KUALA LUMPUR (May 30): Water and power supply remain a major challenge in Johor, despite the southernmost state in Peninsular Malaysia experiencing a boom in data centres due to its proximity to Singapore and the spillover effects of the US-China trade war, according to Johor Bahru city council (MBJB) Mayor Datuk Mohd Noorazam Osman.

To tackle these issues, he suggested enhanced collaboration between the government and private sector, including building desalination plants for adequate water supply and partnering with developers to create industrial parks equipped with adequate power and water infrastructure for high-tech industries.

"People are too hyped about data centres nowadays, but the issue in Johor is water and power. Areas with potential for power supply are Pasir Gudang and Kulai," he said during a panel discussion at The Johor Conversations 2024.

“As a local authority, I believe that while promoting investments is important, it should not come at the expense of the local and domestic needs of the people,” he added.

The Johor Conversations 2024, titled Pursuing Growth Through Infrastructure, Innovation, Technology, and Sustainability, was organised by GovInsider together with the state government’s investment agency, Johor Corp (JCorp).

The event discussed Johor’s potential as one of the country's most promising economic engines with tremendous untapped potential for future growth. It also addressed key challenges faced by Johor and beyond, paving the way for the region’s digital transformation.

Johor is the largest data centre market in Malaysia, attracting investments from multinational corporations (MNCs) with regional presence. It is the ninth-largest data centre market in the Asia Pacific, news reports quoted resource site Baxel earlier this month.

Major data centre players such as Nvidia, AirTrunk, GDS International, YTL Power International Bhd (KL:YTLPOWR), and Princeton Digital Group have established their operations in Johor. Additionally, tech giant Microsoft has also purchased land in Kulai from property developer Crescendo Corp Bhd (KL:CRESNDO) to open a data centre.

In April, the Ministry of Investment, Trade and Industry disclosed that data centres accounted for RM114.7 billion, constituting 79% of approved digital investments from 2021 to 2023, out of the total RM144.7 billion. These investments have led to the creation of 39,231 job opportunities.