KUALA LUMPUR: Malaysia's data centre market is on a fast track to growth, driven by the surge in cloud computing, artificial intelligence, and digital transformation.

With 78.6 per cent of the country's operational IT capacity based in Johor, the state is expected to cross the 1 Gigawatt (GW) capacity mark in the coming years as pipeline projects reach completion.

At a recent seminar hosted by Knight Frank Malaysia, the session "Unlocking Opportunities in Malaysia's Booming Data Centre Ecosystem" explored the country's rising demand for data infrastructure and its pivotal role in meeting global digital needs.

Johor's strategic advantages — including abundant land, a stable power supply, and government-backed incentives — position it as an emerging data centre powerhouse.

Sustainability has become a critical focus for Malaysia's digital infrastructure growth, with increasing investment in green data centres and renewable energy integration to meet global ESG benchmarks. The government's emphasis on AI-driven data centres also prepares Malaysia to support next-generation high-performance computing, further cementing its role in the region's digital economy.

Allan Sim, senior executive director of Land & Industrial Solutions at Knight Frank Malaysia, said, "Malaysia is at the forefront of attracting high-value industrial and logistics investments. With strong fundamentals and investor-friendly policies, we see significant opportunities for businesses to thrive in this market."

The Johor-Singapore Special Economic Zone (JS SEZ) stands out as a key catalyst for investment, offering attractive benefits for businesses setting up operations in Johor. These include tax incentives, grants, and facilitation programmes, alongside streamlined regulatory processes, cross-border trade facilitation, and enhanced business support.

Sigrid Zialcita, chief executive officer of the Asia Pacific Real Estate Association, added, "The rise of Malaysia, particularly Johor, as a prime destination for industrial and digital infrastructure investment underscores its growing importance in the regional economy. With the JS-SEZ creating new avenues for growth, Malaysia is poised to attract more institutional capital, reinforcing its position as a strategic gateway to Southeast Asia."

Lee Kun Thye, director and head of the Johor branch at Knight Frank Malaysia, presented on the "Emerging Market: Industrial & Data Centre Landscape," noting Malaysia's rising appeal for foreign direct investment (FDI) due to infrastructure development, government incentives, and its growing digital economy prominence.

"Johor's industrial market is evolving rapidly, supported by strong government initiatives and infrastructure growth. The state's strategic location, coupled with competitive incentives, especially under the JS SEZ, makes it an attractive proposition for investors looking at long-term growth in Southeast Asia," Lee noted.

Md Eharay Abd Majid from the Invest Malaysia Facilitation Centre Johor (IMFC-J) stressed Johor's rapid economic development and the strategic importance of the JS SEZ in enhancing cross-border trade and attracting high-value investments.

Heng Wai Mun, chief executive officer of YTL Data Centres, discussed Malaysia's readiness to meet rising global digital infrastructure demands, while Renee Ho, director at Deloitte Malaysia, provided valuable insights on tax incentives available for businesses investing in data centres and digital infrastructure.