Malaysia's data centre boom must lift local firms up global value chain: Johari Ghani

KUALA LUMPUR: Malaysia wants its growing data centre investments to translate into stronger local businesses, a more skilled workforce and higher economic value, rather than merely expanding the country's digital infrastructure.

Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani said the government was seeking to ensure that the expansion of data centres strengthened domestic supply chains and created opportunities for Malaysian companies to develop capabilities and compete in regional and global markets.

He said Malaysia had approved 117 data centres with a combined maximum energy demand of approximately 23,500 megawatts (MW) upon completion.

Of the total, 55 were already operational, while the remaining projects were at various stages of planning and construction.

He said data centres were becoming an important foundation for the digital economy, providing the computing capacity needed to support digital services and artificial intelligence (AI) applications.

Malaysia attracted RM218.5 billion in approved investments in the first half of 2026, an increase of almost 12 per cent from the corresponding period last year.

Data centre and cloud-computing projects accounted for RM95.8 billion, or nearly 44 per cent of the total approved investments.

Johari said the government recognised the need to balance the industry's expansion with electricity and water security, as well as environmental considerations.

"The government remains conscious of the legitimate public concerns surrounding the rapid

expansion of data centres, particularly their demand for electricity and water.

"Our approach must balance investment growth with resource security and environmental responsibility," he said at the AWS Cloud and AI Day here today.

He said the government, via the Data Centre Task Force (DCTF), is working with relevant agencies and state governments to assess supply requirements and strengthen standards covering power usage effectiveness, water usage effectiveness and carbon usage effectiveness.

He said data centre projects approved under the task force were also required to meet at least 30 per cent local content, including the use of Malaysian consultants, contractors, engineers and procurement managers.

The requirement is intended to ensure domestic companies participate meaningfully in the industry's supply chain and benefit from the influx of foreign investments.

Johari said Malaysia needed foreign investors to finance and develop the necessary infrastructure, as the government did not have the financial capacity to build all the required facilities itself.

He said the government was also looking at ways to accommodate the additional electricity demand without compromising supply for the country's existing industries.

"We don't want to mix (the data centre industry with) the 27 industries that we have. This is an industry that we consider a pillar of our economy," he told reporters after the event.

He said Malaysia could leverage its position as the world's fifth-largest gas exporter by using some of its gas resources to generate additional electricity for data centres instead of exporting all of it.

The government was also diversifying its power generation mix through renewable energy sources, including solar, battery storage and hydropower, amid a global shortage of turbines that could delay additional generation capacity.

"At the same time, while waiting for the turbine to come by TNB, we also build our renewable energy, like solar, battery, and hydro," he said.

Johari said a diversified energy portfolio comprising gas and renewable sources would be important to support the expansion of data centres.

He also cautioned that data centres, despite their substantial capital investments, were not necessarily major employers once operational.

While the projects generated demand for electricity, infrastructure and engineering, procurement, construction and commissioning (EPCC) services, he said the greater opportunity lay in developing Malaysian engineers, software developers and technology companies.

"Malaysia must not be merely a host for digital infrastructure but a creator of digital value," he said in his prepared speech.

He said Malaysian businesses must leverage advanced computing and AI to improve productivity, develop new products and services and reach customers across Asean and beyond.

Johari also highlighted Amazon Web Services' (AWS) planned investment of RM29.2 billion in Malaysia through 2038, which is estimated to contribute RM57.3 billion to the country's gross domestic product and support an annual average of more than 3,500 jobs at local businesses.

He said AWS's contribution extended beyond infrastructure investment through initiatives to develop local talent, strengthen suppliers and expand the adoption of cloud and AI technologies among Malaysian businesses.

These include Semarak AI Malaysia, an initiative aimed at making AI more accessible to government agencies, businesses and the public through three pillars: AI Negara, AI Ekonomi and AI Rakyat.

Under AI Negara, AWS is working with GovTech Malaysia and the National Digital Department to establish Kiro GovHub, which aims to support 500 developers in 2026 before expanding to 4,000 by 2028.

Under AI Ekonomi, AWS is partnering with Malaysian companies GDXchange and VSTECS to provide 10,000 eligible small and medium enterprises with six months of complimentary access to Amazon Quick and Kiro AI by 2028.

Johari said such initiatives were important to ensure investments in digital infrastructure translated into more competitive Malaysian companies, a highly skilled workforce and more efficient public services.