Maybank Forecasts Explosive Data Center Boom in Malaysia Fueled by AI Demand

Maybank Investment Bank reports that data center infrastructure spending in Malaysia continues to accelerate rapidly.

The bank's research highlights a robust capacity pipeline expected to hit 7.5GW over the next five to ten years, increasingly anchored by major U.S. hyperscalers.

Record-Breaking Investments

Between 2021 and mid-2025, the Malaysian Investment Development Authority (MIDA) approved MYR 144.4 billion ($36.77 billion) in data center and cloud computing investments.

Local contractors secured MYR 7.9 billion in contracts in 2024, surging 56.5% to MYR 12.4 billion in 2025, with year-to-date 2026 already at MYR 7.4 billion.

This momentum points to a near-term mechanical, electrical, and plumbing (MEP) market worth MYR 43.8 billion over the next one to three years.

Sustainability Challenges Emerge

Johor state has halted approvals for less efficient Tier 1 and Tier 2 data centers, which guzzle up to 200 times more water than advanced Tier 3 and 4 facilities.

Prioritizing AI-supporting, energy-efficient projects addresses rising concerns over water and power consumption amid the buildout frenzy.

Economic Boost and Future Outlook

The boom creates jobs in construction, power substations, and water treatment plants, strengthening Malaysia's role as an ASEAN digital hub.

Global tech giants like Microsoft, Alphabet, and Amazon plan combined capex of $570-580 billion in 2026, a 71% jump driven by AI needs.

For everyday Malaysians, this means faster internet, cheaper cloud services, and new tech career opportunities as the country rides the AI wave.

Looking ahead, more electricity supply agreements with Tenaga Nasional Berhad (TNB) and infrastructure upgrades will sustain growth, but balancing environmental impacts remains key.