Stop-work order issued to data centre project in Johor

A data centre project in Johor had the dubious distinction of being the first to be issued with a stop-work order this week. This is the first reported regulatory pushback in Johor, a rising data centre hub that has witnessed explosive data centre growth over the last three years.

As reported by various Malaysian publications (here, here, and here), a data centre in the Iskandar Puteri area was issued with the order for breaching stipulated construction conditions. Here's what this means for the rapidly expanding data centre landscape in Johor.

Stop-work order issued

State housing and local government committee chairman Datuk Mohd Jafni Md Shukor issued a statement on Thursday on this matter. According to him, the order was issued for dirty roads, earthworks issues, construction at unreasonable hours, and lack of hoardings six months after starting construction.

It's not clear if the earthworks lacked proper authorisation or simply went beyond what was originally approved. While the official statement omitted the name of the data centre operator, W.Media reported that the operator involved is ZDATA, which held a groundbreaking for its GP3 data centre campus in February.

ZDATA owns Computility and is one of three hyperscalers in the first wave to establish water reclamation plants for their data centres in Johor. This makes the stop-work order particularly notable, given ZDATA's position as an early mover in sustainable data centre development in the region.

Contractors at ZDATA were given two weeks to comply with the requirements. A 30-minute video being circulated showed Mohd Jafni conducting a site visit with officials, residents, and the press, signalling that the government is taking these violations seriously.

Dozens under construction

With so much data centre news from Johor, it's easy to forget that the majority of the data centres there, including some of the largest, are still under construction.

So how many data centres are there in Johor now? In media interviews related to this incident, Mohd Jafni revealed that Johor has 13 operational data centres, with another 15 under construction. In an unrelated Facebook post earlier this month, he also wrote that 42 data centre construction projects were approved in Q2 this year alone.

These numbers paint a picture of explosive growth. In 2021, there was just one operational data centre of 10MW. Today, with 13 operational centres and dozens more in the pipeline, Johor has firmly established itself as a data centre hub.

Build fast, but build right

With 13 operational centres, 15 under construction, and 42 new projects approved in Q2 alone, the scale of development in Johor is unprecedented. It's worth noting that operational data centres may also see extensive construction, since modern campuses are typically built in multiple phases. The actual volume of construction activity is likely even greater than the numbers suggest.

In my view, the government is working hard to ensure that ongoing data centre construction in Johor doesn't inconvenience residents. This stop-work order sends a clear message: rapid growth cannot come at the expense of local communities or proper procedures.

Hopefully, other data centre operators will get the message too. Johor's transformation into a data centre hub is remarkable, but it cannot come at the expense of proper construction practices and consideration for existing residents.