The state of southern Malaysia has decided to put a stop to applications for authorization to build data processing centers, one of the main markets in Southeast Asia. In the region, bordering Singapore, residents have already suffered water shortages and power outages. However, the government aims to develop the digital economy to foster national growth.
Kuala Lumpur (/Agencies) – In the last five months the Malaysian state of Johor has rejected almost 30% of applications to build “data centers”, due to the need to ‘protect local resources and regulate one of the largest markets in Southeast Asia. In June this year, the State of Johor created an ad hoc commission to evaluate applications for authorization for the construction of data processing centers, the spaces where the infrastructure is installed to store information from large companies, which is also necessary for the development of artificial intelligence, which in turn would lead to further increases in energy demand.
Furthermore, according to various studies, these centers are highly polluting. An investigation conducted in Europe found that, in 20 years, data centers in the Old Continent produced between 6,600 and 10,400 tons of carbon dioxide per megawatt of computer system in operation, a figure equivalent to the annual electricity consumption of 1,700-2,800 European families . In Malaysia, taking into account average consumption, energy efficiency levels and geographical differences, one gigawatt is enough to power between 750,000 and one million homes.
Lee Ting Han, vice-chairman of the Johor Data Center Development Coordination Commission, told the newspaper Straits Times that in recent months, out of a total of 14 applications submitted, four were rejected because sustainability practices to reduce water and electricity consumption had not been included. “Operators have chosen locations that do not have adequate service infrastructure, with the risk of severely testing the water supply to the local community,” he commented. In April, several areas in Johor had reported water shortagewhich caused serious problems for residents, who also suffered frequent power outages. The Diplomat points out that this is a problem before the creation of data centers. In 2016, for example, due to drought, water rationing was imposed.
The capacity of Johor State’s data processing centers – measured in terms of electricity consumed – has increased from 10 megawatts in 2021 to 1.3 gigawatts today, and is projected to reach 2.7 gigawatts in 2027, Lee noted. According to some researchIn the southern state of Malaysia, there are currently 13 data centers covering an area of 153,000 square meters, the ninth largest market in the Asia-Pacific area.
The cost of building data centers in Malaysia, according to experts, is $10 million per megawatt and Johor will attract another $3.6 billion in new investments until the end of 2024, taking advantage of trade competition between China and the United States. In fact, the American Nvidia and the Chinese GDS International already operate in the Southeast Asian country, and soon the data processing centers of Microsoft and ByteDance could also be located in Malaysia.
In addition to environmental sustainability, the Malaysian government explains that it also takes into consideration the number of potential customers once the centers are operational, as well as the creation of well-paid jobs. This highlights the competition with Singapore, where many qualified Malaysians emigrate in search of better salaries. In the city-state, which borders Johor, there are more than 70 data centers with 1.4 gigawatts of capacity.
Last month, Prime Minister Anwar Ibrahim, who also serves as Minister of Economy, declared that “the traditional approach of providing support and incentives to investors without taking into account the economic consequences is no longer sustainable.” However, one of the government’s objectives is that by 2025 the digital economy will represent 22.6% of the gross domestic product.
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