KUALA LUMPUR (April 28): Geopolitical tensions in the Middle East and rising energy prices have not dampened Malaysia’s data centre (DC) industry as strong investment inflows are still being seen, said RHB Investment Bank Bhd.
In a thematic note on Tuesday, RHB IB said it expects construction companies, utility providers and telecommunication firms linked to data centre development to benefit from the sector’s continuous growth.
It added that although supply chain disruptions have slowed deliveries of key AI chips and hardware, its industry checks point to players having so far managed setbacks to avoid major shutdowns.
Its sentiments arrive over growing concerns on the integrity of infrastructure security and supply chain risks in the Gulf region, especially with an onslaught of physical attacks on major cloud infrastructure in the United Arab Emirates during the US/Israel-Iran war.
RHB IB said industry checks point to major cloud service providers and colocation operators still seeing growing demand for artificial intelligence (AI) and cloud computing services, as DC expansions and building plans in Malaysia are still on track.
“On top of the competitive land and energy economics, political stability and a strong policy framework further support and strengthen Malaysia’s attractiveness as a preferred DC destination,” said RHB IB.
It added that lower land and electricity costs continue to make Malaysia an attractive destination, despite global fuel prices potentially pushing operating costs upwards.
RHB IB’s analysts said Malaysia’s electricity tariffs are still competitive compared with regional markets such as Singapore and the Philippines, helping keep projects financially viable.
RHB IB said that more than three gigawatts (GW) of new data centre capacity is expected in Malaysia by 2030, potentially creating an estimated RM90 billion in construction opportunities.
Major US technology players, including Microsoft, Amazon Web Services and Google, are already expanding their presence in Malaysia. Examples include Microsoft launching its first Malaysian cloud region in 2025 and developing another in Johor, while Google is slated to complete its first cloud region in Elmina Business Park sometime this year.
However, risks to RHB IB’s call include stricter government policies, uncertainty over long-term profitability, restrictions on advanced chip access and stronger competition from other emerging DC markets in the region.
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