< Previous18 MASTER BUILDERS JOURNAL #133 I think many of you have tuned in or read the coverage on the recent Budget 2025 tabulation. MBAM is of the view that more taxes, new policies and subsidy reforms would impact material prices instantly. From the Desk of Oliver HC Wee MBAM President I think many of you have tuned in or read the coverage on the recent Budget 2025 tabulation. MBAM is of the view that more taxes, new policies and subsidy reforms would impact material prices instantly. Construction contracts are mostly fixed-price contracts for the whole construction duration, from months to years. The fluctuation of material prices will have a negative impact to the project. Contracting parties must acknowledge and address this issue to overcome it when such imposition takes place, in order to avoid disputes or project failures. It is also noted that some foreign participation is in the local market, which stands around 15%. The government should impose certain controls to manage the situation. There are many transformation programs behind schedule, such as the digital transformation, ESG, corporate liability compliance, etc. All these require cost to kickstart and implement. Sufficient education and training are required to realise the knowledge in order to practice. The government should lead in encouraging the industry in this direction, by providing awareness and financial assistance to kickstart these transformation programs. MBAM has also voiced out on the proposed EPF contribution for foreign workers, which would adversely affect our industry in terms of higher costs of doing business that has not been allowed for. We hope the government will hear us, and govern this matter with a new set of rules or mechanisms to minimise the impact on construction industry players. One significant trend that has captured the industry’s attention is the rapid growth of data centres in Malaysia. As the world increasingly relies on digital infrastructure, data centres have become the backbone of this transformation. Malaysia’s strategic location, robust connectivity, and government support have made it an attractive hub for data centre investments. This presents a substantial opportunity for the construction sector, particularly in specialised building designs, electrical and mechanical works, and sustainable construction practices. The increasing demand for data centres will not only drive the need for innovative technologies, and sustainable solutions but also utilities such as electricity and water. The government has to make such infrastructure available to accommodate the rise of data centres. Lastly, thank you for your continued support, dedication, and hard work throughout this year. I wish you all a Merry Christmas and a promising start to the new year ahead. Yours sincerely, Oliver HC Wee KMN, AMN MBAM President “SUSTAINABLE FUTURE ISO9001:2015 CERTNO.120936 ISO45001:2018 CERTNO.121358 ISO14001:2015 CERTNO.121357 SIS INTEGRATED Sdn. Bhd. WE BUILD A OVERVIEW Our Company provides extensive services for the construction of post tensioned slab systems SIS Prestressing SIS Chemical & Concrete Repair provides solutions to damaged sections or members of any concrete structure through the use of various types of chemical and mechanical method. SIS Chemical & Concrete Repair SIS Deck We strive to deliver value to each client by practical and economical building systems that enable construction of any architectural structure from simplest to the most complex model. sis@sisint.com.my +60 3-5525 1922 SIS Integrated Sdn Bhd SIS INTEGRATED Sdn. Bhd. 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We aim to continue expanding our product portfolio by including the latest and most advanced building systems, and contribute towards nation building.20 COVER FEATURE COVER FEATURE The Expanding Data Centre Industries in Malaysia and Southeast Asia Malaysia has emerged as a prime location for data centre investments, with global tech companies investing considerably to build advanced digital infrastructure. This presents significant opportunities for the local construction industry that will drive demand for skilled labour and innovative building practices. In this article, MBJ explores how these investments are reshaping Malaysia’s economic landscape and the potential benefits for local players. MASTER BUILDERS JOURNAL #13321 MASTER BUILDERS JOURNAL #133 COVER FEATURE COVER FEATURE D ata centres have become a critical part of modern infrastructure, driven by the exponential growth of digital technologies, cloud computing, and the need for data storage and processing. As digital services expand globally, the demand for secure, scalable, and energy-efficient data centres has skyrocketed. These facilities host critical infrastructure, including servers and networking equipment, ensuring the seamless functioning of the internet, communication, and data storage. Their role is vital in supporting industries like finance, healthcare, and telecommunications, which rely heavily on uninterrupted data access. In Southeast Asia, including Malaysia, the demand for data centres is expanding rapidly as governments and businesses push towards digital transformation. Malaysia