JOHOR. BAHRU, Aug 27 – Malaysia has been ramping up efforts to attract domestic and international investors to set up data centers amid a global surge in demand for such facilities due to the spread of artificial intelligence.
Leveraging its proximity to Singapore, a financial and logistics hub in Southeast Asia, Malaysia aims to provide large tracts of land for data center construction. In particular, its southern state of Johor, which lies just north of the prosperous city-state across a causeway, has been seeing a data center construction boom.
Massive, warehouse-like structures have risen on former palm oil plantations in the area, with further development expected on vacant land.
Data centers, which house servers that store and process data underpinning IT services and generative AI, consume large amounts of electricity for data processing and water for cooling equipment.
According to JLand Group, the Johor state-linked developer, the site spans about 5.6 square kilometers, with half already operational and the remainder under construction.
Drawn by Malaysia’s neutral foreign policy, companies from both the United States and China have entered the country, while European firms are also investing.
Power demand at the site stood at around 1,700 megawatts as of August, the developer said.
Development of the area began around 2015 and gained momentum from 2019 onward, when Singapore began restricting new data center construction over concerns about land and power shortages.
With the recent AI boom, Malaysia’s central bank said related investment helped the country achieve a growth rate of 5.2 percent in 2025.
Data center operations are primarily focused on maintenance and management, limiting job creation.
But Faezah Ayub, senior general manager of strategic partnerships and business development at Johor-based JLand Group, said the aim is “not simply attracting more data centers but to build a sustainable digital infrastructure ecosystem that balances economic growth, resource security and environmental responsibility.”
Amir Fareed Abdul Rahim, director of strategy at KRA Group, welcomed the investment but expressed caution over the government’s AI vision, saying, “There is no substantive policy design yet.”
While demand for data centers has grown, opposition has also intensified in the United States and elsewhere over environmental concerns.
In Johor, residents have raised concerns about construction dust and potential water shortages.
Faezah defended the data center construction, saying the state “has sufficient electricity and water resources to support current and planned developments” and is “advancing initiatives to increase the use of sustainable and renewable energy.” – KyodoNews
