KUALA LUMPUR, Jan 9 — Global technology companies are expected to pay a premium for energy and water access to support their data centres in Malaysia.
Natural Resources and Environmental Sustainability Nik Nazmi Nik Ahmad acknowledged the importance of data, which he described as “the new oil of the 21st century” in an interview with Financial Times, as well as Malaysia’s desire to be part of the booming sector, but added a caveat.
“We don’t want just any data centre, but if it’s coming with AI or some other technology that’s a bit more cutting edge, then, we will consider them,” he was quoted as saying.
Malaysia has been courting tech companies amid the boom in interest for artificial intelligence (AI), cloud computing, and cryptocurrency mining and is seeing a surge in data centres set up locally, especially in Johor.
At the same time, the government has noticed the significant pressure placed on the country’s energy and water resources, raising environmental concerns.
Nik Nazmi noted that Malaysia is becoming “more selective” in approving data centre projects due to these resource constraints.
“We expect data centres to pay a premium for access to water and energy supplies, and many are willing to do so to operate here.”
He also noted that Malaysia had drawn significant investment following a moratorium in Singapore on new data facilities between 2019 and 2022, driven by concerns about energy consumption.
Last year, Malaysia began permitting data centre operators to draw energy directly from green power producers, bypassing the national grid.
Nik Nazmi said the move would support Malaysia’s renewable energy system, as tech companies paid for a reliable supply of clean power.
“Because these data centres are willing to pay a premium, they can push the boundaries with regards to renewable energy and water recycling in ways that normal industries may not be able to absorb due to the costs,” he was quoted as saying.
Johor has become a hotspot for data centres, with 22 facilities already operating and another eight under construction, according to Baxtel, market research firm that specialises in the data centre industry.
Bryan Tan, a partner at international law firm Reed Smith that provides legal services to a wide range of industries, including technology, financial services, and energy, claimed that Johor has a huge potential for data centres and could accommodate up to 40 data centres, Financial Times reported.
The lawyer told the business paper that Johor is targeting to more than double its energy capacity to 2.7 gigawatts by 2027, which could support as many as 90 data centres, but added that this requires an increase in clean energy production.
Nik Nazmi said Malaysia is targeting 70 per cent renewable energy capacity by 2050, up from 25 per cent currently, and is considering options like solar and pumped hydro storage to meet this goal.
The government has also revised its water tariffs in recent years and is reconsidering energy subsidies to ensure that large corporations pay full market prices for resources, he added.
