Malaysia data centres face location constraints and rising operating costs

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Malaysia data centre constraints

Highlights

Malaysia's data centre site options are limited, with most facilities in Johor, compared with a broader geographical spread in Thailand and Indonesia.
Rising operating costs and constraints on electricity and water supplies could undermine Malaysia's competitiveness in the regional data centre market.
Latency of between seven and nine milliseconds is suitable for AI training applications, but AI inference requires a lower range of around five to six milliseconds.

This article was translated from the original. Read the original version by our correspondent here.

Concentrated hubs and infrastructure constraints

As reported by The Edge Malaysia, industry players say Malaysia's relatively limited site options for data centre development, coupled with rising operating costs, could undermine the country's ability to compete with regional markets.

At Bursa Malaysia's Sectorial Series session, Powering the AI Era, Watt Next?, IVPS Malaysia (Cushman & Wakefield) managing director and country manager Tiffany Goh said Malaysia's data centre clusters are relatively concentrated compared with those of regional peers, with most facilities located in Johor. She said Thailand offers developers more options in terms of power providers, while Indonesia has a wider geographical spread of potential sites.

She said Malaysia's constraints include the availability of electricity and water, as well as the distances between sites suitable for development. These factors are key considerations as operators assess the viability of new sites amid rising demand for digital capacity.

Implications for growth and AI workloads

Isaac Goh, general manager of data centre architecture and delivery at TM Global, Telekom Malaysia Bhd's domestic and international wholesale business arm, said Greater Kuala Lumpur remains attractive because of its existing infrastructure, while Johor continues to be another major data centre hub.

He said northern states could also offer opportunities, although latency—the time it takes for data to travel between locations—may be a barrier for certain types of workloads. Latency of between seven and nine milliseconds may be suitable for some applications, including AI training, but AI inference may require a lower range of around five to six milliseconds, he said.

The comments were made during a panel discussion titled Malaysia’s Data Centre Boom: Sustaining Growth in the Next Phase, moderated by Macquarie utilities and construction analyst Colin Lee. The industry assessment suggests that Malaysia's existing infrastructure advantages remain important, but the geographic distribution of sites, utilities and network performance will remain key determinants of the data centre sector's ability to sustain momentum.

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