like Amazon, Google, and Oracle (Image: Alamy)

Why Equinix is Optimistic About the New Guidelines

Among the many data center operators in Malaysia is Equinix. The company currently has facilities in Kuala Lumpur (KL1) and Johor (JH1) which both became operational in 2024.

Related:Malaysia Taps Chinese Investors to Build More Data Centers

“Equinix expects that the new guidelines, including planning controls and buffer zones, will contribute to the overall growth and stability of the data center market in Malaysia and ensure sustainable and responsible development of digital infrastructure,” Cheam Tat Inn, managing director for Equinix in Malaysia, told Data Center Knowledge.

“The data center industry in Malaysia is on the cusp of significant growth, driven by the rapid adoption of digital technologies across various sectors including finance, healthcare, manufacturing and e-commerce.”

Current and Planned Data Center Buildouts in Malaysia

There already is a significant amount of data center activity in Malaysia.

According to data from Omdia, Johor, a state in the southern part of Malaysian peninsula has seen a boom in new data center construction, attracting major US players such as Equinix and Microsoft, Chinese operators such as Bridge Data Centre (ByteDance) and GDS Holdings, government-linked companies such as Nxera (Singtel) and TM Global, ST Telemedia GDC, and Keppel, as well as other private operators such as YTL Corporation, Sea, Princeton Group, AirTrunk, Yondr, and K2.

Omdia’s data also notes that early phases of major projects such as YTL (500MW), Yondr (200 MW), Airtrunk (150 MW), and Princeton (150 MW) are set to be operational by the end of the year.

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According to Arizton Advisory and Intelligence, as of June 2024, Malaysia’s existing data center power capacity stands at around 640 MW, and could see upcoming power capacity exceeding 2.4 GW, through the development of new data center facilities. Malaysia accounts for more than 30% of the existing data center power capacity within the Southeast Asia data center market.

Here’s a brief rundown of some of the biggest Malaysia data center deployments:

Why Malaysia is Growing its Data Center Efforts

Experts cited several reasons why the data center market in Malaysia is ready for expansion.

“The construction of data centers in Malaysia has significantly increased after Singapore, which was considered as the central hub for regional data center operations, halted new projects in 2019 due to land and energy limitations,” Harish Sridharan, associate director of data centers at advisory firm Arizton, told Data Center Knowledge.

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Sridharan noted that Malaysia is strategically positioned to address regional capacity shortages. Malaysia has lots of land, a stable power supply, access to 23 existing international submarine cable systems with six upcoming submarine cables and rising interest from providers and hyperscalers.

The country’s strategic location close to Singapore, along with other advantageous conditions, makes Malaysia an appealing choice for data center investments.

“In early 2022, Singapore lifted its moratorium on data centers, yet this had little effect on the data center boom in Malaysia,” Sridharan said. “The country continued to attract new operators who were developing new data center facilities.”