Explainer (2): Powering the Future: How Data Centres Unlock Malaysia’s Economic Opportunity
In the second article of APDCA’s explainer series, we dive into Malaysia’s fast-growing data centre scene and explore what the surge in data centre investments could mean for Malaysia’s economy. Beyond GDP growth and investment figures, investment in data centre capacity is creating jobs, driving AI and digital innovation, catalysing the clean energy transition and delivering positive impact on local communities in Malaysia.
Learn more about KPMG’s new report commissioned by APDCA, which highlights the economic value that data centres create for Malaysia’s digital economy.
Inside Malaysia’s data centre boom
As Malaysia positions itself as a regional digital hub, data centres are the foundational infrastructure that enables AI, cloud adoption and digital transformation across sectors. They house specialised computing infrastructure that power services in the digital economy and emerging applications for AI and cloud computing (learn more about the fundamentals of data centres in APDCA’s first explainer blog).
Malaysia’s data centre industry is poised for growth. Valued at USD 4 billion in 2024, the market is estimated to grow at an annual rate of 22.4% to reach USD 13.6 billion by 2030.
Malaysia’s Data Centre Market (in USD)
As Malaysia targets digital growth that creates jobs and economic opportunity across the country, ensuring sustainable growth is a key priority. APDCA members are leading efforts to make data centres greener in their energy and water use, pioneering innovations such as efficient cooling methods and the use of AI to optimise cooling or power distribution. APDCA’s forthcoming work will shine a spotlight on best-practice approaches to data centre sustainability.
Strategic infrastructure for Malaysia’s digital economy
The development of new data centre facilities are driving the country’s economic growth. This is detailed in a new KPMG study commissioned by APDCA – the first comprehensive research investigating the economic impact of data centres in Malaysia.
In Malaysia, the data centre sector contributed USD 1.4 billion to total economic output in 2024, supporting over 4,400 jobs across the economy. By 2030, this is forecast to grow to USD 34 billion in economic output and 30,900 jobs.
Source: KPMG report
The report’s authors identified benefits to Malaysia across four critical areas:
Enabling Malaysia’s digital growth;
Supporting activity upstream and growing high-value employment;
Investing in education and training; and
Catalysing investment in energy infrastructure
Enabling Malaysia’s digital growth
Data centres are critical enablers of Malaysia’s ambitions to be a major player in the global digital economy. They provide the infrastructure necessary to power a wide range of services for consumers, businesses and governments, such as online banking, cloud and digital public services.
By providing the digital infrastructure for business operations, data centres are a powerful magnet for foreign direct investment (FDI). They also attract a cluster of digital businesses such as cloud providers, software developers and cybersecurity firms that benefit from proximity to high-speed data processing facilities. This clustering effect contributes to the diversification and growth of the digital economy.
Malaysia’s AI growth – expected to contribute USD 115 billion to the Malaysian economy by 2030 – relies on data centre infrastructure. Data centres provide the essential computing power to train machine learning models, run big data analyses and deliver AI services.
Supporting activity upstream and growing high-value employment
Malaysia’s data centre supply chain is underpinned by a diverse and high-value ecosystem of industries. Data centres support a wide range of upstream activities, from construction to equipment manufacturing, operations and maintenance, professional services, and adjacent manufacturing. They are contributing to the growth of high-paying onshore jobs in three main forms:
Direct employment for skilled roles, such as cloud architects, network engineers, cybersecurity technicians and specialised functions in heating and cooling. The number of direct operational jobs in Malaysian data centres could reach up to 7,300 by 2030.
Indirect employment across their extensive procurement and supply chains, such as civil engineering, construction and utility services.
Induced employment when those directly and indirectly employed spend their income on housing and services including retail and transportation. The KPMG report found a x4.2 multiplier effect for data centre jobs, meaning that for every direct job in a data centre, an additional 3.2 jobs are supported in other Malaysian industries.
