KUALA LUMPUR — Malaysia has approved 143 data center projects worth RM144.4 billion between 2021 and mid-2025, according to the Malaysian Investment Development Authority (Mida).
Amazon, Microsoft, Google and Oracle have collectively committed around RM69 billion to these developments in Malaysia. Johor, in the southern part of the country, has emerged as Southeast Asia's fastest-growing data center hub.
Environmental groups have raised concerns about resource usage. Sahabat Alam Malaysia said households could end up subsidizing foreign server farms through higher costs for water and electricity. Malaysia is developing efficiency requirements to ensure heavy users pay for their own power and water consumption.
The data center expansion mirrors Malaysia's experience with the semiconductor industry. When Intel opened its first plant in Penang in 1972, it initially brought foreign assembly work. Over five decades, the facility trained tens of thousands of Malaysian engineers, many of whom founded successful companies including Inari, ViTrox and Greatech, now valued at billions of ringgit.
The hyperscalers are engaging Malaysian contractors to construct the data center campuses. Work has expanded beyond basic construction to include higher-margin specialized services such as power and cooling systems. Malaysian firms including Gamuda, Sunway Construction and IJM have won contracts worth billions of ringgit. Gamuda alone won a RM1.72 billion contract in Negeri Sembilan in April.
This collaboration transfers technical knowledge to local engineers operating advanced infrastructure previously imported. YTL Power completed Malaysia's first Nvidia-powered data center in Johor, using Grace Blackwell artificial intelligence chips.
A KPMG study projected the sector's output could reach approximately RM139 billion annually by 2030, representing nearly 4 percent of the Malaysian economy. The growth is expected to generate about 30,900 jobs across the entire supply chain.
Challenges surrounding energy, water, community opposition and export control compliance dynamics continue to shape the sector's expansion.
