KUALA LUMPUR, Sept 10 — Streaming a video, making an online payment, shopping online or using an AI-powered service involves data being stored and processed somewhere.
Much of that happens in data centres — facilities that house computer servers and other equipment used to store, process and transmit data.
Malaysia is seeing growing investment in data centres and cloud computing as demand for digital services and artificial intelligence increases.
So, what does this boom actually mean for Malaysians?
For households, the effects are likely to be less obvious than the headline investment figures, but they can be seen in terms of jobs and business opportunities, as well as the demand data centres place on electricity, water and other infrastructure.
Here is what the boom is all about and why it matters to you.
What exactly is a data centre?
A data centre is a facility that houses computer servers and other equipment used to store, process and transmit data.
These facilities provide the physical infrastructure behind many digital services, including cloud computing and applications that rely on large amounts of computing power.
Malaysian Investment Development Authority (Mida) describes modern data centres as infrastructure that supports cloud computing and artificial intelligence services and enables businesses to access digital capabilities.
What is the big deal?
Demand for cloud computing, artificial intelligence and other digital services requires more computing capacity.
Malaysia has attracted increased interest from data-centre investors, particularly in Johor and the Klang Valley.
According to Mida, Malaysia had, in the first half of 2026, approved investments in data-centre and cloud-computing projects worth RM95.8 billion.
That was close to 44 per cent of Malaysia’s total approved investments during the period.
It also said Malaysia was ranked by the United Nations Conference on Trade and Development (UNCTAD) among the world’s 10 largest destinations for data-centre projects.
Between 2021 and 2023, Malaysia approved RM114.7 billion in investments in data centres and cloud services.
Through these investments, 2,325 high-value new jobs were created in specialised areas including data science, data engineering, cybersecurity and network engineering.
What does it mean for jobs and businesses?
Data centre projects require workers and companies involved in areas such as construction, engineering, electrical work, telecommunications and facilities maintenance.
For example, Amazon Web Services (AWS) has said its Malaysia region is expected to support an average of more than 3,500 full-time-equivalent jobs at external businesses annually through 2038.
These include jobs in construction, facility maintenance, engineering and telecommunications.
As for students, the industry’s expansion is also creating training opportunities, including graduate engineering programmes and specialised data-centre technician programmes.
The industry is also creating opportunities ranging from engineers and cybersecurity specialists to data-centre technicians, electricians, construction workers and facility-management staff.
Data centres can also create opportunities for Malaysian companies to become suppliers.
These projects, according to Mida, also create opportunities for local manufacturers and service providers, including architectural, construction, engineering and electrical contractors.
The government has also been matching data-centre operators with Malaysian suppliers to strengthen local participation in the supply chain.
There could also be an indirect benefit for businesses using cloud services.
At the same time, data-centre and cloud services are able to help small and medium-sized enterprises with digitalisation by giving them access to cloud computing, data analytics and other digital capabilities.
For example, for a small business, cloud computing can provide storage and computing power without requiring it to build and maintain its own servers.
An online retailer could use cloud services to run its website and process orders.
What are some impacts on Malaysians?
The impact is not necessarily something that appears directly on a household bill.
It can be felt through jobs and business opportunities, the digital infrastructure used by companies and consumers, and the electricity and water needed to operate the facilities.
Why does electricity matter?
Data centres require electricity to operate servers and cooling systems, often continuously.
As more facilities come online, their electricity demand becomes part of the country’s overall power-planning requirements.
Parliament was told that the actual peak electricity demand from all data centres in Peninsular Malaysia was 849MW as of December 2025, and this was projected to rise to 4,811MW by 2030.
To meet overall electricity demand in Peninsular Malaysia, including demand from data centres, the government has planned new generation capacity of up to 9,600MW, expected to come online between 2028 and 2031.
The additional capacity will also replace existing power plants expected to retire by 2030.
This does not mean data centres automatically cause household electricity bills to rise.
It is how additional demand is incorporated into electricity planning and how the cost of infrastructure needed to serve that demand is managed.
The government is also examining whether the electricity demand declared by proposed data centres accurately reflects their eventual usage.
As of June 2025, actual electricity consumption by data centres nationwide was 603MW, compared with declared maximum demand of 1,276MW — about 47 per cent of the declared maximum.
The government said it was reviewing these projections partly to reduce the risk of underused electricity infrastructure and costs being shifted to other consumers.
What about water?
Data centres also use water, particularly for cooling.
The latest figures — 0.47 million litres a day — given in Parliament show that data-centre water use accounted for a relatively small share of total domestic and non-domestic water consumption in the areas cited.
In Selangor, Kuala Lumpur and Putrajaya, data centres used an average of 0.12 per cent of total domestic and non-domestic water consumption in those areas.
In Johor, data centres used 9.07 million litres a day, equivalent to 0.6 per cent of the state’s total domestic and non-domestic water consumption.
To cope, one approach is to use alternative water sources rather than relying entirely on treated potable water.
The Johor government announced in August 2025 that treated wastewater of up to 12 million litres a day would be supplied to a water-reclamation plant supporting data-centre cooling.
By June 2026, the government said the 12-million-litre-a-day reclaimed-water supply for data-centre cooling was the first such initiative implemented in Malaysia.
The Ministry of Energy Transition and Water Transformation (Petra) has also announced an integrated reclaimed-water supply chain for data-centre operations in the Klang Valley, involving AWS, Air Selangor and Indah Water Konsortium.
What are some safeguards in place?
The rapid expansion of data centres has also prompted the government to impose conditions on new projects, particularly because of their demands for electricity and water.
As of August 2026, the Data Centre Task Force cleared projects only where power and water supplies are secured and green-compliance requirements can be demonstrated. Priority is also given to operators that support the local supply chain.
Projects must also meet Power Usage Effectiveness (PUE) requirements, a measure of how efficiently a data centre uses energy.
Parliament was told that applications must meet a PUE of no more than 1.6 for colocation data centres and 1.4 for hyperscalers, while sufficient Tenaga Nasional Berhad (TNB) infrastructure must be available in the area.
In other words, the government is not simply looking at how much investment a proposed data centre can bring, but also whether there is enough power and water, how efficiently the facility uses electricity, and how much value it can create locally.
