Malaysian Data Centres attract investor attention

Favourable market conditions and extensive opportunities in the Malaysian’s Data Centre sector have attracted hyperscalers and investors to deploy capital in the country

November 08, 2021

The demand for high-quality internet connectivity is an increasing priority in Malaysia, like most other parts of the world. The need is driven by the young and information-thirsty population increasingly using mobile devices. Further, the government’s Movement Control Order (MCO) to combat COVID-19 has escalated the demand—with bandwidth usage peaking at 1.2 Tbps (TeraBits Per Second) in August 2021, creating the need for data centres and cloud-based services throughout the country.

As such, JLL Malaysia has received many enquiries for data centres and facilitated a few land transactions as investors and operators scramble to enter the market. Particularly, hyperscalers like Microsoft, Amazon and Google have obtained conditional approval to build and manage large-scale data centres and cloud services throughout the country, uplifting Malaysia’s prominence as a data hub within the region. Other recent greenfield development investments and company acquisitions include PCCW Solutions, GDS and Bridge Data Centre transactions.

Malaysia’s current data centre capacity is between 120MW and 150MW, concentrated in Greater Kuala Lumpur (Greater KL) and Johor, with a few in Penang. Cyberjaya, located in the south of Greater KL, is the most preferred location due to its well-planned infrastructure, relatively low land prices and proximity to the city centre. VADS, NTT, Bridge, amongst others, currently have more than 30 facilities in this area, and they are expanding aggressively. On the other hand, Johor has started to gain more attention, mainly due to its proximity to Singapore. With this strong inflow of global tech players and expansion plan of existing players, the Malaysian Communications and Multimedia Commission (MCMC) is expecting the addition of 150MW of data centre capacity in the next few years.

Malaysia is currently connected to 23 submarine cable networks and 15 landing stations, providing excellent connectivity with the rest of Asia and the world.

Figure 1: Key Data Centre Locations and Submarine Cables Connectivity in Malaysia

Source: TeleGeography, JLL Research

Figure 2: Submarine Cables Connectivity and Landing Stations in Malaysia

Landing Stations Submarines Cables
Butterworth, Penang Asia Africa Europe-1 (AAE-1)
Penang Bay of Bengal Gateway (BBG)
FLAG Europe-Asia (FEA)
South Africa Far East (SAFE)
South-East Asia - Middle East - Western Europe 3
Bandar Bukit Tinggi, Selangor Java, Sumatra and Kalimantan (JASUKA)
Morib, Selangor India Asia Xpress (IAX)
Myanmar/Malaysia India Singapore Transit (MIST)
Melaka SeaMeWe-4
Dumai-Melaka Cable System
Batam Dumai Melaka (BDM) Cable System
Rengit, Johor Batam-Rengit Cable System (BRCS)
Mersing, Johor Asia-America Gateway (AAG) Cable System
Sistem Kabel Rakyat 1Malaysia (SKR1M)
East-West Submarine Cable System
Asia Submarine-cable Express (ASE)/Cahaya Malaysia
SEA Cable Exchange-1 (SEAX-1)
Kuantan, Pahang Asia Pacific Gateway (APG)
Asia Pacific Cable Network 2 (APCN-2)
Cherating, Pahang Malaysia-Cambodia-Thailand (MCT) Cable
Kg Buntai, Sarawak Batam Sarawak Internet Cable System (BaSICS
Kuching, Sarawak Sistem Kabel Rakyat 1Malaysia (SKR1M)
East-West Submarine Cable System
Bintulu, Sarawak Sistem Kabel Rakyat 1Malaysia (SKR1M)
Miri, Sarawak Sistem Kabel Rakyat 1Malaysia (SKR1M)
Kiamsam, Labuan Labuan-Brunei Submarine Cable
Kota Kinabalu, Sabah Sistem Kabel Rakyat 1Malaysia (SKR1M)

Source: TeleGeography

The Government of Malaysia is promoting growth in the data centre sector and is committed to creating a viable ecosystem. Incentives include up to 100% tax exemption for eligible data centres and cloud businesses investments. The MCMC plans to increase the number of Internet Exchange Point (IXP) providers from the existing 12 to 66 by 2025. On the other hand, the Malaysia Digital Economy Blueprint (MyDIGITAL) has aimed to improve Malaysia’s infrastructure, certainly drawing more players to this sector.

An abundance of developable land, competitive electricity rates, and a pool of dynamic, literate and skilled workers have elevated Malaysia’s competitiveness in operational costs and other resources.

Figure 3: Electricity Prices for Business


Figure 4: Ease of Doing Business

Rank 1 = most business-friendly regulations
Source: World Bank

Figure 5: Literacy Rate

Source: World Bank

Malaysia has committed to reducing its carbon footprint by generating 31% renewable energy through its power-generation plan by 2025. This goal aligns with the targets set for global data centre players. The World Bank has rated Malaysia 12th in the world for ease of doing business, giving Malaysia a competitive advantage in attracting domestic and international investors seeking data centre and cloud business opportunities.