Apr 18, 2023 | Posted by Abdul-Rahman Oladimeji
Malaysia is emerging as an important hub for data centers in Asia, with pro-business policies aimed at attracting and retaining investors, according to RHB Investment Bank Bhd. The research house cited the government's commitment to accelerate digital adoption and a new investment policy unveiled by the Ministry of International Trade and Industry as positive signs for the sector. Major companies such as AWS and Microsoft, as well as GDS, Equinix, and Yondr Group, are making significant investments in the country. RHB predicts that Malaysia will see over 800MW of capacity come on stream over the next five years, with lower land and energy costs proving attractive to investors. However, RHB also noted that energy costs and availability, internet bandwidth, ease of doing business, political stability, and natural disasters are critical risks for the industry.
The research house also highlighted sustainability as a vital issue, with newer, more energy-efficient data centers potentially replacing older ones. RHB believes that the growth of data centers in ASEAN is driven by solid investments, upgrades to new technologies, and the transition to 5G networks.
According to Frost and Sullivan, Malaysia, Singapore, and Indonesia will account for around 74% of the $5.7 billion ASEAN data center market by 2025.
Arizton Advisory and Intelligence's Mar 2023 report predicts that the Indonesian data center market will grow 6% CAGR between 2022-2028 to $3.1 billion, fueled by rapid capacity expansion by hyperscalers, data localization regulations, and the closing gap in internet penetration with its ASEAN peers. While Singapore remains the epicenter of data center growth in Southeast Asia, its more stringent conditions for new builds have compelled investors to consider alternative sites in the region. Singtel, for example, is expanding its data center footprint in Indonesia and Thailand, adding about 70MW of capacity over the next three to five years.
