KUALA LUMPUR, July 20 — Data centres in Malaysia are estimated to require over US$20 billion (US$1=RM4.09) in funding for powered shells and equipment over the next three years, based on the estimated capacity addition of around two gigawatts (GW), according to S&P Global Ratings.
Powered shells and equipment include the facility shell, power and cooling infrastructure, and networking and storage equipment.
S&P Global said the funding quantum runs higher when chips are included, which can be one to four times the cost of the powered shell, depending on the type of chips used.
“We expect such funding needs to exceed domestic banks’ concentration limits per sector, which we assume to be at an aggregate of about US$30 billion.
“Even if there were a fresh US$30 billion limit, it may not be sufficient to fund data centre projects and the chips over the next three years,” it said.
Therefore, S&P Global Ratings said data centre projects in Malaysia are reaching an inflection point.
“While they were able to depend mostly on bank loans and equity in the past, they would need to explore alternative capital sources soon,” it added.
Meanwhile, S&P Global Ratings said Malaysia’s cost competitiveness has eroded, with power costs now slightly above average versus Southeast Asian peers.
“Construction costs remain average against other key data centre markets in this region.
“Despite this, we believe demand is unlikely to shift from Malaysia to neighbouring countries on cost alone. Malaysia’s strategic location remains its largest advantage,” it said.
Moreover, it said similar resource scarcity and reliability challenges across the region suggest that any large-scale expansion in neighbouring markets would likely also be met with rising infrastructure and associated costs.
S&P Global Ratings expects Malaysia to overcome the execution challenges to become one of Southeast Asia’s largest data centre hubs, nearly tripling capacity by 2030.
Proximity to Singapore, strong connectivity and growing power and water capacity should keep Malaysia competitive, despite rising costs and tighter approvals. — Bernama
