Artificial intelligence (AI)-grade data center will support sustainable digital economy in Malaysia, BMI Country Risk and Industry Research said last Friday.
The research house said in a note that its projections for total market supply reveal that, while Malaysia’s current live capacity slightly outperforms its sample average, its planned capacity significantly surpasses this benchmark at 1.1 gigawatt (GW).
According to BMI, the new 64 megawatt (MW) AI data center campus will add to this figure.
Discounting this latest project, Malaysia’s planned capacity stands at 2.8GW, whereas most other markets exhibit below average performance.
It is noted that Malaysia’s telecommunication firm Telekom Malaysia and Singtel Digital InfraCo unit Nxera have begun constructing a sustainable, AI-grade data center in Johor,
Malaysia.
The aim is to accelerate the digitalization of the economy, positioning Malaysia as a leading digital hub in the region.
“This development underscores our view that Southeast Asian markets, to varying degrees, are becoming increasingly attractive for investments in digital infrastructure, furthering countries’ specific digital transformation goals,” BMI said.
BMI noted AI adoption will, however, be contingent on the ability for AI-powered devices to connect to the Internet.
Although Malaysia is making good progress with regards to fixed high-speed broadband connectivity, it said it is in the 5G arena that digital readiness will be assessed.
Unfortunately, it said Malaysia demonstrates a relatively low 5G adoption rate compared to its Southeast Asian counterparts.
As of 2023, the 5G penetration rate was estimated at 24.12 percent of the total mobile base; this will increase to 40.82 percent by the end of 2024 and will eventually reach approximately 86 percent by the end of 2033.
This growth trajectory is modest compared to regional peers such as Singapore, which is forecasted to achieve a penetration rate of 141 percent by 2033, up from 52 percent in 2024, and Thailand, expected to rise from 45 percent to 121 percent within the same period.
Coupled with a wave of global tech firms (most notably Google, AWS and Microsoft) presenting a vested interest into Southeast Asia markets, BMI said Malaysia’s economy is set to achieve its national ambitions through initiatives such as the Digital Economy BluePrint (MyDigital) and JENDELA.
This momentum is bolstered by institutional investments from firms such as KKR, which owns a 20 percent stake in SingTel’s data center unit and has previously invested $2.21 billion in ST Telemedia Global Data Centres (STT), said BMI.
According to BMI, financial backing from alternative investment management firms provides the necessary support to sustain modern digital infrastructure deployments, most notably hyperscale data centers.
It is worth noting that these investments are targeted with a risk-based approach, where data center investments are aimed towards infrastructure with tangible value and those with contracted revenue profiles, which are more certain in nature.
It is also noted Telekom Malaysia’s 2023 sustainability report emphasizes the priority of high environmental standards, to which the new data center intends to adhere.
This includes the ambition that two out of its seven total data centers within Malaysia implement a rainwater harvesting system and water filtration system, which effectively reduces water consumption, required for cleaning tasks.
This is extended towards monitoring and enhancing power usage effectiveness (PUE), a measure of energy efficiency within data centers, in an effort to optimize efficiency.
Consequently, the average PUE ranges between 1.6 and 1.8, aligning with the global industry average of 1.2 to 2.0, despite increasing energy use cases, BMI said.
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