Racks Central tops out its Johor data centre

I was at the topping-out ceremony of Rack Central's first AI data centre in Johor today. Here's why Malaysia is on track to outbuild almost everyone in the Asia Pacific (APAC).

The road trip took me over to Pasir Gudang in Johor, just two months after Rack Central's milestone event in June. This time, I climbed to the rooftop where the ceremony was held, a level that didn't even exist previously.

It got me thinking about Malaysia and its surging data centre ecosystem.

An unassailable lead

Here's what data centre insiders already know, but which might not be obvious to the general public: Malaysia has gained an almost unassailable lead in data centre capacity across APAC.

According to projections from JLL, Malaysia is on track to have the highest data centre capacity of any APAC market outside China by around 2029.

This might sound confusing, given the reports of Malaysia tightening approvals for data centres. But remember: Malaysia has already approved a substantial number of them, and many will start coming online soon.

Proactive, not reactive

As I wrote earlier this week, Malaysia is working proactively to ensure that resources such as electricity and water are allocated judiciously, and that new digital infrastructure benefits the country.

This stands in contrast to the reactive backlash increasingly seen in various parts of the world, where a groundswell of unhappiness and petitions has led to moratoriums and abrupt restrictions on new data centres.

And these efforts began even earlier. Data centres in Malaysia that have launched or been announced this year almost invariably do one or more of the following: they process their own water, they place a strong focus on renewables, or they are building cutting-edge AI facilities.

So this isn't about Malaysia slamming the door on data centres. It's about making tweaks to establish guidelines around renewable use, curbing speculation, efficient resource use, and tariffs and fees to pay for infrastructure.

I'll go out on a limb here and argue that even if all new developments were frozen today, it would not stop Malaysia from holding the lead for many years.

Of course, I'm confident that won't happen. APAC as a region does need more digital infrastructure, and as I've argued in an earlier piece, the era of useful AI is upon us.

The way I see it, the adjustments being made now will set the stage for future, sustainable growth. And if done well across Johor, Singapore, and Batam, they could well result in a data centre region that can go toe-to-toe with the top regions globally.