Malaysia has made significant data centre (DC) developments in the last two decades. Increasing demand for data storage, processing capabilities, and significant growth has helped the market attract many DC investors. The market is driven by factors such as cloud computing, AI and increasing data-intensive activities in various industries.
So, what has Malaysia got to offer that is attracting these investors?
Increasingly strong social media penetration rates
Figure 1 – Social media penetration
Source: JLL Research
Figure 2 – Smartphone penetration
Source: JLL Research
In Malaysia, social media penetration is a key contributor to growing domestic DC demand. In 2022, the social media penetration rate in Malaysia was ~91.7%, outpacing Singapore at ~89.5%. This spike in social media penetration in Malaysia suggests further growth potential for DCs in Malaysia, as some of the core users of DCs are social media companies like Meta and Google. Furthermore, Malaysia has also observed increasing smartphone usage since 2018. In 2018, Malaysia’s smartphone penetration was at ~87.3% and is forecasted to grow through 2025. As such, increasing penetration and usage of smartphones and social media is likely to translate into further demand for DCs in the country.
Strategic location
Malaysia is regarded as a strategic location for DCs for a variety of reasons:
- Connectivity – The country has a well-established telco infrastructure, a robust network of submarine cables and reliable access to high-speed internet.
- Ease of doing business – Malaysia offers a business-friendly environment with various government-led incentives and initiatives to attract foreign investments.
- Geographic location- Malaysia is strategically located within Southeast Asia. It is close to major emerging markets in the Asia-Pacific region, making it an ideal hub for DC operations. As such, we have seen additional locations such as Northern Malaysia, Sabah, and Sarawak considered potential DC locations in Malaysia.
- Favourable cost structure – The low cost of land, labour, and electricity makes it an attractive destination for DC investments, as these positively contribute to DC’s operational efficiency and competitiveness.
- Skilled workforce – Malaysia has a well-educated and skilled workforce, offering a talent pool in areas such as IT, engineering, and data management.
- Renewable energy potential – Malaysia has favourable conditions for generating renewable energy, such as solar and hydropower. However, the country’s power grid may not be able to keep up with the pace of the incoming DC supply.
Government support and infrastructure developments
Malaysia’s government has shown support for DC investments through initiatives like Tenaga Nasional Berhad’s (TNB) green lane pathway. This green lane, in particular, facilitates an exclusive pathway and strategic offering for the market to provide efficient and environmentally responsible solutions for DC operators.
In addition, Malaysia has been investing in its digital infrastructure, including the expansion of high-speed broadband networks, such as the country’s 5G rollout, which has reached approximately 57.8%. Furthermore, Telekom Malaysia (TM) has entered a consortium to build a new submarine cable which will connect Southeast Asia, the Middle East, and West Europe.