has emerged as one of the fastest-growing markets for data centres in Southeast Asia, driven by the increasing demand from sectors such as artificial intelligence (AI), e-commerce, and cloud computing. The country’s strategic investments and supportive government policies have positioned it as a significant regional hub, set to become the third-largest data centre market in Asia, behind only Japan and India, according to a Q3 2024 report by Juwai IQI. However, this growth is not without its challenges. For professionals in the construction industry, developing data centres in this region involves addressing specific issues related to land, power infrastructure, regulatory hurdles, environmental considerations, and technological advancements. Challenges in Data Centre Development in Malaysia Land and Location Constraints One of the primary challenges in data centre development in Malaysia and Southeast Asia is finding suitable land that meets the unique needs of these facilities. Data centres require large plots with robust infrastructure, stable geotechnical conditions, and high connectivity. In rapidly urbanising areas like Kuala Lumpur, Singapore, and Jakarta, finding available land that is also cost-effective poses a significant hurdle. Moreover, these locations must have reliable access to power and cooling resources, and they must be geographically safe from natural hazards such as floods, earthquakes, and typhoons, which are common in the region. Power Supply and Energy Efficiency Data centres are notoriously energy- intensive, consuming massive amounts of electricity to power and cool their servers. One of the main challenges in Malaysia and the broader Southeast Asian region is ensuring a stable and sustainable power supply. Countries in this region often face issues related to energy security, and the electricity grids in some areas may not have the capacity to support large-scale data centres without significant upgrades. Furthermore, the rising emphasis on sustainability and reducing carbon footprints mean that data centres are under increasing pressure to incorporate renewable energy sources, such as solar or wind power, which can be costly and technically challenging to integrate into existing power systems. Regulatory and Compliance Issues Navigating the regulatory landscape is another challenge in data centre development. Each country in Southeast Asia has its own set of regulations regarding data sovereignty, infrastructure standards, environmental impact assessments, and energy usage. For instance, Malaysia has specific guidelines on data storage and protection that must be adhered to by data centre operators. The complexity and variability of these regulations can lead to delays and increased costs in construction projects, especially when approvals from multiple governmental bodies are required. Additionally, compliance with international standards like ISO/IEC 27001 for data security and Tier certifications for data centre performance often adds another layer of complexity to the process. An aerial view of the YTL Green Data Center Park in Kulai, Johor – showcasing over 535,000 sqft of state-of-the-art infrastructure, designed for sustainability and scalability22 MASTER BUILDERS JOURNAL #133 COVER FEATURE Cooling and Climate Control Challenges Southeast Asia’s tropical climate poses significant challenges for data centre cooling. Maintaining optimal temperatures is crucial for the efficient functioning of data centres, as excessive heat can lead to hardware failures and a reduced lifespan of equipment. The high humidity and heat in the region increase the cooling demands, making traditional air-conditioning systems less efficient and more costly. Developers must explore advanced cooling technologies such as liquid cooling, evaporative cooling, or even submersible server systems, which require substantial investments and specialised engineering skills to implement. Connectivity and Network Infrastructure For a data centre to function effectively, it needs high-speed, low-latency network connections to global data routes. While Malaysia and other Southeast Asian countries are making strides in improving their connectivity, there are still significant gaps, particularly in rural or less-developed areas. The reliance on submarine cables and other international network infrastructure also means that any disruption in these connections can severely impact data centre operations. Moreover, as demand for bandwidth grows, there is a continuous need for investment in 5G technologies and fibre-optic networks, which further complicates development projects. High Initial Capital Expenditure Data centres require a high initial investment, not only in terms of construction but also in the necessary technologies, power, cooling systems, and cybersecurity measures. The capital expenditure for building a data centre in Southeast Asia can be prohibitive, especially when factoring in the costs of land acquisition, regulatory compliance, and implementing energy-efficient technologies. Financial constraints often pose a barrier to entry for smaller companies, and even larger firms may struggle with securing adequate funding, particularly if they