Equinix Malaysia MD Cheam Tat Inn said Malaysia is not facing DC overcapacity despite the rapid build-out.
KUALA LUMPUR: Malaysia’s rapid build-out of data centres (DC) is not expected to result in overcapacity, even as environmental concerns mount, with industry players arguing that surging artificial intelligence (AI) workloads and cloud deployments will keep facilities occupied.
Equinix Malaysia managing director Cheam Tat Inn said the government’s attempt at oversight in the DC space through the Data Centre Task Force (DCTF) is addressing the resource constraint issue surrounding DC developments.
“Power and water resources are constrained right now, largely because of the sudden surge in the number of DCs and the fact that we are building bigger facilities.
“Unlike in the past, now players need to obtain approval from the DCTF before they can build a DC.
“It is a very stringent process, where developers must demonstrate how projects will manage water and electricity use and meet power and water efficiency targets, rather than simply securing approval and building the facilities,” he said during a briefing titled Empowering Malaysia’s digital growth yesterday.
Cheam added the DCTF shows “the government is serious” in regulating the DC industry to ensure there is sustainable growth.
The DCTF is a multi-agency strategic platform set up in February 2025 and is responsible for formulating, coordinating and monitoring the implementation of policies and development initiatives for the country’s DC industry.
This encompasses aspects of planning, investment approval, and infrastructure requirements.
DCs are guzzlers of electricity and water.
Their rapid expansion in recent years has intensified concerns about rising strain on national power and water infrastructure.
In 2019, Singapore, facing increasing challenges on land availability and energy and water consumption, imposed a moratorium on new DCs and called for a closed-door review of DC investments.
This move came at the peak of the city-state’s DC expansion.
The moratorium was eventually lifted in 2022.
Singapore currently has a very strict approval process, only picking DCs that have high standards of energy efficiency, decarbonisation initiatives and proof of economic contributions.
On whether Singapore’s experience could be a foreshadowing for Malaysia, Cheam said resource constraints depend largely on where DCs are deployed in the country, adding that Malaysia has options when it comes to resources, given the varying water and power availability across states.
“Even in areas where resources are constrained, DC projects can still move forward by working closely with utility companies and aligning development plans with available resources.
“As a nation, Malaysia needs to expand the deployment of renewable energies for DCs, and this is where initiatives such as the National Energy Transition Roadmap comes in.”
Cheam said Malaysia is not facing DC overcapacity despite the rapid build-out.
He added that while it may appear there are many DCs from a local perspective, demand remains strong from a global standpoint.
“The demand from artificial intelligence (AI) and cloud adoption continues to grow tremendously.
“What is coming next is AI Inference, which will require many more distributed DCs across Asia.”
Cheam said the idea here is to build DCs closer to the source of data or to the user, to enable faster response times and real-time decision-making.
“More companies will also start to look at hybrid multi-cloud infrastructure. Looking at all these changes that are happening, I am positive about the growth of the DC industry,” he said.
Cheam added that DC investments also present opportunities for local enterprises, allowing Malaysian companies to leverage the existing digital ecosystem to expand their global digital presence, while global firms use Malaysia as a hub to serve the Asia Pacific region.
“On AI and cloud deployments, most of the time, we always look at the big three or four, cloud players,” he said.
“But there are smaller tier-two cloud players from Europe and the United States that are coming into Malaysia, using the country as their hub to serve the rest of the customers in the Asia Pacific.”
In November 2025, Equinix topped out its second international business exchange DC in Johor, known as JH2.
