Urban planners and infrastructure experts say data centres are expected to bring billions of ringgit in investments and strengthen Malaysia’s position as a regional digital hub
PETALING JAYA: Malaysia’s ambition to become Southeast Asia’s next digital infrastructure powerhouse is colliding with an increasingly urgent question: Can the country’s cities keep pace with the relentless demands of a runaway data centre boom?
What was once largely invisible infrastructure powering cloud computing and artificial intelligence (AI) is becoming a visible urban planning challenge, particularly in mature townships where new data centre developments are being proposed near established residential neighbourhoods.
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Urban planners and infrastructure experts say while data centres are expected to bring billions of ringgit in investments and strengthen Malaysia’s position as a regional digital hub, their vast appetite for electricity, water and land could place growing pressure on ageing urban systems if expansion is not carefully managed.
Universiti Kebangsaan Malaysia Faculty of Engineering and Built Environment senior lecturer Dr Muhammad Ammirrul Atiqi Mohd Zainuri said existing utilities in mature urban areas were never designed to accommodate multiple hyperscale facilities operating continuously at industrial-scale capacity.
“Urban grids are built for mixed residential and commercial use, not facilities running 24 hours a day at maximum load.”
He added that data centre power requests across Peninsular Malaysia have surpassed 11,000 megawatts – equivalent to nearly half the country’s total electricity generation capacity.
He also said concentrating large facilities within existing urban networks could strain electricity supplies, water systems and surrounding communities, adding that a single 100-megawatt data centre could consume up to four million litres of water daily for cooling, equivalent to the needs of a small town.
“The challenge is not just electricity.
Water infrastructure is increasingly becoming a limiting factor.“ Ammirrul said beyond resource consumption, some of the most overlooked impacts were those felt directly by residents living nearby.
“People often assume data centres operate quietly, but the constant hum generated by cooling systems, ventilation equipment and backup generators could create persistent lowfrequency noise.
“This is capable of penetrating residential buildings, potentially affecting sleep quality and increasing stress levels.
“The facilities could also intensify localised urban heat island effects by releasing large volumes of extracted heat into the surrounding environment, raising ambient temperatures in nearby neighbourhoods.”
He added that routine testing of diesel-powered backup generators may contribute to localised air pollution through emissions of particulate matter and nitrogen oxides, while chemically treated cooling water discharged into municipal sewer systems could place additional burdens on treatment facilities.
He also questioned whether Malaysia’s existing environmental impact assessment (EIA) framework was sufficiently equipped to evaluate the long-term infrastructure burden posed by hyperscale facilities, adding that data centres are not explicitly listed as prescribed activities requiring comprehensive federal EIA.
“The current EIA process was developed long before the rise of hyperscale data centres and AI infrastructure. No single authority is evaluating the cumulative impact of the facilities on an urban area as a whole.“
Universiti Malaya Institute for Advanced Studies senior lecturer and urban planning expert Dr Fong Chng Saun said data centres should no longer be viewed solely as digital infrastructure, as their physical footprint carries direct implications for land use, water security, energy demand and urban liveability.
“In mature townships, hyperscale data centres should not be treated as ordinary commercial or light industrial projects.“
While acknowledging the economic value of data centre investments, he said rapid approvals risk creating a perception that investment priorities are moving faster than liveability considerations.
He called for stronger safeguards, including transparent siting criteria, cumulative impact assessments, noise modelling, utility-capacity studies, water and energy disclosure requirements, emergency risk planning and meaningful community engagement before approvals were granted.
“What appears to be missing is an integrated planning lens.
Data centres sit at the intersection of land use, energy, water, climate resilience and digital economy policy, yet decision-making often remains fragmented across multiple agencies.”
Fong said cities risked losing their liveability balance when infrastructure designed to serve the digital economy began shifting its environmental and social costs onto residents through noise, heat and pressure on public utilities.
“In my view, data centres should be planned as strategic infrastructure, preferably clustered in suitable zones with clear buffers, renewable energy pathways, water efficiency requirements and transparent monitoring.
“For mature residential or mixed-use townships, the planning test should be stricter.
