Malaysia remains as the key data center growth market in ASEAN, with a steady stream of corporate announcements and new regulations, Macquarie said in recent note.

The research house said that Malaysia is poised to be the second-fastest growing market in terms of data center – after India, and just ahead of Australia and Japan.

According to the note, there is an expectations from industry experts that points towards 5.6 gigawatt (GW) new data center energy demand from data centers in Malaysia over the next decade. This versus DC Bytes ten-year forecast of 3GW.

While limited renewable energy (mostly solar) capacity is a bottleneck, Macquarie noted that it is poised to begin easing from September with a major new policy launch.

It is noted that in July, Malaysia’s government announced the impending launch of the Corporate Renewable Energy Supply Scheme (CRESS), which will open up third-party access to Malaysia’s power grid.

Basically, under CRESS, solar developers will pay Tenaga 25-45 sen / kWh (5.5-9.9 US cents) for the use of its transmission and distribution (T&D) network.

Unlike its predecessor plan, the Corporate Green Power Program (CGPP), CRESS does not quota limitations. The CGPP only allowed capacity blocks of no more than 30 MW.

“We see this as a tremendous opportunity for Malaysia to accelerate the relatively slow development of its solar potential in order to meet demand from incoming data centers,” said Macquarie.

Overall, Macquarie sees ASEAN as one of the most exciting regions globally for data centers.

Cited DCByte’s market forecast, it said four of the fastest-growing markets in data center in Asia Pacific (APAC) over the next five years are in ASEAN.

It is noted that Singapore’s government announced in May that they were targeting at least 300 megawatt (MW) new data center capacity on top of the country’s existing 1.4 GW.

This new capacity will be released in phases starting in the fourth quarter of 2024, requiring data centers to achieve a power usage effectiveness (PUE) of 1.3 or lower by 2025.

These efforts align with Singapore’s Green Plan 2030, which focuses on integrating renewables and innovative cooling solutions.

“This should help Singapore to stay relevant in the industry, but will be nowhere near sufficient to soak up demand in the region, and we do not expect it to hinder development in neighboring markets,” Macquarie said.

Macquarie also highlighted that Indonesia presents compelling opportunities for data centers, given its population and young population and rapid digital adoption.

While the bulk of development is still around Jakarta, hopes are high that Batam, 13 km from Singapore, could emulate Johor, the Southern region of West Malaysia.

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