Data centre debate rages on
LIKE it or not, data centre (DC) investments are continuing to pour into Malaysia. It is concerning to detractors who believe DCs are not economically beneficial enough to justify the resources they consume, which could result in other economic problems such as higher tariffs.

Others see DC investments as advantageous when viewed in context of artificial intelligence’s (AI’s) phenomenal growth potential, which will drive the deployment of DCs. Moreover, they claim that there are technologies that can be used to make DC development in Malaysia a “sustainable” process.

Associate Professor Dr Lili Nurliyana Abdullah of Universiti Putra Malaysia notes: “Investment in DCs in Malaysia is gaining momentum due to the country’s strategic location, government support, job creation and growing demand for digital services.

“As businesses increasingly adopt digital transformation and cloud computing, the DC industry in Malaysia is set for further growth, attracting both domestic and international investments.”

Professor Lee Poh Seng, executive director at energy studies institute, National University of Singapore, adds: “Malaysia is at the heart of digital transformation as demand for DCs surges, reflecting a broader global trend. DCs are essential digital infrastructure as cloud computing, big data and AI become integral to business and governance.”

For Dr Muhammad Azzam Ismail of the Department of Architecture, Faculty of Built Environment, Universiti Malaya, it is imperative for Malaysia to attract investments in advanced DCs if it aspires to become a digital powerhouse in South-East Asia. “DCs are essential for the development of digital infrastructure and a sustainable and resilient economy,” he notes.

They all agree though that there are risks and this is why good regulations and other strategies are needed such as the usage of technologies to ensure that DCs do not harm the environment and that they remain sustainable businesses in the country.

“Despite the undeniable potential of DC investments, there are significant challenges, including high initial costs, energy consumption, regulatory compliance and intense competition. To maximise benefits and mitigate risks, investors must balance these factors carefully, emphasising sustainability for long-term success,” says Universiti Putra Malaysia’s Dr Lili.

She adds, “Proactive planning, regulatory oversight and collaboration are crucial for aligning DC growth with sustainable resource management.”

Prof Lee notes that due to DCs high resource requirements and environmental impacts, Malaysia must approach its expansion of DC capacity with meticulous planning and foresight.

“Singapore’s recent experiences provide valuable lessons on managing this growth sustainably and responsibly, offering Malaysia a reassuring model,” he adds.

For Dr Muhammad Azzam, DC operators and developers could utilise revolutionary immersion cooling techniques to directly cool server racks without damaging electronic equipment instead of depending on air-conditioning and zonal air circulation for cooling.

““Dielectric liquid immersion” cooling is efficient and can be linked to heat exchangers that are cooled using lake or sea water. This innovative cooling technique is practised in advanced economies and should be emulated here. The region has many abandoned tin mining lakes that are ideal for clustering modular DCs on barges equipped with heat exchangers that are water cooled.”

Prof Lee also points out that DCs pose sustainability challenges due to their need for significant amounts of electricity and water, especially for cooling systems.

“By adopting some of Singapore’s innovative approaches, such as sustainable cooling technologies that minimise environmental impact and the strategic use of recycled water, Malaysia will be able to address these challenges,” he says.

Meanwhile, for entrepreneur Joel William, who runs clean room consultancy services for the semiconductor industry, the rapid proliferation of DCs poses significant challenges that could hinder sustainable growth and economic diversification.

“A strategic re-evaluation of DC investments is required to ensure they contribute positively to Malaysia’s development, which is already facing power shortages and struggling to accelerate infrastructure projects.

“Hyperscale DCs, which can require between 200 and 500MW each, exacerbate the problem. There is currently a 16- to 30-month wait time for industrial parks to develop the necessary infrastructure to meet high demand, especially in states like Johor,” he says.

He adds, “This creates a bottleneck for foreign direct investment (FDI) in other critical sectors like semiconductors, medical devices and biotechnology, which require ready infrastructure for fast-track projects. As a result, these sectors might look to Vietnam or Thailand, leading to lost opportunities and economic diversification challenges for Malaysia.”

Our leader articles related to this topic give some important views and insights in this DC debate which continues to rage on.

This article first appeared in Star Biz7 weekly edition.
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LIKE it or not, data centre (DC) investments are continuing to pour into Malaysia. It is concerning to detractors who believe DCs are not economically beneficial enough to justify the resources they consume, which could result in other economic problems such as higher tariffs.