Malaysia is witnessing a surge in investments in data centres and cloud computing, driven by the rising demand for artificial intelligence, cloud services, and digital applications. This boom is opening up new employment opportunities and boosting local businesses, while simultaneously increasing the strain on the country’s infrastructure, including electricity and water supplies. In the first half of 2026 alone, Malaysia approved RM95.8 billion for these sectors, constituting nearly 44% of the nation’s total investments for that period. Johor and the Klang Valley have become key hubs for these new facilities.
The expanding data-centre sector is generating a variety of job opportunities, particularly in fields such as data science, engineering, cybersecurity, telecommunications, construction, electrical work, and facility management. Additionally, Malaysian companies stand to benefit by providing necessary construction, engineering, and electrical services for these projects. However, the continuous operation of data centres demands substantial electricity, primarily for servers and cooling systems. As of December 2025, electricity consumption by data centres in Peninsular Malaysia reached 849 megawatts, with forecasts predicting an increase to 4,811 megawatts by 2030.
To accommodate this growing demand, the Malaysian government is planning to expand power-generation capacity by up to 9,600 megawatts between 2028 and 2031. This expansion aims to not only meet increased demand but also to replace ageing power plants. Authorities are also scrutinizing electricity-use projections from proposed data centres to avoid unnecessary infrastructure investments and manage any associated costs effectively.
Water usage, particularly for cooling systems, is another area of concern. Authorities are pushing for data-centre operators to utilize reclaimed and alternative water sources instead of relying solely on treated drinking water. In Johor, plans have been introduced to supply up to 12 million litres of reclaimed water per day for data-centre cooling, with similar initiatives being considered for the Klang Valley. Furthermore, the government has mandated that new data-centre projects demonstrate sufficient power and water supplies and adhere to energy-efficiency standards.
These standards include meeting specific Power Usage Effectiveness (PUE) targets, with limits set at 1.6 for colocation facilities and 1.4 for hyperscale operators. While Malaysia’s data-centre expansion promises considerable economic and employment benefits, authorities are increasingly focused on ensuring the industry’s growth is sustainable, without putting excessive pressure on the country’s critical resources like electricity and water.