Johor rejects some requests for new data centres to protect the environment
Located in southern Malaysia, the state plans to turn down applications to build data processing centres, one of the main sectors in Southeast Asia. In the region bordering Singapore, residents have already experienced water shortages and blackouts. However, the government wants to develop the digital economy to support economic growth.
Kuala Lumpur (AsiaNews/Agencies) – In the last five months, the Malaysian State of Johor has rejected almost 30 per cent of applications to build data centres in order to ensure the conservation of local resources and regulate one of the largest markets in Southeast Asia.
Last June, Johor set up an ad hoc committee to vet applications to build data processing centres that house the IT infrastructure for storing information of large companies, crucial for the development of artificial intelligence, which will further boost demand for energy.
According to several studies, such facilities are highly polluting. One study in Europe found that over 20 years, data centres in the continent produced between 6,600 and 10,400 tonnes of carbon dioxide per megawatt of operating IT, equal to the annual electricity consumption of 1,700 to 2,800 European households.
In Malaysia, considering average consumption, energy efficiency levels, and geographical differences, one gigawatt is enough to power between 750,000 and one million homes.
Lee Ting Han, Johor state’s data centre development coordination committee vice-chair, told the Straits Times newspaper that in recent months, out of a total of 14 applications submitted, four were rejected because sustainability practices to reduce water and electricity consumption had not been included.
Some “operators chose locations lacking adequate utilities infrastructure, which could risk straining water supplies for the local community,” said Lee Ting Han.
In April, several areas of Johor had reported water shortages, causing several problems for residents, who also experienced frequent blackouts.
These problems predate the surge of data centres, The Diplomat points out; for example, water rationing was imposed in 2016 due to drought.
The capacity of data processing centres in Johor – measured in electricity consumed – has risen from 10 megawatts in 2021 to 1.3 gigawatts today, and is expected to reach 2.7 gigawatts by 2027, Lee pointed out.
According to some studies, the southern Malaysian state currently hosts 13 data centres covering an area of 153,000 square metres, the ninth-largest data centre market in the Asia-Pacific area.
The cost of building data centres in Malaysia, according to experts, is US$ 10 million per megawatt. Johor is set to attract US$ 3.6 billion in new investment by the end of 2024, taking advantage of the China-US trade war.
The Southeast Asian country already hosts US-based Nvidia and China’s GDS International, and might soon welcome the data processing centres of Microsoft and ByteDance.
In addition to environmental sustainability, the Malaysian government also says it is considering the number of potential customers once the centres are operational and the number of well-paid jobs created.
This raises the question of competition with Singapore, where many qualified Malaysians emigrate for better salaries.
The city-state, which borders Johor, is home to more than 70 data centres with 1.4 gigawatts of capacity.
“The traditional approach of providing support and incentives to investors without taking into account the economic spillover achieved is no longer sustainable,” said last month Prime Minister Anwar Ibrahim, who also serves as Finance minister.
Now the government wants the digital economy to represent 22.6 per cent of gross domestic product by 2025.
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