KUALA LUMPUR, May 25 — Malaysia, particularly Johor, has positioned itself as a cost-efficient alternative to Singapore for data centre investments, owing to its relatively abundant land, availability of power infrastructure, and attractive investment incentives.
Moody’s Ratings, in a report today, said Johor’s appeal to hyperscalers is further enhanced by its geographical proximity to Singapore and the ability to leverage the republic’s robust international connections.
“With around 897 megawatts (MW) of installed capacity and a significant development pipeline, Johor is increasingly integrated into Singapore-linked deployment strategies to serve regional demand.
“Johor has successfully capitalised on regional capacity constraints to position itself as a key destination for hyperscalers,” it said.
It added that this is evidenced by significant investment commitments from Microsoft and Oracle, alongside the launch of new cloud regions in Johor over the past year, building on ByteDance’s earlier deployment in the state.
Moody’s Ratings noted that Singapore remains the region’s largest and most mature hub for data centres, with an estimated 1.0 gigawatt (GW) of installed capacity, underpinned by its role as a regional connectivity gateway with extensive submarine cable links and a stable regulatory framework.
“However, capacity expansion has become more constrained because of land and power limitations, as well as sustainability requirements, prompting operators and hyperscalers to adopt a hub-and-spoke model, where Singapore functions as a core interconnection and control node, while additional capacity is developed in surrounding markets,” it explained.
Additionally, Moody’s Ratings said Malaysia, one of the fastest-growing data centre markets in South and Southeast Asia, has benefited from available power and transmission infrastructure, supported by its solid power reserve margin, enabling rapid scaling of data centre capacity.
The credit rating agency noted that despite Peninsular Malaysia’s solid power reserve margin of around 25 per cent at present, it will need to carry out substantial investments planned for both power generation and grid upgrades over the coming years.
This will be necessary to support further growth in data centre demand, given the large pipeline of data centre projects announced relative to the size of its power market.
“Failure to deliver on these power sector initiatives will likely constrain Malaysia’s ability to support further growth in data centre development, as power demand from data centres is already significant and increasing.
“The total power supply committed to data centres will exceed 7 GW – around 25 per cent of current generation capacity in Peninsular Malaysia – if all data centres that have executed energy supply agreements with the local utility company are ultimately developed to their full capacity,” it said.
Data centres already accounted for four per cent of total power consumption in 2025 and were a key driver of demand growth. Their share of consumption will continue to climb as existing projects ramp up, even before accounting for additional project connections, it added. — Bernama