Malaysia is poised to become one of Southeast Asia’s largest data centre hubs by 2030, with plans to nearly triple its capacity, according to a report by S&P Global Ratings. The country’s strategic location near Singapore, coupled with strong connectivity and increasing power and water capacity, positions it favourably despite rising costs and stricter regulatory approvals.
The report highlights that Malaysia’s data centre sector is transitioning from rapid expansion to a sustainable growth model. This shift allows the country to expand its necessary resources, aiming to support the burgeoning demand for data centres. Spencer Ng, a credit analyst at S&P Global Ratings, noted, “Malaysia is slowing down to get ahead in data centres. This will buy the country time as it expands the necessary power and water resources.”
However, the report warns of potential execution risks, with data centres expected to account for over 30% of Malaysia’s electricity demand by 2035. Delays in power or water infrastructure could hinder growth. Additionally, the financing needs for this expansion are significant, with an estimated $20b required for powered shell and equipment over the next three years.
Despite these challenges, Malaysia’s strategic advantages remain intact. Yijing Ng, another analyst at S&P Global Ratings, stated, “The country’s draw remains intact—its strategic location, cost efficiency relative to Singapore, and land availability.”
Looking ahead, Malaysia’s supportive government policies, such as the “Green Lane Pathway” to expedite power approvals, are expected to further bolster the data centre sector. As Malaysia navigates these challenges, its position as a key player in the region’s data centre landscape appears promising.
