Fostering growth of data centres vital

PETALING JAYA: Appropriate regulations and investments are needed to spur the growth of data centres in the country, as the value of the data centre market is expected to rise to about US$1.57bil in 2027.

Vantage Data Centres chief operating officer for Asia-Pacific Giles Proctor told StarBiz a regulatory environment that remains favourable to foreign direct investment by making land transactions simple and permit timely applications are vital to speed up the development of such centres.

“To continue to reap the benefits of the data centre investment boom, Malaysia will need to continue investing in its electrical grid and telecommunications infrastructure. The emerging needs of artificial intelligence (AI) infrastructure are expected to require large amounts of increasingly clean energy.

“We welcome the establishment of the Digital Investment Office by the Malaysian Investment Development Authority and Malaysia Digital Economy Corp (MDEC) to promote and facilitate digital investment.

“The Malaysia Digital Economy Blueprint has certainly attracted more players to deploy capital in the country. Coupled with various tax incentives it can further boost foreign or local investments and accelerate data centre and green technology development,” he said.

He said the government and the private sector need to forge partnerships to foster investments in the race for technology innovation. For Malaysia to become a successful data centre hub, it would need to create the right incentives for digitalisation and infrastructure flexibility.

Proctor said to position the country as the potential investment location for data centres, it would require a degree of readiness.

The telecommunication companies, connectivity providers, energy providers and state governments would need to work hand-in-hand to build a thriving ecosystem, he noted.

Market research firm Arizton estimated the value of the Malaysian data centre market at US$1.06bil in 2021. That figure is expected to grow rapidly to US$1.57bil by 2027.

United States-based Vantage Data Centres is a specialist which has 26 campuses spanning five continents, 12 countries and 18 markets with an information technology (IT) capacity totalling nearly 1.5 gigawatt (GW) once all campuses are fully developed in the next few years.

Proctor said Vantage’s footprint in Malaysia had grown more than eight-fold since it entered Asia-Pacific in late 2021. In May this year, he said it announced an additional US$3bil investment to develop its second campus in Cyberjaya with 256 megawatts (MW) of IT capacity.

This reflected Vantage’s firm belief in the opportunity for data centre development in the country, he said.

He said Malaysia was a growing data centre market in South-East Asia due to its favourable investment climate, large and growing digital ecosystem, and attractive renewable energy sources.

MDEC estimates that in Asean there are 440-plus million Internet users and a digital economy valued at US$3 trillion, which all augur well for the development of data centres.

Proctor added the data centre boom was bringing the most advanced construction techniques, sustainable practices and innovative technology to Malaysia, creating high-quality jobs and a greener economy.

“Accelerating digital infrastructure development in the country can drive sustainable economic growth, pushing towards an inclusive ecosystem that offers technology and access to digital advancement,” he noted.

Proctor said the surging demand for AI and cloud computing for digital transformation would drive significant additional investment into data centres.

There would be demand for more capacity for computational power to meet the huge demands for AI, especially as it enters data-rich fields like healthcare and finance, he said.

In terms of competition for the development of data centres, he said it would be stiff going forward.

He said there was growing demand and competition for data centres to locate across Asia as the cities in the region aspire to be the hub to drive the next wave of technological innovation.