ISKANDAR PUTERI (Sept 26): Investments in data centres within Johor’s territory should focus on long-term strategic value rather than being driven solely by property plays, according to Maybank Banking Bhd (KL:MAYBANK) president and group chief executive officer (CEO) Datuk Khairussaleh Ramli.
Investors must be cautious on the nature of data centre developments in Johor as the state is increasingly attractive for industry investment due to its lower operational costs and access to clean energy, in comparison to its counterpart Singapore, the CEO warned.
"We want to avoid this being a property play,” Khairussaleh said during a panel session at the Invest Malaysia 2024 conference here on Thursday. “We look at the principles of who is going to be the off-taker. That’s one, and even if there is an off-taker, we also want to make sure that it's diverse — we don't just [want to] have one off-taker.”
The data centre sector in Johor has been gaining traction over the past year, attracting technology giants including Microsoft — which announced in May 2024 that it will invest US$2.2 billion (RM9.1 billion) in building AI infrastructure in Malaysia and plans to purchase land in Kulai, Johor, for a new data centre.
On top of this, in December 2023, Nvidia said it was collaborating with YTL Power International Bhd (KL:YTLPOWR) to establish a US$4.3 billion AI data centre park in Johor. ACWA Power, Alphabet and Google, meanwhile, have expressed interest in local digital infrastructure investment during online meetings with Prime Minister Datuk Seri Anwar Ibrahim.
“Whether [or not] the off-taker is a major player like Microsoft or Alibaba, having a diverse client base is critical to mitigating risks and ensuring the project’s success,” Khairussaleh added.
In a statement on Thursday, Maybank said Johor is a key beneficiary of the data centre boom and is slated to see RM17 billion worth of new investments in data centres in 2024. Green developments in the state would be supported by demand for renewable energy both domestically and in Asean, particularly from Singapore.
However, concerns about the formation of a speculative bubble in the industry have surfaced, particularly as AI-related hype has spurred a wave of investment in digital infrastructure.
Khairussaleh maintained that data centre investment will still have compounding spillover effects as businesses seek reliable access to power and water supplies — two key requirements for large-scale data centre operations.
“When you look at data centres, everyone's worried that they don’t employ many people, but you actually have to consider the industries they support and the thinking they enable,” he said at the conference.
Khairussaleh noted that many companies are already considering transitioning their data storage operations from Singapore to Johor as part of broader efforts to enhance operational resiliency and reduce costs.
“If I were operating in Singapore and wanted to lower my costs while accessing clean energy, I would consider relocating my data operations to Johor,” he said.
The growing interest in data centres in Johor aligns with Malaysia’s push towards renewable energy and digital infrastructure.
The government’s National Energy Transition Roadmap (NETR) and other initiatives aim to position the country as a hub for green technology and digital services, further boosting Johor’s appeal as a data centre destination.
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