Malaysia - Data Centre Market

Data Centres in Malaysia attracting strong growth from both local and international providers

The Malaysian data centre market has seen strong recent growth which is predicted to continue over the next five years, growth has been strong from both from local and international providers.

Local Malaysian telcos are also beginning consolidating their data centre footprint, by leasing data centre space in third party data centres, a trend more evident in developed markets such as Singapore.

Over the past five to ten years and particularly more recently, there has been significant new data centre builds and additions to existing capacity as new providers enter the South East Asian data centre market. These markets have undergone and continue to undergo a period of adjustment as they absorb new capacity from recent data centre investment across markets including Singapore, Malaysia, Vietnam, Philippines, Brunei, Indonesia and Thailand.

While mature markets such as Singapore, Hong Kong and Japan have developed as the regional hubs in the Asia Pacific region, a growing number of data centre operators are choosing to locate their data centres in Malaysia to enhance data speeds to end-user consumers in emerging densely populated cities, as local demand increases and cross-border data flow regulations improve.

Cities with large domestic consumption, young demographics and an accelerating level of industrialisation are attractive destinations as alternatives to Hong Kong and Singapore. Recent growth has been particularly strong in developing markets such as Malaysia, Indonesia, the Philippines, Thailand and Vietnam.

South East Asian developing nations such as Malaysia are increasingly been seen as destinations for new data centre sites throughout Asia, including hyperscale data centres, outside of the more developed markets of Hong Kong and Singapore.

Compared to more mature neighbouring markets such as Singapore, Hong Kong and Japan where land for new builds is scarce and expensive to acquire, Malaysia has better availability of land at cheaper prices.

Latency and connectivity are increasingly becoming less of an issue for second tier markets such as Malaysia.

Large international data centre specialists and international content and cloud providers have yet to enter Malaysia to the same extent seen in more advance markets such as Singapore and Hong Kong, however their interest in the Malaysian market is now increasing. For example, Alibaba Cloud entered the Singapore market in 2018.

Demand in Malaysia is beginning to drive the rising adoption of cloud-based services by local and international businesses.

Malaysia is increasingly becoming a regional hub for industries such as manufacturing, logistics and big data analytics. This is driving more organisations to invest in cloud systems which is in turn driving the need for more local data centres.

The high concentration of international cloud service providers in Singapore are often attracted to Malaysia as a secondary market for business continuity and disaster recovery location, to support their primary locations in Singapore.

The entry of international cloud players will in turn drive more multinationals to invest in Malaysia. In turn, multimedia content providers and cloud companies are driving strong demand for data centre storage and networking in Malaysia. There are a growing number of young consumers who access high levels of data daily to watch movies, upload photos and videos, play games, make cashless payments. This is attracting data centre operators to bring data and cloud storage closer to the consumers.