KUALA LUMPUR, Sept. 7 (Xinhua) -- Malaysia's fast-growing data center industry is facing mounting power and water constraints as developers shift from announcing new projects to commissioning and operating facilities, with Johor at the center of the expansion, according to analysts.
BIMB Securities said in a recent report that the Malaysian market is entering a new phase after land acquisitions, investment announcements and construction activity drove its initial growth. The next stage will increasingly depend on the successful commissioning, energization and utilization of completed facilities.
According to BIMB, Johor state remains central to Malaysia's data center growth, supported by its proximity to Singapore, availability of scalable land and expanding utility infrastructure. However, future growth is expected to depend less on new investment proposals and more on converting existing commitments into revenue-generating operations.
BIMB opined that power availability remains the primary constraint, while water sustainability is becoming an increasingly important consideration in project approvals. Regulatory tightening, local-content requirements and greater discipline in resource allocation could also curb speculative investment and extend development timelines.
The rapid expansion of artificial intelligence-related data center capacity could add further pressure, raising questions over long-term power demand and infrastructure readiness.
Meanwhile, Moody's Ratings said in its recent report that Malaysia's data center build-out was expected to deliver the largest relative gains in gross domestic product and employment among South and Southeast Asian markets covered in its analysis.
Citing Cushman & Wakefield, the rating agency noted that operational information technology capacity in Johor reached 1,110MW in the first half, with another 602MW under construction and 2,486MW planned. ■