The southern state of Johor is taking proactive measures to manage its burgeoning data centre sector, rejecting nearly 30 per cent of new applications to focus on sustainability and resource conservation. With the state emerging as a primary data centre market in Malaysia, officials are determined to ensure that the industry’s growth does not compromise local resources.
Data Centre Capacity Growth
Johor’s data centre capacity has skyrocketed from just 10 megawatts (MW) in early 2021 to about 1.3 gigawatts (GW) as of now, with projections to reach approximately 2.7 GW by 2027. The swift expansion follows the data centre moratorium in Singapore, pushing businesses to seek grounding in Johor, where demand is surging.
Application Vetting Process
- The state established a data centre development coordination committee in June 2024 to supervise new applications.
- Out of 14 submitted applications, four from overseas operators were rejected due to insufficient sustainability practices.
- Rejection reasons included inadequate plans to manage water and electricity use, risk of straining local utilities, and locations lacking necessary infrastructure.
Commitment to Sustainability
Lee Ting Han, vice-chair of Johor’s development committee, noted that all applicants must now demonstrate a commitment to sustainable practices, job creation, and infrastructure adequacy. This new vetting approach aims to ensure that data centre operations are genuinely beneficial to local communities.
Job Market and Economic Impact
Attractive employment opportunities are also on the table, with skilled positions commanding starting salaries of RM4,000 per month—substantially higher than the industry average. The Johor state government is encouraging data centre operators to commit to competitive salaries to draw talents back from Singapore.
Future Development Guidelines
In alignment with the initiative to prioritise high-value jobs, the federal government, led by Prime Minister Anwar Ibrahim, is finalising guidelines that will compel data centres to maintain sustainable practices. Expected to be announced in late 2024, these guidelines will include energy efficiency measures and water usage metrics.
As Johor navigates this intricate balance between growth and sustainability, stakeholders remain optimistic about the potential for economic stimulation through responsible development.