Malaysia On Track To Become Third Largest Data Centre Hub In Asia - HLIB

KUALA LUMPUR, Oct 30 (Bernama) -- Malaysia is on track to become the third-largest data centre market in Asia, after Japan and India with key sector beneficiaries being utilities, renewable energy (RE), property, and telecommunication, among others, said Hong Leong Investment Bank Bhd (HLIB).

In a note today, the research bank said the future of Malaysia’s data centre industry appears bright as global demand for digital infrastructure continues to grow and its role in the data centre ecosystem is likely to expand.

The data centre space in Malaysia is experiencing significant growth, with approved investments totalling RM114.7 billion between 2021 and 2023.

HLIB said the electricity and water are relatively affordable and abundant in Malaysia, attracting data centres which consume large amounts of these resources, and the country also appeals to international data centre operators by enabling them to source RE.

"As data centres are electricity guzzlers, it is crucial that the significant rise in energy consumption be met with an increase in RE generation capacity to ensure that Malaysia’s net-zero objectives are met.

"We roughly estimate that 35-40 gigawatts (GW) of RE is needed (assuming solar) to power up 7.2GW of data centres," it added.

Meanwhile, the research bank opined that besides electricity and water, high bandwidth connectivity has become the third critical utility in the data centre industry

"Connectivity here refers specifically to fibre and not only with domestic coverage, but extensive reach to international shores as well.

"Fibre that transmits and receives data at the speed of light has become the prerequisite to network between data centres, corporates, developers and end users," it said.

In addition, HLIB noted that the surge in data centre investments has opened up new opportunities for property developers.

Developers who have land suitable for data centre development can sell the land directly, build and lease data centres to operators or even participate in operating the data centre, it said.

Additionally, the bank said under the construction sector, sophisticated engineering, procurement, construction and commissioning (EPCC) contracts are essential for modern data centres, which require advanced configurations and cybersecurity measures.

"We estimate there is RM130-228 billion worth of data centre construction value (based on an IT load pipeline of 4.5-5.1GW) and this will be a boon for reputable data centre builders," it said.

-- BERNAMA