Source: KPMG report
Investing in education and training
Data centres can play a role in addressing the growing demand for skilled workers in the ICT sector, particularly in Malaysia, where the industry faces a shortage of qualified professionals due in part to gaps in education and training. By investing in local talent development, through partnerships with educational institutions, apprenticeships, and support for STEM programmes, data centre operators help bridge this skills gap.
As one example, Princeton Digital Group, an APDCA member, has joined forces with the University of Malaya and University of Technology Malaysia (UTM) to roll out its Graduate Engineer Trainees (GET) programme.
In turn, local communities in Malaysia stand to benefit from better job prospects and wage growth. From 2024 to 2030, the total annual wage income supported by data centres is projected to rise eightfold and reach USD 1.3 billion in 2030.
Catalysing energy infrastructure investment
Data centres are driving investment in energy and connectivity infrastructure. Investment in energy infrastructure – the building of smart grids and expansion of grid capacity – benefits Malaysian households and firms by improving energy resilience and reducing power outages.
Data centre operators are also driving Malaysia’s transition to renewable energy sources. Operators are partnering with utilities, independent power producers, and governments to procure renewable energy, aligning with Malaysia’s green growth ambitions.
Much of Malaysia’s data centre capacity is concentrated in Johor and the Klang Valley. Johor supplies 79% of the country’s data centre capacity. It boasts one of Asia-Pacific’s lowest colocation vacancy rates – at 1%.
According to Knight Frank’s report, Johor’s data centre sector is positioned for significant expansion with 85% capacity growth (335 MW) over the next two years, supporting by USD$4.7 billion in investment.
Data centre investments are driving economic benefits in Johor. In 2024, Johor led all Malaysian states in GDP growth, fuelled by the burgeoning investment into the data centre sector. Continued investment could unlock further employment opportunities for Johor communities. To capitalise, the Johor Talent Development Council has launched its inaugural Data Centre Technician Programme to further develop specialised skills in the sector.
Looking ahead
With the right policy environment, the Malaysian government can encourage sustainable growth of data centres, generating local employment and economic impact across the value chain.
KPMG’s research has focused on four priority areas:
APDCA looks forward to maintaining dialogue with the government and wider stakeholders to promote policies that foster a sustainable and competitive data centre industry in Malaysia.
Explainer (1): Demystifying Data Centres in Asia-Pacific
In a first of a new series of explainer posts, we unpack fundamental questions around data centres in Asia-Pacific: what is a data centre, how does it work, what role do data centres play in the economy and in the adoption of AI?
Stay tuned for further explainer posts from APDCA on key topics in the APAC data centre sector.
What Is a Data Centre?
Data centres have been likened to the brain of the internet or the central nervous system of the digital economy. But what exactly is a data centre?
Data Centres: The Physical Home of Data
A data centre is a physical facility that stores computing infrastructure, including servers, data storage drives, networking equipment. It is the physical home of data - the central hub for processing, transmitting, and safeguarding critical information for individuals, businesses, and governments.
What Is Inside a Data Centre? How Does It Work?
Data centres integrate multiple layers of technology and infrastructure to ensure performance, reliability, and security.
Typically, the following components go into the building of a data centre:
Servers are the cornerstone of data centres that handle data processing and storage. Today, servers are often made virtual.
Networking equipment provides connectivity within and outside the data centres, acting as the “internet highways” for data transmission between servers and storage.
Storage systems manage and store data within the data centre from apps and services.
Power systems, such as backup generators, are essential for keeping data centres running smoothly without interruptions while ensuring that data is safe and accessible.
Cooling systems use air conditioning and special cooling machines to maintain optimal temperature [ST1] and humidity levels. Efficient cooling saves energy and helps prevent overheating, hardware failures, and ultimate data loss.
What Are the Types of Data Centres?
Various types of data centres cater to organisations’ different infrastructure and scalability goals. APAC data centres can predominantly be categorised into four subtypes:
Enterprise Data Centres: Privately owned and operated by enterprises to support their internal IT systems and application. Often hosted in company premises and provide complete control over infrastructure and security.
Co-location Data Centres: Allow businesses to rent colocation infrastructure - space, power, cooling, and connectivity – while hosting and owning their IT infrastructure (e.g., servers, storage, firewalls).
