Malaysia restricts all new non-AI data centres

Malaysia has restricted all new non-AI data centres. Prime Minister Anwar Ibrahim dropped this bombshell in parliament yesterday.

Limited data centres not related to AI

This was revealed during Prime Minister's Question Time in parliament, when Anwar was asked about whether the proposed AI Governance Bill would set energy efficiency standards for AI data centres in Malaysia.

"It is under observation because energy and water usage has increased significantly. Over the past one to two years, we have limited approvals for new data centres that are not AI-related," he said.

"If an application brings benefits in terms of advanced technology and AI, it is easily approved. All new applications that are unrelated, data centres built merely to take advantage of cheaper water and energy costs, have already been stopped."

Enough power for now

The question arose due to concerns over the resources required to power the incredible surge of data centres in Malaysia, particularly in Johor.

From just 10MW and one data centre in Johor in 2021, there are now hundreds of megawatts of operational capacity. As a whole, Malaysia is set to surpass Singapore in capacity by 2027 and the rest of APAC, barring China, by 2030.

However, Anwar says that existing electricity production is sufficient for short-term requirements. He also highlighted several initiatives to meet long-term needs, including plans to transmit power from Sarawak and the ASEAN Energy Grid.

My thoughts

Malaysia has been steadily tightening approvals for new data centres over the last two years, as it is forced to make choices in the face of skyrocketing resource demands.

Clearly, it sees an opportunity with AI data centres and is expressing its selectiveness with a stronger preference towards AI workloads. In a way, Anwar is merely confirming what some industry insiders already know: data centres that bring little or no value-add to Malaysia are unlikely to be approved.