Malaysia Set to Become Asia’s Third-Largest Data Center Market, Reports HLIB

Hong Leong Investment Bank Bhd (HLIB) reported that Malaysia is projected to become the third-largest data center market in Asia, following Japan and India. The research note highlights that the data center industry in Malaysia is experiencing notable expansion, driven by increasing global demand for digital infrastructure. Key sectors expected to benefit from this growth include utilities, renewable energy, property, and telecommunications.

Bernama reported that HLIB reports that between 2021 and 2023, Malaysia approved investments totaling RM114.7 billion for data center projects. Malaysia’s relatively affordable electricity and water resources make it attractive to data center operators, whose facilities consume substantial amounts of these resources. The availability of renewable energy options also appeals to international operators looking for sustainable power sources.

As data centers place a heavy demand on energy, HLIB emphasizes the need for Malaysia to increase its renewable energy generation to align with net-zero carbon goals. They estimate that 35-40 gigawatts (GW) of renewable energy capacity, primarily solar, will be necessary to support an anticipated 7.2GW of data center load.

Beyond utilities, connectivity is increasingly important, with HLIB pointing to fiber networks as a “third utility” in the data center sector. This connectivity, particularly in terms of extensive fiber coverage within Malaysia and links to international networks, is essential for the efficient operation of data centers.

The growth in data centers is also creating new possibilities for property developers who own suitable land for such projects. Developers can sell land directly, lease data center space, or even take part in the operation of facilities. HLIB also notes a significant role for Malaysia’s construction sector, estimating RM130-228 billion in potential data center construction value based on a projected IT load pipeline of 4.5-5.1GW.

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February 5, 2022