Hello Reader,
Things are back to normal in my household by mid-week after a hospital admission last week. Really makes one appreciate normalcy and how we can fall into the trap of taking it for granted.
This week came news from Malaysia of RM30,000 per month jobs highlighted by a government minister, who cited figures from a Bank Negara Malaysia report. Let's take a look at the state of data centres in Johor.
Behind the salary headlines
I'll leave you to read the details here, though I will say that I am generally wary of salary claims. In this case, at the heart of Digital Minister Gobind's response in the Dewan Rakyat, the lower house of Malaysia's Parliament, was a growing concern about the pace of Malaysia's data centre growth.
As the world rushes to fulfil surging demand for data centres, the winds of public opinion are gradually changing in the face of increasingly massive digital infrastructure - I'll talk more about that later in this commentary.
It is worth noting that reforms by the Malaysian government two years ago to eliminate blanket subsidies do mean that data centres no longer benefit on this front. In fact, the July 2025 tariff overhaul means data centres are now paying above standard commercial rates, layering fuel-driven grid cost increases on top of infrastructure-specific surcharges.
Power struggles
Still, the sheer number of massive data centres and the pace at which they are built does invariably place stress on the power grid that must be addressed. Last month, Malaysia's TNB announced that it is investing US$10.8 billion to modernise its grid to meet data centre demand.
Indeed, I've heard of how the authorities are increasingly stringent on data centre applications. And when it comes to power allocation, data centre operators are only being allocated a fraction of requested power upfront, with power progressively harder to get.
Ultimately, all these issues will eventually be resolved. Already, water treatment plants and water reclamation plants are increasingly built by operators to support their data centres. Racks Central, for instance, is building a water treatment plant for its 510MW AI data centre campus, easing demand on municipal supply.
Win hearts, not just contracts
If there is one thing that the data centre industry must do, it would be to correct its really bad record on community engagement. Notwithstanding the rapid rise of data centres in Johor, operators are often absent even from industry meetings, let alone community-facing ones.
This is a matter of utmost urgency.
Just last month, I spoke to a journalist from a large international news wire, who called me with questions about the protests in Johor against data centres. Is it something worth flying people in to investigate, she wanted to know.
I'll spare you the details of how the unhappiness seen in Johor is quite different from the protests in the West. In the latter, water concerns were unaddressed, with some operators even skirting laws or exploiting loopholes to operate highly polluting onsite power plants.
Though the issues in Johor are trivial in comparison, the industry must mobilise and do more in terms of communication and practical works such that communities don't see them as merely money-grubbing organisations.
The question, then, is not whether the industry should engage, but how. What would meaningful community engagement even look like for a data centre operator in Johor?
Look forward to hearing your thoughts on this. As usual you can reply directly to this email to reach me.
Regards,
Paul Mah
