Malaysia manages data center growth with regulations

Malaysia is rapidly emerging as a major data center hub in Southeast Asia. The government is positioning the country as a regional powerhouse in technology, AI and cloud computing — combining its inexpensive land and excess power capacity with its proximity to Singapore’s expanding but constrained data center market to attract operators. However, this digital expansion presents significant challenges. Projections estimate that data center energy demand could exceed 5 GW by 2035 — nearly 40% of Peninsular Malaysia’s current total power demand.

In response, the Malaysian government is delaying new approvals in specific regions and emphasizing the need to balance economic growth with environmental responsibility and finite national resources. To direct and control development, authorities have established or proposed five key regulations and standards over the past two years.