Analysis: Malaysia still attractive for data centre investments
05 Feb 2025
Malaysia continues to attract data centre investments due to its cost advantages in land, labour, electricity, and proximity to Singapore, said analysts at RHB Investment Bank Bhd (RHB Research).
In a note, the research house said the demand for data centre infrastructure is expected to grow alongside the increasing adoption of artificial intelligence (AI)-enabled services, driven by improved affordability and efficiency.
“Hence, data centre investments may continue coming on the assumption that Jevons paradox materialises in light of potential AI democratisation,” it said.
Jevons paradox suggests that as technological advancements improve efficiency, overall consumption of a resource tends to increase. In this case, if demand for AI is elastic, falling costs due to efficiency gains may drive higher AI adoption.
RHB Research added that the outlook for data centre developers is expected to remain intact.
“With tech giants staying put on AI investments, we think Gamuda and Sunway Construction’s DC orderbook and tenderbook will not face substantial scale-downs, as most of their clients are multinational corporations from Tier-1 countries (the US, the UK, Netherlands) that are eligible for the universal validated end-user status,” it said.
The research firm also highlighted that the continued expansion of AI adoption through democratisation could benefit contractors involved in data centre construction, as more data centre providers may enter Malaysia, creating additional job opportunities for contractors.
“Notwithstanding the above, we acknowledge the risks stemming from the lingering uncertainty with US President Donald Trump having a 120-day window to comment on the AI chip restrictions,” it said.
Source: The Borneo Post
