Malaysia's data centre boom must lift local firms up global value chain: Johari Ghani

Malaysia seeks to transform its expanding data centre investments into a stronger local business environment, a more skilled workforce and higher economic value, rather than simply enlarging the nation's digital infrastructure. Minister Datuk Seri Johari Abdul Ghani highlighted the government's goal of ensuring that the growth of data centres bolsters domestic supply chains and offers Malaysians the chance to develop capabilities and compete in regional and global markets.

Currently, Malaysia has approved 117 data centres with a combined maximum energy demand of about 23,500 megawatts (MW) upon completion. Of these, 55 are already operational, and the rest are in various stages of planning and construction. Data centres are becoming a crucial foundation for the digital economy, supplying the computing capacity necessary to support digital services and artificial intelligence (AI) applications.

In the first half of 2026, Malaysia received RM218.5 billion in approved investments, a 12 percent increase from the previous year. Data centre and cloud-computing projects contributed RM95.8 billion, or nearly 44 percent of the total. The government acknowledges the need to strike a balance between the industry's expansion and concerns about electricity and water security, as well as environmental impacts.

Through the Data Centre Task Force (DCTF), the government is collaborating with agencies and state governments to evaluate supply requirements and strengthen standards related to power usage effectiveness, water usage effectiveness, and carbon usage effectiveness. Projects approved under the task force must meet at least 30 percent local content, which includes the involvement of Malaysian consultants, contractors, engineers, and procurement managers.

Malaysia relies on foreign investors to finance and develop the necessary infrastructure, as the government lacks the financial capacity to build all the required facilities. The government is also exploring using its gas resources to generate additional electricity for data centres, diversifying its power generation mix through renewable energy sources, and building up renewable energy capacity such as solar, battery storage, and hydroelectric power.

While data centres can generate demand for electricity, infrastructure, and engineering, procurement, construction, and commissioning (EPCC) services, their primary contribution lies in developing Malaysian engineers, software developers, and technology companies. The government aims to ensure that investments in digital infrastructure lead to competitive Malaysian businesses, a highly skilled workforce, and more efficient public services.