Data centre surge boosts M’sia tech and economic growth
06 Aug 2024
However, the rapid growth of data centres could result in both positive and negative consequences to local residents and surrounding areas
THE proliferation of data centres in Malaysia highlights the growing need for improved connectivity and cloud services, which in turn fuels technological advancement and economic growth.
Equinix Malaysia MD Cheam Tat Inn said the demand for data centre capacity in the country will rise due to the growing daily activities of consumers and businesses, including online shopping, email, video calls and critical medical work.
“As companies rapidly integrate artificial intelligence (AI) into their operations, it is driving increased demand for data centre capacity.
“While the emergence of multiple data centres can create a dynamic and competitive landscape, it presents an excellent opportunity for the nation to advance its digital infrastructure,” he told The Malaysian Reserve (TMR).
He said with thoughtful planning and strategic development, this growth can be harnessed to significantly benefit the country, fostering a more connected and technologically advanced society while contributing to the nation’s economy.
Nevertheless, the rapid growth of data centres could result in both positive and negative consequences, potentially affecting local residents and surrounding areas.
Previously, Investment, Trade and Industry (MITI) Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said data centres constituted the majority (RM114.7 billion) from RM144.7 billion in approved digital investments between 2021 and 2023.
Approved investments were RM3.4 billion in 2021, RM80.8 billion in 2022 and RM60.5 billion in 2023, coming from various organisations such as Amazon.com Inc, GDS Holdings Ltd, YTL Corp Bhd and ByteDance Ltd.
Currently, Malaysia is aiming to develop areas in Johor Bahru (JB), Cyberjaya and Kulim as data centre hubs.
Cyberview Sdn Bhd, the development agency behind Cyberjaya, is setting the stage for a transformative era in the city’s growth.
Cyberview head of strategic communications Iza Sofia Kasbi said Cyberjaya is not just a hub for new technologies but also a cornerstone for sustainable development.
The company has been pivotal in establishing key infrastructure projects, including the platinum-rated Cyberjaya Hospital.
The Covid-19 pandemic accelerated the digital shift, leading to a surge in data centre investments in Cyberjaya.
These investments are crucial as the city aims to build an ecosystem of many advanced technologies.
“We are now in the process of building a processing zone, which will require the development of supercomputers and AI,” she told TMR.
Recent Data Centre Launches
Malaysia’s shifting focus towards securing more investments in data centre hubs is becoming increasingly apparent, following several recently signed memoranda of understanding and launches.
In May, digital infrastructure company Equinix Inc expanded its digital footprint in Malaysia with the opening of two international business exchange (IBX) data centres in Johor (JH1)
and Kuala Lumpur (KL1), reinforcing its goal of becoming a leading regional digital hub. Recently, Equinix invested RM23 million to purchase a land in Cyberjaya to expand its data centre capacity in Malaysia.
This expansion followed the launch of Equinix’s IBX facilities in KL1 and JH1, and is aimed to meet the rising demand for data centre services in Malaysia and South-East Asia.
The newly acquired 14,300 sq m of land will support Equinix’s growth in the region. Meanwhile, AirTrunk, a Sydney-based
Asia Pacific and Japan hyperscale data centre specialist, has launched its flagship 150 megawatts (MW) data centre, AirTrunk JHB1, in JB.
The facility, positioned to enhance connectivity with regional technology hubs, including Singapore, was launched in an event attended by MITI Deputy Minister Liew Chin Tong and Australian government officials.
Malaysia’s data centre market is growing rapidly due to its strategic location, supportive policies and increasing digital infrastructure needs, with a projected market value of RM18.29 billion by 2029.
Impact On Local Communities
Data centres play a crucial role in modern economies, not only as hubs for data storage and processing but also as catalysts for local community development.
Open DC Sdn Bhd founder and MD Wong Weng Yew said such facilities play a significant role in community development by driving economic growth, creating job opportunities and contributing to local infrastructure investments.
He said data centres normally require substantial investments, often exceeding RM50 million, which can drive local economic growth.
“Our data centres have led to upgrades in local power grids and enhancements in water supply systems,” he told TMR.
This infrastructure development is essential not only for data centre operations but also for the broader community, improving utilities and services that benefit residents.
For example, Open DC’s investments have included the construction and maintenance of access roads, which improve transportation for local communities.
Additionally, the company supports public services like local schools and healthcare facilities, contributing to overall quality of life improvements.
Meanwhile, Equinix’s Cheam said the construction and operation of data centres often lead to the development of supporting infrastructure such as roads and utilities, improved public services and enhanced connectivity, acting as a “good neighbour”.