aim to develop green data centres that align with environmental sustainability goals. Skilled Workforce and Technological Expertise The shortage of skilled professionals in data centre construction and operation is another critical issue in the region. Building and maintaining these facilities requires expertise in fields like electrical and mechanical engineering, HVAC systems, cybersecurity, and data management. Southeast Asia is still developing its talent pool in these areas, which means that companies often need to bring in specialists from abroad, increasing project costs. Additionally, as the industry evolves rapidly with new technologies like Artificial Intelligence (AI) and Machine Learning (ML), there is a need for continuous upskilling of the workforce to keep pace with technological advancements. Sustainability and Environmental Impact With growing concerns about environmental sustainability, data centre developers are under increasing pressure to reduce their carbon footprints. Traditional data centres are known to consume vast amounts of energy and produce significant heat emissions, which contribute to climate change. In response, there is a push toward designing green data centres that use renewable energy sources and implement energy-efficient technologies like Smart Integrated Building Systems (IBS) and advanced cooling solutions. However, transitioning to these sustainable practices can be expensive and may require extensive R&D investments, posing a challenge for developers in this cost-sensitive region. Construction Industry Response The construction industry in Malaysia and Southeast Asia is quickly adapting to the surging demand for data centres by embracing high-tech construction methods and sustainable energy solutions. Companies are building hyperscale and colocation data centres, integrating green technologies like solar power and energy-efficient cooling systems to meet environmental regulations and reduce carbon footprints. The region’s strategic location and growing digital infrastructure make it a key hub for global tech players. As a result, the industry is leveraging The grand entrance of JDC 1 at YTL Green Data Center Park – a modern gateway to a world-class, sustainable data center facility certified for excellence23 MASTER BUILDERS JOURNAL #133 these opportunities to drive innovation and economic growth, positioning Southeast Asia as a major player in the global data economy. Data Centre Development Trends Regional Trends and Strategic Positioning Malaysia’s rise as a data centre hub is not occurring in isolation but as part of a broader trend in Southeast Asia. Countries across the region, including Singapore, Indonesia, and Thailand, are also seeing significant investments in digital infrastructure. Singapore remains a dominant player, with companies like Equinix and STT GDC expanding their presence, while Indonesia is rapidly growing, driven by its large market size and increasing digital adoption. Role of Government and Industry Support The Malaysian government has played a pivotal role in shaping the country’s data centre landscape through various initiatives and policies that encourage investment in digital infrastructure. The MyDIGITAL blueprint and the New Industrial Master Plan (NIMP) 2030 are key examples of this support, aiming to create a conducive environment for the growth of the digital economy. These efforts are complemented by partnerships with global entities that bring in technology and expertise, further boosting Malaysia’s position as a preferred destination for data centres in Southeast Asia. In the recent Budget 2025 Speech, Malaysian Prime Minister YAB Anwar Ibrahim said that the Retirement Fund (Incorporated), or KWAP, through the RM6 billion Dana Pemacu, will strengthen domestic private markets across private equity, infrastructure and real estate asset classes. The fund is expected to stimulate the growth and development of local fund managers through its unique co-general partner model, with RM500 million to be invested next year involving sectors such as data centres, energy transition and advanced manufacturing. He also said that investments in data centres should not be pursued unless they bring tangible added value to the rakyat, such as high-paying job opportunities and knowledge transfer. Conclusion The data centre industry in Malaysia and Southeast Asia is undergoing a significant transformation, with Malaysia positioned as a leader in this sector. Strategic collaborations with international partners, supportive government initiatives, and a focus on AI and digital economy development are propelling the growth of data centres in the region. The development of data centres in Malaysia and the broader Southeast Asian region is filled with opportunities, but also numerous challenges that need to be addressed by the construction industry. From land and power supply issues to regulatory compliance, climate- related hurdles, and sustainability requirements, each factor plays a crucial role in shaping the feasibility and success of data centre projects. To overcome these challenges, a collaborative approach involving government bodies, technology providers, and industry stakeholders is