Malaysia aspires to provide the backbone of the global AI boom. Will the bet pay off?
The forests of Johor, the Malaysian state, were cleared through the Strait of Johor from Singapore, for the first time in the 1940s by the Chinese tribes of Singapore seeking more space to grow black pepper. In the next century, under British rule, pepper farms have given this road to vast farms of rubber palm trees and oil. In many of these same sites today, Johor cultivates a new type of cash crop: data centers aimed at feeding the world’s appetite for artificial intelligence.
The Johor Data Center, such as shift to growth, is a scarcity function in Singapore. The small city state is the digital axis in Southeast Asia. But he imports both water and energy, and in 2019 it was imposed on a stop on data construction centers because the betting facilities were shaking water and consuming 7 % of electricity in Singapore. Investors and data centers operators have agreed to neighboring Malaysia, where the lands are cheap, energy abundant, and the government is keen to develop the country’s digital economy.
But the rise of Johur as a data center for data is also driven by the global arithmetic stampede. Singapore canceled the ban on the data center in January 2022, but the version of Chatgpt later that year sparked an explosion in the global demand for Amnesty International’s infrastructure – and a new investment madness in Malaysia. In 2023, Malaysia achieved more than $ 10 billion in investment for data centers, then multiplied three times in 2024, making the country the most hot destination in the world of the data center investments in both years, according to Knight Frank Real Estate Consulting.
Johour is the center of construction. For the state, and for Malaysia, the big question is whether this flood of capital and experience will carry their wider economies into a new era of high growth-or whether other challenges, such as transformations in global demand and restrictions in local resources, will transform their data centers from cash cows to obligations.
Johor hosts more than 40 data centers either operating or under construction, according to the consultant BAXTEL, up from about ten in 2022. Many other stages. The database capacity, measured in the amount of energy that facilities can provide, increased to more than 1500 megawatts last year, an increase of 10 megawatts three years ago, according to the DC BYTE data intelligence platform.
If the expansion of its current pace continues, Johour may outperform the northern Virginia as the largest database in the world during the next five years.
“Johor is adding the database capacity quickly and scale that I have not seen anywhere else in the world,” says Rango Salazy, CEO of the Prinston Digital Group, a Singapore -based data center operator. Princeton Digital, which includes its supporters, launched the Warburg Pincus Special Stock Giant, last year, the first stage of the campus of $ 1.5 billion, and 150 megawatts in a huge technical park at a height of 40 miles from the border crossing in Singapore-Johour-and plan to add a second campus, 200 megawatts in a commercial place a few miles away from the road.
The procession of companies that accumulate in investment advertisements also includes millions of dollars in Johor also global technology leaders such as NVIDIA, Microsoft, Alphabet and Oracle, as well as data center operators such as Equinix in California, NTT data in Japan, and GDS holdings in China.
“Three years ago, if I asked the CEOs of Global Technology Giants about Johur, they have not heard of it before, and less than the degree of finding it on the map. Now, everyone is here.”
It is not a coincidence that the appearance of LLMS models in the United States and China sparked a remote center in Malaysia. In the pre -separation era, for many of the services processed by data centers, there was a huge feature to work from facilities near the final users. For functions such as online games, stock trading, fraud detection, social media, or videos, every second of a second. Companies that provide such services pay huge penalties for “cumin” – while the data takes to travel between the user and the data center and return.
In contrast, LLMS training is not interactive. Instead of sending requests and waiting for responses in actual time, it includes running long and continuous accounts on fixed data sets. The process can last for several days or weeks without the need for a quick connection. When cumin is not a concern, artificial intelligence companies can instead give priority to efficiency – power and abundant land – and determine the location of data centers thousands of miles away from where the models are designed or means using them. This means that artificial intelligence centers in Malaysia cannot compete with those in Singapore or other neighbors in Southeast Asia, but also with similar facilities around the world.
Malaysian Prime Minister Anwar Ibrahim welcomed the prosperity of the data center and offered strategic initiatives, including tax exemptions and simplified approval procedures, to place the nation as a global center for Amnesty International. A decisive part of this batch is the Green Lane path, the 2023 initiative launched by Tenaga Nasional Behard, the benefit of primary electricity in Malaysia, which aims to reduce the time required to connect data centers to the power network to 12 months, more than three years before.
