Introduction
As Malaysia positions itself as a leading digital hub in Southeast Asia, the data centre industry plays a pivotal role in driving economic growth and boosting Malaysia’s global competitiveness. Recognising the importance of sustainability, Malaysia is committed to advancing its data centre infrastructure with a focus on reducing energy consumption and carbon footprints, aligning with Malaysia’s goal of net-zero emissions by 2050.
Alongside the Digital Ecosystem Acceleration (“
DESAC”) incentive scheme designed to support this vision and attract digital infrastructure projects, the Ministry of Investment, Trade and Industry (MITI) has published the
Guideline for Sustainable Development of Data Centre (“
Guideline”). This Guideline establishes a comprehensive framework for the development and operation of sustainable data centres in Malaysia, outlining best practices and regulatory standards to ensure peak-performing and sustainable data centre operations.
Objectives of the Guideline
The objectives of the Guideline include the following:
- establishing Malaysia as the data centre hub in Southeast Asia by drawing investments from sustainable data centre organisations;
- unlocking further capacity of organisations in designing and operating energy-efficient data centres;
- promoting the use of renewable or clean energy through the delivery of low-carbon energy sources for data centre operations; and
- driving innovation in improving the efficiency of water consumption through the design and operation of data centres.
Categorisation of data centres
The Guideline categorises data centres into the following six categories as set out in Appendix 1 (“Appendix 1”):
- Hyperscale (commercial single tenant & Service Provider Private);
- Colocation (multi-tenant) Purpose Built (post-2020 build);
- Colocation (multi-tenant) Purpose Built (pre-2020 build) medium voltage;
- Colocation (multi-tenant) Purpose Built (pre-2020 build) low voltage;
- Colocation (multi-tenant) Converted Building; and
- Enterprise Private (Captive) Purpose Built & Converted Building.
Appendix 1 also sets out the parameters for each category of data centre, including power supply, power capacity, baseline Power Usage Effectiveness (“PUE”) at current information technology load, proposed design PUE target for high energy efficiency, measurement methodology for PUE, proposed design for Water Usage Efficiency (“WUE”), measurement methodology for WUE and measurement frequency for each category of data centre.
Sustainable Data Centre Status
The Guideline outlines key metrics to achieve sustainable data centre status in Malaysia:
- Power Usage Effectiveness
- PUE represents the ratio of a data centre’s total energy consumption to the energy consumed by its information technology equipment, calculated, measured or assessed across the same period.
- Organisations should enhance energy efficiency through the adoption of best-in class technologies, with the design PUE limits and parameters determined based on the categories of data centres set out in Appendix 1.
- Organisations must declare the calculated design PUE value according to international standard ISO/IEC 30134-2.
- Carbon Usage Effectiveness
- CUE represents a data centre’s annual CO2 emissions and information technology equipment energy demand.
- Organisations must declare the calculated design CUE value according to international standard IS0/IEC 30134-8. The total CO2 emissions are calculated based on the source of energy and the quantity consumed. The different carbon emission factors for different sources of energy (coal, gas, oil, renewable, etc.) need to be considered when calculating total emissions.
- Organisations may purchase renewable energy resources, produce, co-produce electricity on-site or generate CO2 through other means.
- Water Usage Effectiveness
- WUE represents the ratio of a data centre’s water consumption divided by the energy consumed by information technology equipment.
- For new data centres, organisations should avoid water stress areas (water stress index of less than 0.8) within Peninsular Malaysia (website link to the water stress index map; https://geoportal.sirim.my/sgportal#home).
- The organisation should deploy water efficiency management practices and innovation to accelerate the efficient use of water by the data centre, and may utilise the reclaimed or reuse water for their operation.
- The recommended design WUE is 2.2 m3/MWh or lower, and organisations are required to continuously monitor and disclose the actual WUE in their annual sustainability report, with a target to improve to the WUE of 2.0 m3/MWh or lower from the baseline design WUE value over the next 10 years.
- Organisations must declare the calculated design WUE value according to international standard ISO/IEC 30134-9.
Application
Organisations submitting applications to the Malaysian Investment Development Authority for tax incentives under the DESAC scheme until 31 December 2027 will be evaluated based on the conditions outlined in the Guideline.
Food for Thought
The sustainable development of data centres in Malaysia presents a compelling opportunity to align the digital economy as a new engine of growth with ESG goals. As Malaysia positions itself as a regional data centres hub, integrating sustainability into this growth can drive long-term economic benefits, attract responsible and sustainable investments, and support national decarbonisation target. Sustainable data centres development isn’t just an environmental imperative – it is a strategic move to enhance Malaysia’s global competitiveness. By embedding ESG principles into infrastructure growths and incentives, Malaysia can future-proof its digital economy while fostering resilience against climate change.
Article by Tan Wei Xian (Partner) of the Corporate Practice of Skrine.1