KUALA LUMPUR: Delapan is poised to become a critical hub for cross-border trade and digital infrastructure in northern Malaysia, enhancing connectivity with Southeast Asia. The Malaysian government continues to support the development of the Special Border Economic Zone (SBEZ), aimed at encouraging investment and stimulating economic growth.
As part of this initiative, AREA Group (AREA) has commenced the development of the first phase of the AREA Data Centre Campus (ADCC) in Kedah’s Delapan SBEZ. This development follows a sale and purchase agreement for 12.14 hectares of land, with an estimated gross development value (GDV) of USD 2.4 billion. AREA’s special purpose vehicle, Data Gateway Sdn Bhd, signed the agreement with Northern Gateway Sdn Bhd (NGX), Delapan’s master developer, for the initial purchase of land critical for establishing the data centre.
The selection of the site was influenced by its access to essential resources, particularly energy and water supply. Datuk Stewart Labrooy, AREA Group Executive Chairman, highlighted these factors as crucial for the successful establishment of the data centre.
Delapan also boasts strong submarine cable connectivity, currently linking to Satun and Songkhla across the Thai border, with an Internet exchange scheduled for completion by 2025. This strategic location, at the northern end of the North-South Highway and Federal Route 1—the main border route to Thailand—positions Delapan as a key player in regional logistics.
As of June 2022, projects within Delapan’s SBEZ had secured three significant real estate investment agreements, totaling RM7.2 billion. These include a Truck Depot and Internal Release Project by PKT Logistics Sdn Bhd (December 2019), an Integrated Nitrile Glove Manufacturing Complex by Hartalega Bhd (March 2021), and an Internet Exchange (IX) and Data Centre Project (December 2021).
The SBEZ covers nearly 11,800 acres and is a high-impact initiative developed in collaboration with the Federal Government and the Kedah State Government. NGX, as the main developer for the DELAPAN projects, manages an area of 4,400 acres, representing 38% of the total SBEZ.
Datuk Ammar Shaikh Mahmood Naim, NGX Senior Director, noted that Delapan is uniquely positioned to emerge as a prime destination for core and investment-grade assets, particularly with its Free Commercial and Industrial Zone attracting businesses targeting ASEAN markets.
Delapan’s Zone 1 East features a 156-acre freehold site with adequate water supply facilities, exceeding 65 million litres per day—essential for the data centre’s operations. A report by Cushman & Wakefield highlights that hyperscale data centres require significant power capacity (over 50 megawatts) and advanced cooling systems, with costs exceeding USD 10 million per megawatt in Malaysia. “Based on the 50-megawatt benchmark, the total development cost of a data centre at that capacity is around USD 500 million,” the report states.
The vision for Delapan is a harmonious blend of Thailand and Malaysia’s economic strengths, facilitated by the Asia Highway Network 2 (AH2). This network, known in Malaysia as the PLUS Highway, connects Singapore, Thailand, Indochina, and extends to India and Iran. The cultural ties between these regions—evident in shared culinary, entertainment, and linguistic elements—further enrich Delapan’s unique positioning.
With just a 40-minute drive from Hatyai International Airport, Delapan is at the heart of regional dynamics. Southern Thailand benefits from the maritime access provided by Delapan’s Inland Port, establishing seamless connectivity to Penang Port. Additionally, the robust terrestrial network serving the Indochina digital realm further reinforces Delapan’s reputation, earning it recognition as Malaysia’s Second Best Data Exchange Hub.
As Malaysia expands its digital infrastructure and cross-border trade capabilities, initiatives like the ADCC will be pivotal in positioning the country as a leader in Southeast Asia’s economic landscape.
