KUALA LUMPUR: The rapid expansion of data centres is beginning to reshape Malaysia’s energy landscape, with industry players warning that policy clarity – not capital – will determine whether the country captures higher-value investments in the sector.
Dhaya Maju Infrastructure (Asia) Sdn Bhd senior vice-president of business development Ravindran Devagunam said the current wave of data centre growth is already driving a noticeable uptick in energy demand, but Malaysia risks remaining a secondary destination unless it adjusts its approach.
“We are seeing a clear blip in energy requirements driven primarily by data centres. But we have to be honest – much of what we are attracting today is still spillover from Singapore,” he said at the Malaysia Energy, Water & Climate Change Summit 2026 recently.
He noted that while Johor has benefited from this overflow, higher-end data centres and innovation hubs continue to gravitate towards Singapore.
Recent geopolitical disruptions, particularly in the Middle East, are now accelerating capital flows into Asia, presenting Malaysia with a narrow window to reposition itself.
“There is capital outflow happening as we speak, moving into this region. Malaysia now has an opportunity to attract not just spillover, but higher-end data centres. If that happens, the impact on our energy demand will be significantly larger,” Ravindran said.
That shift, however, will require a corresponding rethink of the country’s energy strategy.
Ravindran pointed to the need for a broader mix of solutions, including renewable energy and other alternatives, to support the scale and reliability required by large data centre operations.
“Going green is the ideal direction, but we
cannot rely solely on existing capacity. We need to look seriously at a combination of solutions – solar, storage and other emerging technologies – to meet future demand,” he said.
Beyond infrastructure, Ravindran said Malaysia’s challenge is less about capability and more about intent. “We already have most of the infrastructure and the technical capability. What we need is the drive – and that ultimately comes down to policy.”
Ravindran emphasised that data centres should be viewed not merely as standalone investments, but as economic anchors capable of catalysing broader ecosystems. “A data centre is not just a facility – it generates a much larger economy around it. We have not fully approached it from that perspective yet.”
From a financing standpoint, he dismissed concerns about capital constraints, noting that private sector players are prepared to invest at scale if conditions are right.
“Capital is not the restriction. What matters is having a conducive environment that gives investors confidence to commit for the long term,” he said.
Ravindran called for stronger policy frameworks to underpin the sector’s growth, including mechanisms to ensure long-term commitment from data centre operators.
“This is where the government needs to step in as an honest broker. Long-term contracts – 25 to 30 years – provide the certainty needed for infrastructure investments to move forward.”
At the same time, he cautioned that the transition towards renewable energy will introduce new complexities to the grid, requiring careful management to maintain stability. “Renewables bring inherent intermittency, and that adds complexity to the network. Ensuring grid stability while scaling up cleaner energy sources will be one of the key challenges ahead.”
Ravindran said Malaysia’s ability to capitalise on the data centre boom will hinge on how quickly policy, infrastructure planning and energy strategy can be aligned. “The opportunity is there. But whether we capture it depends on how decisively we move.”
