Johor rejects 30% of applications to open data centres

State's focus is on conserving resources, ensuring maximum gain for local economy

- Zunaira Saieed

Malaysia's southern state of Johor has rejected almost 30 per cent of data centre applications in the past five months as the authorities focus on conserving resources and regulating the industry to ensure maximum benefits for the local economy.

Johor, which has emerged as Malaysia's top data centre market and is poised to be the largest in South-east Asia, began vetting applications through an ad hoc committee in June 2024 following concerns that data centres worth billions of dollars could strain local resources, such as water and electricity supplies, in the coming years.

The state's data centre development coordination committee vice-chairman, Mr Lee Ting Han, told ST that four applications from overseas data centre operators were rejected in the past five months out of 14 total applications submitted.

The committee rejected those applications mainly because the operators concerned did not demonstrate sustainable practices to reduce water and power usage, Mr Lee said. The applications have to include proposed plans for the location site and sustainability efforts, as well as details of the jobs and wages offered.

"Some applications were rejected because operators chose locations lacking adequate utilities infrastructure, which could risk straining water supplies for the local community," he told ST.

Johor state's data centre capacity has grown from just 10 megawatts (MW) at the start of 2021 to around 1.3 gigawatts (GW) currently, and that figure is expected to rise to 2.7GW by 2027, said Mr Lee.

Currently, Johor has 13 data centre facilities across more than 1.65 million sq ft of space, according to data centre research firm Baxtel.