PETALING JAYA: Singapore’s limited data centre capacity could drive more demand to Malaysia’s data centre hub in Johor, as the city-state’s provisional award of just 200 megawatts (MW) of new capacity is way below what competing proposals sought.
According to The Star, citing Fitch Ratings, infrastructure, rather than demand, will determine the pace of data centre growth in Singapore and Johor. However, the credit rating agency noted that “much of the announced capacity in Asia-Pacific is still at the planning stage”, as projects depend on utility connections, land availability, permitting, financing and equipment supply.
Singapore currently has 25MW of data centre capacity under construction.
Fitch also compared planned capacity in the two markets, with Singapore at 207MW and Malaysia at 2,486MW — more than 12 times Singapore’s figure.
The agency noted that Johor will need proper resource management and infrastructure delivery to accommodate further data centre growth there.
The credit rating agency said that while Malaysian authorities have tightened requirements on power efficiency, water use and renewable energy adoption, “they should also buoy the market’s long-term resilience and sustainability by imposing greater discipline on project development.”
Fitch said existing data centres may be better positioned due to high entry barriers, low vacancy rates and strong spillover demand, but new projects face greater risks of delays due to power availability, grid upgrades, equipment lead times and sustainability requirements.
Some Singaporeans online, however, still see the spillover demand to Johor as a win for the city-state.
One commenter on r/singapore described data centres as “utility sinks” that mainly hire construction workers and security guards, saying Singapore could instead benefit from financing and supplying chips while businesses enjoy cheaper cloud costs with minimal latency trade-off.
“Major win for SG for capturing the upsides of data centres. Unfortunately, MY will bear the externalities and suffer the longer-term detrimental impacts,” the commenter said.
Another commenter pointed to the massive amount of water data centres demand, saying, “Malaysia is definitely going to get burned very soon down the road.”
A third commenter echoed these concerns, saying, “They [data centres] are energy and water suckers, and generate little local employment.” /TISG
Read also: Billions invested, but how many jobs? Johor’s data centre boom under scrutiny
