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SHAH ALAM - Malaysia’s artificial intelligence (AI) and data centre growth should prioritise facilities in designated industrial or technology parks away from densely populated areas while maintaining access to major digital infrastructure.
UCSI University data centre expert and chemical engineering professor Datuk Dr Ahmad Ibrahim said Malaysia’s rapid emergence as a regional AI and data centre hub presented significant economic opportunities, but also brought environmental and infrastructure challenges that required careful planning.
He said Malaysia’s strategic location, lower operating costs and supportive government policies had made the country attractive to investors.
Its proximity to Singapore also allowed data centres to achieve sub-5-millisecond latency while benefiting from greater land availability at significantly lower prices.
However, the rapid expansion of the sector had increased concerns over water consumption, electricity demand, land use and pressure on existing infrastructure.
“Future AI data centres should ideally be located in industrial zones or designated technology parks outside major urban and residential areas while remaining close to strong digital infrastructure.
“Site selection should take into account existing electricity grid capacity, sufficient land for water-reclamation facilities, appropriate industrial zoning, major fibre-optic routes and proximity to subsea cable landing stations.
“Such planning could reduce the need for extensive new infrastructure while limiting environmental and social impacts,” he told Sinar Daily.
Ahmad cited proposed data centre development in densely populated Petaling Jaya as an example of why location should be carefully assessed.
While data centres could generate investment and employment, facilities located near residential communities could create concerns involving noise, visual impact and pressure on utilities.
“Developments of this scale would ideally be directed towards dedicated, pre-planned industrial areas away from large residential communities, with greater emphasis on green corridors rather than placing large AI facilities within city centres.
“Water consumption is another major concern, particularly because data centres require substantial amounts of electricity and cooling can account for a significant portion of their energy use.
“The industry was increasingly moving towards reclaimed or recycled water, rainwater and distilled seawater instead of relying heavily on treated potable water.
“Stricter regulations and higher water tariffs for data centres could encourage operators to adopt alternative water sources and develop their own reclamation and recycling systems.
“Authorities would need to strengthen reservoirs and treatment facilities while encouraging operators to become more self-sufficient in managing their water needs,” he added.
On electricity, he said rising AI demand could further increase national power consumption while Malaysia remained heavily reliant on fossil fuels for electricity generation.
He noted that initiatives such as the Corporate Renewable Energy Supply Scheme (CRESS), greater solar deployment and green power purchase agreements could help reduce the sector’s environmental footprint.
Local impacts such as heat, noise and light could also be reduced through more efficient cooling technologies and appropriate site selection.
“Ultimately, Malaysia is trying to balance rapid investment with increasingly urgent environmental and infrastructure considerations.
“Tenaga Nasional Berhad’s investments to modernise and strengthen the national grid, including smart-grid technology and cluster-based planning, would be important in ensuring infrastructure development kept pace with data centre expansion.
“Malaysia’s long-term success would depend not only on attracting more investments but also on consistent enforcement of sustainability requirements and continued investment in renewable energy, alternative water sources and efficient technologies,” he said.
