No bubble, doom or trouble for Malaysia’s data centres

FOR over the past year, questions have persisted about Malaysia’s data centre boom. Is it sustainable? Will hyperscalers pull their chips? Is it in a bubble?

Malaysia’s data centre surge remains one of the largest in the world, but the physical and geopolitical limits surrounding it are no longer theoretical. Higher electricity tariffs, uncertainty around long-term energy pricing, constraints with water resources, and new US semiconductor rules are reshaping the calculus for developers and government planners. The concerns, however, are not exclusive to Malaysia. Data centres are also on the rise in Indonesia and Vietnam. Many analysts are worried, but others say there is no bubble and these countries are making a necessary investment.

A boom built on Singapore’s pause

Malaysia’s rise began with Singapore’s “temporary pause” on new data centres between 2019 and 2022 due to environmental and resource-related issues. The moratorium pushed global cloud providers to look for alternatives just across the border.