Edge Data Centres: Smaller facilities located closer to end users and devices to reduce delay. Often support applications that require real-time processing (e.g., IoT devices, 5G networks, and autonomous vehicles).
Hyperscale Data Centres: Provides massive scalability capabilities to handle large-scale workloads, usually houses thousands of servers.
Data Centres and Our Digital Lives
Data centres underpin our digital lives. We interact with data centres hundreds of times daily – our financial transactions, communication, shopping, leisure and travel all pass through data centres.
For example, digital transactions that take place for a traveller are supported by data centres[1]. When a traveller books flights and accommodations for travels, the booking websites and apps are enabled by data centres. When the traveller uses GPS map apps to navigate during the trip, this similarly requires data centre storage and processing power.
The Role of Data Centres
For businesses
In today’s digital landscape, businesses rely heavily on computing equipment – to draft emails, power e-commerce platforms, run internal applications, or deploy AI tools.
Data centres offer the foundation for businesses’ IT systems, supporting almost all compute, data storage, network and business applications. Data centres help businesses centralise their IT equipment and operations (which saves costs), scale efficiently, and enable disaster recovery through backup power supplies and data replication. This is seen in illustrative examples such as[2]:
A telecommunications company uses geographically distributed data centres to back up critical customer data and provide failover solutions, ensuring that its services remain online even in the event of a local outage.
A bank relies on data centres to drive its real-time trading systems, ensuring rapid transactions and secure management of customer data.
For governments
Data centres are essential to the digitalisation of public services across APAC. Public sector organisations have accelerated their transitions to cloud for scalability and cost-efficiency, enabling governments to deliver citizen-centric services more effectively and at lower cost. Notably, several governments have already outlined specific national cloud adoption targets, including:
Thailand: The Digital Economy and Society Ministry plans to enforce its “Cloud First” policy via the Government Data Centre and Cloud (GDCC) system on 1 October 2025. A full-scale cloud government will allow agencies to enhance the efficiency of data analysis to better address Thailand’s development needs.
India: The National Informatics Centre (NIC) has established National Data Centres (NDC), providing cloud services to government ministries, state governments, and public sector undertakings (PSUs) to deliver more efficient e-governance services.
Malaysia: In October 2024, Malaysian Prime Minister Anwar Ibrahim announced that the country is set to launch a national cloud policy, which will focus on enhancing public service innovation.
Powering the AI Revolution
Increasing AI and cloud adoption is driving demand for data centres across Asia-Pacific. According to a July 2024 report[3], APAC data centre capacity is expected to grow at a compound annual average rate of nearly 20% through 2028. This will involve over $564 million of investment through 2028.
This investment will be critical for powering AI-based innovation that is transforming people’s lives across the region. Citizens across Asia-Pacific are already benefiting from AI, from improved access to quality healthcare, expanding educational opportunities, and raising industrial capacity:
In Malaysia, the Ministry of Health launched an AI-powered diagnostic tool called the Diabetic Retinopathy Inference with Multi Artificial Neural Network Technology Automation (DR.MATA), which enhances the accuracy and efficiency of diagnosing diabetic retinopathy.
In India, the Read Along Initiative (Bolo) initiative uses voice-recognition technology to help improve learning skills, showcasing AI’s potential in personalising learning and delivering quality education.
In Japan, AI is helping to improve the efficiency of the production of electric vehicles (EV), as seen in the Toyota Research Institute’s use of generative AI tool to accelerate the EV design process.
Looking to the Future
Data centres enables the digital transformation of all types of business and the digital delivery of public services. The demand of AI workloads is driving further investment and innovation in ensuring that data centres are built and operated in a sustainable way. APDCA members will continue to innovate in providing a secure and sustainable foundation for Asia-Pacific’s digital future.
[1] Data centres: The good they do | Digitalisation World
[2] A Guide to Common Data Center Use Cases - Data Center Asia
[3] APAC data centre capacity to double by 2028: Moody’s | Asian Business Review