“Investment in infrastructure improves efficiency by reducing transportation and logistics costs, connecting small businesses to broader markets and attracting both domestic and foreign investment. “Enhanced infrastructure, such as reliable power, water and Internet services, boosts productivity, enabling small businesses to function effectively and scale operations,” he added.
He also remarked that data centres attract ancillary businesses and service providers, further stimulating local economies.
“Higher demand for goods and services directly translates into increased sales and revenue for small businesses, encouraging them to scale up operations, invest in new technologies, and expand their workforce.
“This demand strengthens local supply chains and fosters market confidence, creating a positive business environment,” he said.
Among other benefits include the creation of a wide range of job opportunities, mainly roles for IT technicians, cyber security specialists, data analysts as well as support staff, which ultimately contribute to local employment by providing high-quality jobs with competitive salaries and career development prospects.
Additionally, these roles support the growth of Malaysia’s tech sector, helping to build a skilled workforce and encourage local expertise in digital infrastructure.
The company recognises these initiatives as catalysts for innovation and job creation, contributing to the development of a digitally skilled workforce.
The creation of data centres can also impact local housing markets, frequently resulting in higher demand and escalating rental prices as tech workers relocate to the area.
However, Wong pointed out that this could also stimulate the local economy, enhancing amenities and services for all residents.
He mentioned that Open DC collaborates with local authorities to balance these effects, ensuring that community development remains equitable.
Regarding Cyberview, Cyberjaya’s unique designation as “enterprise land” has shielded the local housing market from the impacts typically associated with data centre growth.
Iza Sofia said this classification ensures the land is reserved for business and technological enterprises, thereby maintaining a clear separation from residential areas.
Environmental Sustainability Concerns
Wong said there is no doubt that the establishment of a large facility such as a data centre will require significant daily consumption of electricity and water.
Naturally, such major developments will raise a number of environmental issues, hence it is imperative for all data centres to prioritise sustainability, considering their substantial energy needs.
He said Open DC has implemented various strategies to mitigate environmental impact such as utilising sustainable energy sources, advanced cooling systems and water treatment technologies.
The company is committed to reducing its carbon footprint by adopting renewable energy (RE) sources and pursuing green building certifications like Leadership in Energy and Environmental Design, and GreenRE.
For Equinix, Cheam pointed out that the rising demand for data centres is further fuelled by the need to support AI applications, which require high-density power.
As digital infrastructure becomes increasingly central to the modern world, he said the growing demand for data centres will inevitably lead to higher power and water consumption.
Therefore, it is crucial for the industry to prioritise the design, construction and operation of data centres in a sustainable manner.
Data centres are actively minimising their environmental impact and promoting sustainability through several key measures by enhancing energy efficiency with efficient hardware and power management, while adopting RE sources via green power purchase agreements, on-site generation and RE credits.
Simultaneously, Equinix is committed to preserving its collective future by addressing pressing environmental challenges to ensure the sustainability and resiliency of its communities, global society and business.
Cheam said its multi-faceted approach leverages numerous opportunities to advance sustainability within its industry and create long-term value for stakeholders.
As for AirTrunk, the JHB1 has a low power usage effectiveness of 1.15, making it one of the most energy-efficient data centres in Malaysia.
JHB1 features advanced cooling technologies, including direct-to-chip liquid cooling and indirect evaporative cooling, which greatly reduce energy consumption.
In partnership with Tenaga Nasional Bhd (TNB), AirTrunk has connected the facility to the grid, supported by a 30MW RE agreement under Malaysia’s Corporate Green Power Programme.
To support the influx of data centres, Cyberview is enhancing its infrastructure, including the addition of a new Transmission Main Intake, while also in collaboration with TNB, to meet the growing energy demands.
Looking ahead, Cyberview is focused on integrating RE solutions and water recycling systems to meet the sustainability needs of these data centres.
Data Privacy, Security and Bridging Connections
Data privacy and security are becoming increasingly valuable as nearly everyone in the world has a digital footprint somewhere on the web.
Wong said with data privacy concerns becoming increasingly prominent, Open DC adheres to strict security standards, being ISO27001 and PCI-DSS certified.
The company has policies for data access, retention and protection ensuring personal data confidentiality and integrity.
It also invested in continuous system monitoring and regular staff training to uphold high-security standards.
Data centres like those operated by Open DC are pivotal in enhancing digital infrastructure, thereby improving access to online services in both urban and rural areas.
Wong said the company is involved in initiatives to provide affordable Internet access and digital literacy programmes, particularly in underserved areas.
Open DC is also constructing the first Tier-3 Data Centre in northern Malaysia, which will include the DE-CIX Internet Exchange, further boosting regional digital connectivity.
Source: The Malaysian Reserve
