KUALA LUMPUR: With Malaysia’s data centre industry projected to reach RM3.6 billion in revenue by 2025, it’s more important than ever to prepare local industry players for the expected growth and strategically place data centres throughout the country, accelerating the industry’s development.
Recently, Deputy Communications Minister Teo Nie Ching said that Malaysia is on the right track in its aspirations to become a regional data centre hub.
“RM76 billion worth of data centre-related investments have been approved by the Investment, Trade and Industry Ministry via the Malaysian Investment Development Authority (MIDA) from 2021 to March 2024.
“From this, we see that more industry players are investing in the digital economy and a lot of existing data centre operators here are expanding their operations,” he said.
“This is an opportunity to create more high-value jobs for Malaysians and at the same time, to ensure our place as a digital economy leader in ASEAN,” she added.
According to Teo, creating an ecosystem for data centres and cloud services could potentially increase the number of industry suppliers in the country.
Leading global provider of hyperscale data centre campuses, Vantage Data Centres is one that is making its presence known in Malaysia, with the development of the campus being part of the US$3 billion investment that was injected into the country.
Digital Minister Gobind Singh Deo said that the growth in the data centre market in Malaysia experienced an expected compound annual growth rate (CAGR) of 13.92% from 2023 to 2029, presenting a huge potential for expansion.
Attractive Market
Among the many factors of Malaysia being an attractive location for data centre operations include the low electricity tariff, which is the lowest in ASEAN.
On this, Savills Malaysia Managing Director Datuk Paul Khong said, “The average electric tariff in Thailand and Singapore are now well priced at 51 sen per kWh (THB3.99) and RM1.11 per kWh (S$0.3247) respectively. In comparison, Malaysia charges 33.7 sen per kWh and 20.2 sen per kWh during peak and off-peak periods, respectively, for high-voltage industrial usage.”
Khong also added that favourable government policies in Malaysia, with tax incentives and subsidies, are an added bonus, saying, “Notable incentives given include a 100% tax exemption to eligible data centres and cloud business investments.”
Furthermore, the abundance of industrial land in the north and south of the peninsula increases Malaysia’s attractiveness. “These industrial parks provide competitive land prices, alongside investment incentives supported by the government,” he added.
Having this in mind, a prominent investment outfit, Qew Group Bhd is also making its mark in the telecommunications industry which further contributes in the digital landscape of the country. Currently, the Group operates 59 telco towers in Klang Valley, Sabah and Labuan with an asset value of RM59 million and generating an annual revenue of RM6.24 million.
Having 37 sites fully operational and an additional 22 monopole structures scheduled for completion by 3Q 2024, the assets are under a 10-year contract with the option for renewal.
“We are also involved in the fibre network operations in Kelantan, KELNET with a capital investment of RM45 million. To date, KELNET’s projected revenue and asset value are estimated to reach RM278 million over a period of 5 years,” said Qew Group Bhd Group Executive Chairman, Dato’ Dr Muhamad Iqbal.
Additionally, Dato’ Iqbal highlighted that Phase 2 of the project anticipates the completion of 127 new towers and the deployment of a 100km fibre network by 2026, which is expected to generate an annual commercialisation value of RM5 million.
These projects are outlined in one of the Group’s 3 strategic pillars, dubbed Bright Future, which also includes real estate development.