There are signs that the data center boom is stretching Malaysia’s resources – for some of the same reasons that the installations were temporarily banned in Singapore. Malaysia, like Singapore, is one of the most stressful water in the world. The National Water Services Committee in Malaysia has warned that the country may face a widespread shortage of water in the next five years due to climate change and aging infrastructure – even without a collaboration in increasing demand from databases.
Power, too, is a problem. A medium -sized data center may have a capacity of 40 to 50 megawatts, which is enough to consume a lot of electricity per year about 125,000 homes, depending on the use. Large -surplus AI processing centers can require continuously 500 megawatts, and consume more electricity annually from about 250,000 families in the largest city in Johor, Johor Bahu.
Malaysia’s position in the equator means that its data centers also require much more energy than facilities in the prominent climate northern countries.
At a conference for the last investors, the mayor of Johor Bahero Muhammad Norzam Othman admitted concerns about the lack of water and energy. He said: “People are very exploding about data centers at the present time.” “The case in Johour is that we do not have enough water and power. I think that although the promotion of investments is important, it should not come at the expense of the local and local needs of people.”
The Malaysian government says it expects to pay the country -operating data centers in addition to water and energy; Early indicators indicate that technology companies and operators are ready to do so. Last year, the authorities rejected a handful of data center projects for not compliance with efficiency and sustainability standards.
The rapid increase in energy demand from data centers may prove a blessing if it speeds up the transmission of Malaysia to renewable energy. In 2020, only about 4 % of Malaysia’s power came from renewable sources. This percentage is expected to increase more than 30 % this year, according to the Malaysian Investment Development Authority, and the government has pledged to increase the renewable energy share in the total generation capacity to 70 % by 2050.
In Johour, the authorities are highly considering. The first campus of the PRINCETON Digital Data Center is located in the SDENAK Tech Park (STEP), a 700 -acre digital center owned by the real estate arm in JCORP, a state -owned group, on a site that was previously part of the sprawling palm oil farm. In addition to the Princetus Hub, the step includes a university campus for a 300 -megawatt in the data center that is built by the Yander Group in Amsterdam, and the third, under development by Mitsui & Co. Japanese, which will include a solar farm on the site.
Step, already the largest database complex in Malaysia, is about to become larger. JCORP develops the second stage, step 2, which will add 640 other acres to the park, and has plans for a town with an area of 7000 acres that will include research and development facilities, residential areas, culture centers and centers. JCORP also participated in Zaha Hadid Architects to design a 500 -acre innovation center called Discovery City, which will integrate digital technologies and sustainable living.
The spread of such projects turns Johur, Malaysia state in the far south. Johur and Singapore are linked through two ground crossings, Woodlands and Tuas Link, among the most crowded and crowded crossings in the world. Singapore is packed and carefully organized, with graphics and customs numbering. The loud and chaos side, with more motorcycles, small cars and buses.
“Johour adds the database capacity quickly and a scale I have not seen anywhere else.”
Rangu Salgame, CEO of Princetus Digital Group
In January, Johour signed the “Special Economic Zone” agreement with Singapore to enhance over the border cooperation between economists. The billionaire billionaire in Johur, who is currently the king of Malaysia within the framework of the rooted property system in the country, defends the effort made to bring his mandate and Singapore. The agreement includes tax exemptions, enables smoother trade across the border, and makes it easy for skilled workers to move back and forth across the border.
It is unclear whether the data centers will generate more and better jobs for the age. Most data centers provide about 30 to 50 permanent jobs. The largest facilities may create up to 200. But it is unlikely that data centers are largely enhanced by the total wealth in Johur, where the per capita GDP share is about $ 10,000 compared to approximately $ 85,000 in Singapore. It is also not clear that Malaysia can use the development of data centers to attract other technical industries such as the manufacture of chips.
The biggest danger is a global data center bubble. It can reduce the so -called Deepseek shock (the achievement model in China that shook Wall Street) from the scale and demand for databases everywhere if repairing artificial intelligence models to suit the low -cost Deepseek approach reduces demand for advanced chips, energy expansion, and large databases.
“Not the least worried about it” says about the demand for arithmetic energy demand from the data centers that PRINCENTON Digital in Johour is built. The most cheapest and most efficient artificial intelligence models will not speed up the world’s use of Amnesty International-and the need for low-cost Amnesty International training centers in places like Johour. “This is only the beginning,” he says.
This article appears in April/May 2025: The Asia case of luck With the title “Power Power Power Power in Malaysia”.
This story was originally shown on Fortune.com
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2025-04-18 00:00:00