essential. With strategic planning, investment in technology, and an emphasis on sustainability, Malaysia and Southeast Asia can position themselves as key players in the global data centre landscape. COVER FEATURE COVER FEATURE (top) Artist’s impression of Yondr Group’s 300MW hyperscale data centre in Sedenak Tech Park, and illustration of Vantage Data Center’s planned KUL2 campus in Cyberjaya (bottom)24 MASTER BUILDERS JOURNAL #133 Malaysia-UAE Partnership A major development in Malaysia’s data centre industry is its partnership with the United Arab Emirates (UAE). In January 2024, the two countries signed a Memorandum of Understanding (MoU) to collaborate on the development of data centres in Malaysia, with a projected capacity of 500 megawatts. This agreement underscores Malaysia’s commitment to enhancing its digital infrastructure and fostering economic ties between the two nations. It also aligns with Malaysia’s New Industrial Master Plan (NIMP) 2030, aimed at advancing AI capabilities and digital economy initiatives. STT GDC and Basis Bay Joint Venture Singapore-based ST Telemedia Global Data Centres (STT GDC) and Malaysia’s green data centre provider Basis Bay have formed a joint venture to develop data centres in Kuala Lumpur and Cyberjaya. The project includes two main facilities, with the first being focused on mission-critical sectors such as financial services and government, while the second will cater to hyperscalers. This collaboration not only emphasises local participation but also addresses data sovereignty concerns, an important aspect in today’s data-driven economy. DNeX and Google Cloud to Deliver Sovereign Cloud Services in Malaysia Dagang NeXchange Berhad (DNeX) and Google Cloud have announced a multi-year deal to deliver sovereign cloud COVER FEATURE Recent Key Contracts & Joint Ventures services in Malaysia. This partnership aligns with Google Cloud’s expansion in Southeast Asia, following its $2 billion investment in its first data centre in the country. DNeX will operate Google Distributed Cloud to offer secure cloud solutions, focusing on data residency and privacy for sectors like public services and healthcare. Both companies are also exploring the creation of an AI centre of excellence to nurture local talent in artificial intelligence. Equinix’s Expansion in Malaysia Equinix, a global data centre leader, has established new facilities in Kuala Lumpur, driven by the region’s rapid growth in digital services and cloud adoption. These data centres are designed to meet rigorous industry standards, providing reliable and scalable solutions for businesses. The Malaysian government’s supportive digital policies, such as the MyDIGITAL blueprint, have been a critical factor in attracting such investments. Equinix’s local partnerships further ensure regulatory compliance and operational stability, enhancing their integration into the Malaysian market. IJM Secures Data Centre Contracts IJM Corp Bhd has secured a RM508 million contract to build two data centres in Gelang Patah, Johor, in partnership As the demand for digital infrastructure continues to rise, Malaysia is set to play a crucial role in shaping the future of Southeast Asia’s digital landscape. For stakeholders in the construction industry, this growth represents a wealth of opportunities for infrastructure development and technological innovation. with Woh Hup Malaysia. The project, awarded by an undisclosed international developer, involves completing the first building by Q3 2025 and the second by Q1 2026. Additionally, IJM Corp secured a RM331.7 million contract in June to design and construct the Block 2 data centre for Telekom Malaysia in Iskandar Puteri, slated for completion by Q3 2025. Gamuda to Build Hyperscale Data Centre for Sime Darby Gamuda Bhd has secured contracts worth RM1.74 billion to build a hyperscale data centre for Sime Darby Property at Elmina Business Park. The project includes a RM815 million construction contract and a RM928.6 million fit-out, mechanical, electrical, and plumbing works contract, set to be completed by 2026. This initiative supports Gamuda’s strategy to expand its Next-Gen Digital IBS capacity for data centre construction, aligning with rising market demand. The contracts were awarded through public tender, emphasising Gamuda’s expertise in the field. YTL Green Data Centre to Integrate NVIDIA AI Technology YTL Power International has partnered with NVIDIA to integrate AI capabilities into a data centre at YTL Green Data Artist’s impression of Google’s first data centre in Malaysia (image: Google)25 MASTER BUILDERS JOURNAL #133 COVER FEATURE COVER FEATURE Centre Park in Johor, Malaysia, set to begin in 2024. This collaboration aims to establish Malaysia as a leader in AI by providing supercomputing infrastructure and developing a Malay language AI model. The data centre, powered by a 300 MW solar farm, will utilise NVIDIA’s technology for generative AI model optimisation, enhancing the country’s AI capabilities and positioning Malaysia as a key player in the AI-driven digital economy. ACMV Subcontract for KTJS KJTS Group Bhd has secured a RM12.28 million subcontract from Sunway Engie DC Sdn Bhd, a joint venture led by