The data centre (DC) industry in Malaysia is experiencing unprecedented growth, driven by escalating demand for digital infrastructure and substantial investments. This article delves into the current landscape, future projections, and the factors propelling the data centre boom in Malaysia.

Market Growth and Projections

The Malaysian DC market is anticipated to expand at a compound annual growth rate (CAGR) of 13.73% from 2024 to 2029, with the power capacity set to rise from 540 MW in 2023 to 1,360 MW by 2029. The industry’s revenue is projected to reach RM3.6 billion by 2025, up from RM2.09 billion in 2022 according to Knight Frank Research and Mordor Intel.

Infrastructure and Capacity Expansion

The total floor space of data centres in Malaysia is expected to grow from 3 million sq ft in 2023 to 7.7 million sq ft by 2029. Concurrently, the number of installed racks is projected to increase from 154,000 to 388,000​​. Malaysia currently hosts around 34 operational colocation data centres, with 33 additional facilities expected to be developed soon​.

Tier Classification and Performance

Data centres are classified based on their tier, which determines their uptime and redundancy capabilities:

• Tier-1: 99.67% uptime, less than 28.8 hours of annual downtime.
• Tier-2: 99.74% uptime, less than 22 hours of annual downtime.
• Tier-3: 99.98% uptime, less than 1.6 hours of annual downtime.
• Tier-4: 99.74% uptime, less than 26.3 minutes of annual downtime

Key Developments

Several initiatives are driving the DC industry forward. The upcoming Sedenak Tech Park in Johor, for example, offers renewable energy solutions, large land availability, and low natural disaster risk, making it an attractive investment location. Additionally, a Special Economic Zone (SEZ) is being developed in Johor in collaboration with Singapore, further boosting the sector​.

Environmental Considerations

Sustainability is a growing focus, with DC operators increasingly incorporating renewable energy sources to reduce their carbon footprint. This shift is essential given the high energy consumption of data centres.

Investment Opportunity: Southern Score Builders Berhad

Southern Score Builders Berhad (SSBB) is a promising investment target within the burgeoning DC market. The company recently announced a proposed acquisition of a 51% equity interest in SJEE Engineering Sdn Bhd for RM22.95 million. This strategic move will enhance SSBB’s capabilities and market presence, particularly in the electrical engineering sector​​.

Details of the Acquisition

The acquisition involves the purchase of 1,275,000 ordinary shares in SJEE Engineering Sdn Bhd. SJEE, with its extensive experience in electrical works for data centres, high-rise and mixed development buildings, and other commercial and industrial projects, complements SSBB’s existing construction management services​​.

Strategic Benefits

The acquisition is expected to bring several strategic benefits to SSBB:

Market Expansion: SSBB will be able to tap into new market segments and expand its income streams.

Technical Expertise: Leveraging SJEE’s technical expertise in electrical works and experience in data centre works will enhance SSBB’s capabilities.

Cost Efficiency: By undertaking some electrical works in-house, SSBB can reduce reliance on subcontractors and achieve cost efficiencies.

Geographical Reach: SJEE’s presence outside Klang Valley will help SSBB expand its geographical reach.

Profit Guarantee

The acquisition comes with a profit guarantee of RM15 million over three years, providing additional income and ensuring the financial stability of the enlarged group​​.

In conclusion, Malaysia’s DC industry is set for significant growth, driven by robust demand and strategic investments. Southern Score Builders Berhad, with its recent acquisition and innovative initiatives, represents a valuable opportunity for investors looking to capitalise on this expanding market.