Data center investment soars in Malaysia, leading the way in ASEAN

Data center investment soars in Malaysia, leading the way in ASEAN

Malaysia is estimated to have become the region's top destination for investment in electricity-guzzling data centers. According to market analysts, several new and emerging investments in the sector are expected to increase capacity to nearly 1,000 megawatts (MW) within five years.

Compared to 2022, when capacity was only 113 MW, projections show a gradual increase to more than 900 MW over the next five years. Analysts note that this is due to lower land, energy, and labor costs in Malaysia compared to neighboring countries, especially Singapore.

To date, six new data centers have been completed and are expected to consume about 292 MW of power, according to Kenanga Research analyst Teh Kian Yeong.

Tenaga Nasional Bhd (TNB) has signed power supply agreements with eight data centers to meet the demand for 2,000 MW of power, Teh said. He added that the total power demand from data centers is expected to reach 7,000 MW by 2035.

Tengku Datuk Seri Zafrul Abdul Aziz, Minister of Investment, Trade and Industry, also said that Malaysia has managed to attract RM76 billion in investments related to data center development between 2021 and March this year. This medium-term forecast shows very significant growth, with the compound annual growth rate estimated at 16 percent or approximately RM9.36 billion from 2021 to 2026.

While this growth forecast continues, there are still concerns regarding this development. Adrian Koh, Head of Secure Power Division, Schneider Electric Malaysia, said the rapid growth of data centers in Malaysia has created a high demand for professionals who can design, build, operate, and maintain such complex infrastructure. Unfortunately, there is still a shortage of professionals in this industry in Malaysia.

Based on the Malaysia Digital Economy Corporation's projections to December 2022, it is estimated that the demand for industry professionals will grow at an annual rate of about 7.59 percent over the next three years.

While other data comes from the Uptime Institute report, by 2025, at least 2.3 million full-time employees will be needed to keep data centers up and running around the world. The greatest demand is expected to come from large Internet companies and colocation providers in the Asia-Pacific, Middle East, and Africa regions.

Koh emphasized the need for industry leaders to work together to address the data center labor shortage. He suggested increased recruitment efforts, training, and awareness of opportunities as necessary measures.

According to him, new approaches that leverage digital transformation and recent innovations need to replace traditional recruitment and mentoring strategies. Koh also emphasized that individuals with diverse backgrounds, such as project management, logistics, customer service, and the arts, may have transferable and relevant skills for data center operations.

In the context of an increasingly digitized world, data centers play a critical role in handling the vast amounts of information generated by individuals, businesses, and governments, and serve as the backbone of modern technologies supporting everything from cloud computing to artificial intelligence.

According to Koh, the availability of sufficient land and power resources, seamless global connectivity and supportive government regulations have enabled Malaysia to become a strategic and ideal investment destination for data center development.

Source: New Straits Times

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