KUALA LUMPUR: Malaysia's data centre sector is on the brink of a boom, set to more than triple in value from US$4 billion in 2024 to US$13.6 billion by 2030, driven by soaring demand for artificial intelligence (AI) and cloud computing infrastructure.
The growth, representing a compound annual growth rate (CAGR) of 22.4 per cent, is expected to generate a construction pipeline of up to US$30 billion (RM126 billion), according to CIMB Securities Sdn Bhd.
With local data centre capacity projected to reach 5 gigawatts (GW) and construction costs averaging US$6 million per megawatt (MW), CIMB expects the next wave of large-scale projects to underpin Malaysia's construction and engineering sector well into the next decade.
"We expect around eight more major data centre contracts worth RM13 billion to RM14 billion and five pure mechanical and electrical (M&E) packages to be awarded by the end of the first half of 2026," CIMB Securities said.
Big Winners Emerge in Early Contract Cycle
CIMB Securities highlighted Gamuda Bhd, IJM Corp Bhd, and Sunway Construction Group Bhd as the frontrunners in early turnkey and civil and structural (C&S) data centre wins. However, it warned that rising competition from European, Japanese, and local-foreign joint ventures could challenge their dominance as the market matures.
Greater localisation of C&S works will benefit M&E contractors and power distributors, CIMB Securities said, noting that internal M&E specialists could enjoy stronger margin resilience amid the evolving project mix.
CIMB Securities retained Gamuda and IJM as its top infrastructure picks for exposure to Malaysia's fast-growing data centre sector, citing their established engineering credentials and direct exposure to government-backed digital infrastructure projects.
"Beyond being a frontrunner in data centre construction, the firm said Gamuda is also well positioned to benefit from the government's national cloud policy ambitions," the firm said.
AI, Cloud and Energy: The Triple Catalyst
The data centre surge is being accelerated by a confluence of factors – from AI workloads to national policy incentives and major power infrastructure commitments.
According to the Malaysian Industrial Development Authority's (MIDA) Data Centre Nexus 2025 report, Malaysia's data centre market is set to reach US$13.6 billion by 2030 (2024: US$4 billion), supported by cumulative electricity supply agreements (ESAs) with a total maximum demand of 6.7 GW that Tenaga Nasional Bhd has locked in across 47 projects as of June 2025.
By 2035, MIDA projects that data centre energy consumption could exceed 5 GW, equivalent to 40 per cent of Peninsular Malaysia's current power capacity. Total ESA applications have already surpassed 11 GW, reflecting the scale of planned expansions.
As of the first quarter of 2025 (1Q25), Malaysia's total data centre capacity stood at 522 MW operational, 1,250 MW under construction, and more than 3,750 MW in the planning stage – a trajectory that could lift total capacity to 5,522 MW by 2030.
Regional Leadership and Investment Confidence
By completed capacity, Malaysia's 522 MW outpaces Indonesia (270 MW) and Thailand (140 MW) but remains below Singapore (1,000 MW), according to Jones Lang LaSalle (JLL). Yet, Johor's momentum is outpacing all other Asean markets.
JLL noted in its September 2025 report that Johor is now the fastest-growing data centre hub in Asean, projected to host 60 per cent of Malaysia's data centre capacity by 2030 – a transformation driven by hyperscalers, new fibre networks, and cross-border connectivity with Singapore.
Cushman & Wakefield added that Malaysia's infrastructure readiness, measured by population per MW, is projected to improve from 60,000 currently to 14,000 by 2030, far ahead of the Asia Pacific average of 350,000 – underscoring Malaysia's aggressive pursuit of a world-class data centre ecosystem.
"This signifies Malaysia's aggressive approach to developing a vibrant data centre ecosystem encompassing key growth nodes such as AI, cloud computing, e-commerce, and digital transformation," CIMB Securities said.
Between 2021 and 2024, MIDA approved RM278 billion worth of digital investments, of which RM185 billion – nearly two-thirds – was channelled into data centre and cloud-related projects.
Infrastructure Meets Policy: AI and Cloud as National Priorities
Malaysia's policy landscape is evolving in lockstep with the sector's growth. Under Budget 2026, the government has allocated RM2 billion to the Malaysian Communications and Multimedia Commission to establish a sovereign AI ecosystem – part of a broader RM5.9 billion national cloud policy aimed at developing AI-ready digital infrastructure.
At the state level, Selangor plans to impose a 30 per cent local content requirement for data centre hardware to align with the National Semiconductor Strategy, further stimulating local industry participation.
Foreign Investment and Global Partnerships
According to Knight Frank Malaysia's 2024 Data Centre Report, the country attracted US$23.3 billion (RM71.4 billion) in strategic investments from global tech giants such as Microsoft, Google, Oracle, and Amazon Web Services. These projects are reshaping Malaysia's DC landscape, with AI training clusters now demanding 100–200 MW facilities on integrated campuses to support vast compute workloads.
Adding to the momentum, Malaysia's reciprocal trade agreement with the United States, finalised in 2025, has further boosted investor confidence. The deal includes US$150 billion in commercial transactions, including semiconductor purchases, and Malaysia's commitment to avoid discriminatory digital taxes on US-based cloud and social media companies.
CIMB Securities said the recent reciprocal trade agreement between Malaysia and the United States comes at a pivotal time, reinforcing Malaysia's position as a key destination for US hyperscalers and other Tier-1 digital infrastructure investors.
Under the pact, the US government will maintain Malaysia's reciprocal tariff rate at 19 per cent — a move seen as strengthening bilateral trade and investment flows.
"The landmark agreement contains two key points that strengthen economic and bilateral ties between both countries and solidify Malaysia's data centre footprint, negating earlier concerns over the US government's chip export restrictions imposed in early 2025," the firm said.
The deal includes two core provisions – US$150 billion worth of commercial transactions, including semiconductor purchases, and Malaysia's commitment to refrain from imposing digital service taxes that could discriminate against US entities such as cloud service providers and social media platforms.
Viewed more broadly, CIMB Securities said the development is expected to sustain investor confidence and drive momentum across Malaysia's data centre ecosystem – spanning landowners, operators, off-takers, infrastructure providers, and equipment suppliers.
Southeast Asia's Digital Powerhouse in the Making
The broader regional trend supports Malaysia's trajectory. According to the Boston Consulting Group, Asean's data centre demand is projected to grow from 1.8–2.4 GW in 2023 to 5.2–6.5 GW by 2030, fuelled by digitalisation, fintech expansion, and a tenfold increase in AI computing needs.
With Johor's rapid ascent, new submarine cable landings, strong regulatory frameworks, and strategic proximity to Singapore, Malaysia is positioning itself as the digital infrastructure capital of Southeast Asia – a hub where data, power, and policy converge to shape the next decade of growth, CIMB Securities said.
Source: https://www.nst.com.my/property/2025/11/1314026/malaysias-data-centre-boom-powers-rm126bil-construction-supercycle-bttv
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