MALAYSIA is fast becoming the darling of global tech companies in search of places to locate their data centres.
It has the right location and energy profile, two requirements that are a challenge for data centres elsewhere but not Malaysia. Industrial land is plenty, labour comes cheap, and energy and water are in generous abundance.
According to the Financial Times, Malaysia received US$16 billion in investment commitments from tech titans like Amazon, Nvidia, Google, Microsoft and TikTok owner ByteDance over the last year, most of it going towards the development of data centres.
The Knight Frank Malaysia Data Centre Research Report 2024 ranked Malaysia as Southeast Asia's number one data centre hub last year.
These data centres — mammoth warehouses of servers, really — require huge amounts of energy and water to prevent the computers from overheating.
According to media reports, half of the energy cost goes towards cooling the servers. Hence Malaysia's energy profile is at play in enticing the tech titans. Other factors, such as Putrajaya's incentives designed to make Malaysia a beneficiary of the generative artificial intelligence (AI) revolution, are also helping.
One must not discount the push factor of the recent moratorium imposed on the development of data centres by our neighbour to the south. All told, it is Malaysia's pull factors more than other nations' push factors that make the country a hotspot.
Natural Resources and Environmental Sustainability Minister Nik Nazmi Nik Ahmad, who spoke to the British newspaper recently, puts it thus: "Data is the new oil of the 21st century, so we want to be part of that." Rightly so. But Malaysia is not opening up to all and sundry.
The choice of the six tech titans is an indication of how selective Putrajaya is. Malaysia is after development, no doubt, but a sustainable one.
Putrajaya is only too aware that however abundant its energy and water resources are, they are not unlimited. A fine balance is what the country is after.
One way is to make the tech giants pay premium prices, a fact Nik Nazmi made known to the Financial Times. This would not be a problem for the tech giants as they earn hundreds of billions of dollars in just one quarter.
The second way is to make them produce their own energy, preferably renewable energy (RE). Or buy RE directly from green energy producers. Even as long ago as the 1980s, our oil refineries used to have their own power plants.
Obviously they weren't huge consumers of power as data centres are. Again, this would not be a problem as some are already having their own nuclear energy plants. Media reports in October last year said Amazon had bought a stake in X-Energy, a United States nuclear energy developer.
Google and Microsoft are also in the nuclear energy race. A recent development is what the nuclear power industry is calling a small modular reactor (SMR), a mini power plant capable of producing 300 megawatts.
The SMR has an advantage. It can be built in, say Texas, and transported to Johor or Selangor, states where numerous data centres are mushrooming. Other states are lining up. Expect 2025 to be a kilowatt-megawatt-gigawatt boom story.