Sunway Construction Group, for a data centre project in Selangor. The contract involves air-conditioning and mechanical ventilation (ACMV) pipework, with work starting on September 11, 2024, and completion expected by November 27, 2026. This partnership highlights KJTS’s role in the data centre infrastructure, contributing to its stock rise by 2.34%, closing at 65.5 sen with a market cap of RM451 million. MN Secures Work for Data Centre- Linked Substation Engineering MN Holdings Berhad, through its subsidiary MN Power Transmission Sdn Bhd, has secured a RM136.2 million contract for substation engineering in Johor, linked to a data centre project. The contract involves the design, installation, and commissioning of a new 275 kV consumer landing station. MN Holdings has also highlighted plans to bid on more data centre projects in Johor and Selangor as Malaysia’s growth as a data centre hub accelerates, with the company currently holding RM291.5 million worth of ongoing data centre contracts. Tropicana Sold Land to Develop Regional Data Centre Hub Tropicana Firstwide Sdn Bhd, a subsidiary of Tropicana Corporation, has sold 38.527 acres of land in Gelang Patah, Johor, to Computility Technology (Malaysia) Sdn Bhd for RM240 million. The buyer plans to develop the site into a regional data centre hub, highlighting Johor’s emergence as a key digital infrastructure hub in Southeast Asia. Tropicana is actively supporting Malaysia’s vision to be a global data centre destination, with recent land deals aimed at enhancing its market presence and partnering with data centre operators. The company holds over 728 acres of land in Johor for potential development. Paragon Globe to Sell Land for Data Centre Development Paragon Globe Bhd is selling additional land in Plentong, Johor Bahru, to Bridge Data Centres Malaysia IV Sdn Bhd for RM98.98 million. This sale, part of a larger deal involving the same plot, supports Bridge Data Centres’ expansion for data centre infrastructure. The proceeds will fund development on the site, repay borrowings, and support ongoing projects. Paragon Globe aims to enhance its liquidity and financial position through these sales, with the deal expected to be finalised by Q3 2025, subject to required approvals. Binastra to Build a Five-Storey Data Centre Block Binastra Corporation Bhd has secured a RM574.4 million contract from Exsim Jalil Link Sdn Bhd for Phase 2 of a data centre development in Bukit Jalil, Kuala Lumpur. The project, which includes a five-story data centre, office spaces, and an electrical substation, will begin in October 2024 with a 16-month timeline. This contract is the largest single project secured by Binastra, contributing to its record-high order book of RM3.3 billion and reinforcing its presence in the data centre construction sector. Powerwell Wins Contract in Indonesia Powerwell Holdings Bhd has secured a RM13.25 million contract to supply low-voltage switchboards for data centre projects in Indonesia, expected to be completed by May 2025. This contract marks an expansion into the Indonesian market, driven by the country’s significant investment in digital infrastructure, including Tier 4 data centres. Earlier, Powerwell also secured contracts for data centres in Malaysia, totalling RM14.75 million. These developments align with Powerwell’s strategic goal to establish itself as a key player in Southeast Asia’s data centre sector. OCK Group to Provide Backup Power Solutions OCK Group Bhd, through its subsidiary EI Power Technologies Sdn Bhd, has secured three contracts worth RM32.5 million to provide backup power solutions for data centres. The contracts involve supplying and installing underground storage tanks and fuel distribution systems to ensure consistent fuel supply for backup generators during power outages. OCK Group’s managing director, Datuk Sam Ooi Chin Khoon, noted that the company anticipates increased demand for data centre projects and is also bidding on fibre network connectivity projects to expand its presence in this sector. Excel Commerce Solutions to Supply and Install Data Centre Equipment Divfex Bhd’s 51%-owned subsidiary, Excel Commerce Solutions Sdn Bhd, secured a RM46.6 million contract to supply and install data centre equipment for Extreme Broadband Sdn Bhd. The project will begin in September and is expected to be completed by February 2025, contributing positively to Divfex’s earnings for FY2025. Extreme Broadband, through its subsidiary Open DC Sdn Bhd, currently operates four data centres in Malaysia, while Excel Commerce specialises in IT outsourcing and managed network services. This deal strengthens Divfex’s position in the data centre industry. Asteel to Provide Roof and Wall Cladding for Hyperscale Data Centre Asteel Group Bhd, through its subsidiary Asteel (Sarawak) Sdn Bhd, has secured a RM61.2 million contract in partnership with Sarnatec Sdn Bhd for the roof and wall cladding of the EBP1A Hyperscale Data Centre at Elmina Business Park, Selangor. The project, awarded by Gamuda Engineering Sdn Bhd, is set to run for 15 months from August 12. Asteel anticipates that this contract will strengthen its position in the growing data centre construction market in Malaysia.Next >