Malaysia’s Data Centre Business

Malaysia has developed a significant volume of business in the global data centre market, attracting billions of dollars in investment from global tech companies.  According to recent reports, Malaysia’s data centre business is expected to reach a market size of USD 2.5 billion by 2038, growing at a CAGR of 9.1% from 2022 to 2028. Germain Thomas, Asian Insiders partner in Malaysia discusses.

As the globe becomes increasingly digitised and all commerce depends on functional digital networks, this creates demands for high-speed connectivity, powerful data storage and service facilities to respond to issues, errors and urgencies. Malaysia has emerged as a significant APAC data centre market due to supportive government policies, a high level of connectivity, abundant available and affordable land, inexpensive sustainable energy and a very useful proximity to Singapore.

There are presently 33 data centres in Malaysia with at least twelve more under development. Further Malaysia is deeply connected to the world with 29 submarine cables and 14 landing stations. Three more undersea cables are in the planning stage. Malaysia is moving fast towards near comprehensive digitisation. For example the government’s JENDELA initiative, a part of the 12th Malaysia 2021 – 20215 Plan, will lead to the investment of USD 4.5 billion in faster broadband services, with near complete 4G coverage nationwide. Malaysia has announced considerations towards a second, 5G network in the planned future.

Malaysia’s data centre business is considerable aided in that the Malaysian population is relatively young, digitally savvy and upwardly mobile. Only around 8% of the population are of retirement age, while 24% are aged under 15. 89% of Malaysians are connected to the internet and use smartphones, one of the highest rates in the world. This youth and connectivity drives a thriving e-commerce market, expected to grow at 13.7% CAGR by 2027. By that time, the Malaysian e-commerce market could be worth as much as USD 17 billion. Malaysia’s data centre business benefits also from the presence of global cloud service providers including AWS, Microsoft, Alibaba and Google cloud. Local major companies include Telekom Malaysia, Equinix and AIMS Data Centres. Malaysia, especially Johor Province and Batam Island of Indonesia, take advantage of the overflow of data centre investment from Singapore.

Land costs in Malaysia are cheaper also, particularly in preferred regions such as Johor and Cyberjaya. Land for this purpose in Malaysia is estimated to be less than 25% of the cost of equivalent land in the US. Malaysia has some 600 industrial estates with strong connectivity as well as several designated ‘free zones’ to cater to looming industrial requirements.

Data centres are notoriously energy hungry and contribute an estimated 1-2% of energy related greenhouse gas emissions globally each year. It is estimated that data transmission and storage in and from data centres uses around 1% of global energy supply, with projections indicating this could rise to as much as 13% by 2030. This puts intense pressure on the requirements for increased energy efficiency in data centre operations, as well as the energy supply itself. Meanwhile Malaysia’s international climate commitments require a major shift in energy generation with Malaysia’s target to generate 70% by 2050. Currently the energy mix is 42% gas, 27% petroleum and 26% coal. Malaysia’s data centre business operators are looking at ways to deploy smart operations for power saving, using AI, VR, IoT technology and circular practices. Industrial estates are designed also with on-site alternative power generation to support local usage. In 2022, Malaysia’s data centre business used 66MW and this is anticipated to rise to 157MW by 2027, so there is also clear pressure to boost Malaysian power generation to meet this increased demand.

The Malaysian government’s support for this sector includes The Data Centre Masterplan, launched in 2018 and aiming to position Malaysia as a leading data centre hub as well as The Digital Economy Corporation (MDEC), the government agency responsible for the development of the digital economy, and provides incentives to operators including tax breaks and grants. The rapid growth in Malaysia’s data centre business is in large part due to these initiatives and has stimulated an environment that international players can also enjoy. The evolution of green data centres and deploying emerging technologies such as 5G, edge computing and AI make Malaysia a strong and growing force in the data centre business in Southeast Asia. Big data is big business and getting bigger. International companies in this space should be looking closely at Malaysia

For more details on the opportunities available in Malaysia’s data centre business, Asian Insiders offers connections, insight and assured engagement in this sector. For a no-obligation call, please contact Jari Hietala, Managing Partner: jari.hietala(at) or Germain Thomas, Malaysia Partner: germain.thomas(at)

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