Johor data centres drive revenue but strain resources, says Amanah leader

New Straits Times

6 days ago

JOHOR BARU: Johor's aggressive push to become Southeast Asia's data centre hub has drawn fresh scrutiny, with a leader from Parti Amanah Negara (Amanah) warning of potential strain on the state's power grid, water supply and environment.
Amanah Johor deputy chief Dzulkefly Ahmad said he supports the concerns raised by Kukup assemblyman Jefridin Atan during the recent state assembly sitting, particularly over the long-term sustainability of critical resources.
During the session, the Johor government was urged to review the guidelines for data centre development following concerns about environmental impact and resource sustainability.
Jefridin said the main issues are high energy and water requirements to support data centre operations, which could strain existing utility systems.
Dzulkefly revealed that Johor has approved 50 data centre projects within two years, including in Sedenak Tech Park, Nusajaya Tech Park, YTL DC Park and SiLC Nusajaya, with tech giants like Microsoft, ByteDance and Equinix among the investors.
"The conversion of agricultural land and premium payments for industrial use are believed to be key contributors to Johor's RM2.1 billion revenue surge in 2024," he said in a statement today.
Malaysia, especially Johor, has emerged as a top destination for data centre investments following Singapore's moratorium on new builds between 2019 and 2022.
Investors are drawn by lower land and utility costs, proximity to Singapore, and generous tax breaks.
Dzulkefly, however, warned that this growth comes at a cost.
"Power demands from data centres in Malaysia have reached 11,000MW, nearly 40 per cent of Peninsular Malaysia's total generation capacity.
"This could pressure the national power grid," he said.
Water usage is also a concern.
Environmental group Sahabat Alam Malaysia (SAM) estimates a 100MW data centre consumes over 4 million litres of clean water daily or equivalent to the needs of a town with 10,000 people.
He said Johor buys 16 million gallons (60.56 million litres) of treated water daily from Singapore, exceeding the 5 million gallons (18.9 million litres) stipulated under the 1962 agreement, due to rising domestic demand.
In March, the Johor government announced a RM3.5 billion plan to build three new water treatment plants to boost capacity by 41 per cent.
The federal government is also investing RM1.5 billion in three water reservoirs, scheduled for completion by 2030.
Dzulkefly further raised concerns over deforestation and land clearing for large-scale data centre campuses.
He alleged that some centres occupy up to 138 acres (15.37ha), potentially threatening water catchment areas and biodiversity.
He added that 49 per cent of the electricity used by data centres comes from coal-fired power plants, significantly contributing to carbon emissions.
Meanwhile, Johor Investment, Trade and Consumer Affairs committee chairman Lee Ting Han said the state government had stepped up regulatory oversight on data centre projects with the establishment of the Data Centre Development Coordination Committee in June last year.
He said the committee aims to ensure sustainable growth in the booming digital infrastructure sector.
"Every application for data centre development is now subject to a multi-agency vetting process, requiring confirmation of power supply from Tenaga Nasional Behd (TNB), water supply from Ranhill SAJ, and right-of-way (ROW) clearances for infrastructure works.
"Beyond basic utilities, we are also enforcing evaluations based on Power Usage Effectiveness (PUE) and Water Usage Effectiveness (WUE) to uphold international sustainability standards," Lee told the New Straits Times when contacted.
He said the updated regulations also include increased scrutiny of the environmental footprint of energy-intensive data centres, particularly in high-demand zones like Johor.
At the federal level, the Data Centre Task Force (DCTF) — co-chaired by the Investment, Trade and Industry and Digital Ministries — was set up to align national policy with sustainable data infrastructure growth.
The task force is also expected to streamline coordination and attract high-value investments linked to artificial intelligence (AI) and cloud computing.
"Data centres are vital to Malaysia's aspirations to become a regional digital hub.
"We are ensuring Johor's rapid economic development does not come at the expense of its environment," Lee said.
He said the state's strategic oversight model, anchored on sustainability and federal cooperation, positions Johor as a model for balanced, data-driven development under the Malaysia Digital Economy Blueprint.