KUALA LUMPUR: Malaysia is an attractive hub for data centers due to its strategic location in Southeast Asia, providing excellent connectivity to major markets in the region. 

Tradeview Capital Sdn Bhd vice president Tan Cheng Wen explained that from a natural geographic standpoint, Malaysia is blessed as it is located outside the Pacific Ring of Fire which translates to very low likelihood of natural disasters such as earthquakes.

He said this is crucial for the construction of data centres which require absolute stability at all times to ensure seamless operations. 

From an economic standpoint, Tan said the country's electricity price is among the cheapest in the region (at a rate of US$0.13 per kilowatt hour) coupled with affordable land prices.

He added that this can be seen with the proliferation of data centres from Microsoft's self-build data centre in Cyberjaya to the development of data centres in Johor in the three main areas of Nusajaya Tech Park, Sedenak Tech Park and YTL Green Data Centre Park.

"The power infrastructures in these locations are reliable coupled with the proximity to the capital city (Kuala Lumpur and in Johor's case, Singapore)," he told Business Times.

Additionally, Tan said this has been further boosted by supportive government policies such as the Digital Ecosystem Acceleration scheme as part of Malaysia's tax reform initiatives in 2022, which waives taxes on all qualifying investments by digital infrastructure providers.

He noted that the recent New Industrial Master Plan (NIMP) 2030 has also placed emphasis on the promotion of digitalisation as one of its core areas, further highlighting the support towards setting up data centres. 

He said our state-run utilities players and government are also collaborating very closely to ensure data centres receive a stable supply of electricity.

"Malaysia is currently considered a Tier 2 market alongside Indonesia and Thailand with Singapore being ranked a Tier 1 market for data centre investments. 

"However, with Singapore slowing down on new data centres (due to scarcity of land and energy requirements), Malaysia has the opportunity to capitalise on the increasing demand for data centres. 

"This is evident from the 113 megawatt (MW) take up by Malaysia in 2022 which places it as first amongst the SEA-5 (Indonesia, Vietnam, Philippines and Thailand the other four). 

"This was more than a four-fold multiple over the next highest market of Thailand (25MW) according to Knight Frank's 2023 Data Centre Research Report," he added.

Hence, Tan said it is safe to say that Malaysia is definitely heading in the right direction and to transition into a Tier 1 market.

He stressed that the government must continue executing the supportive policies (NETR, NIMP) which are conducive to the data centre landscape.

https://www.nst.com.my/business/corporate/2024/05/1054126/malaysia-has-low-likelihood-natural-disasters-cheap-electricity