MALAYSIA is fast becoming a hotspot for data centres.

       Already, big names such as Microsoft and GDS Holdings Ltd, the leading data centre operator in China are building data centres including hyperscale data centres (HDCs) in Johor.

       Generally, HDCs are larger and contain more than 5,000 servers to accommodate cloud service providers (CSPs) hosting hundreds of thousands of servers and virtual machines to store data.

       Recall, Johor’s Mentri Besar Datuk Hasni Mohammad said that the state had received inquiries from a Japanese-based data centre that is interested to invest in Johor.

       Other well-known names that already have their presence in the data centres in Malaysia, are adding more such operations in places such as Cyberjaya and Bukit Jalil.

       They include AIMS Data Centre, NTT Data Malaysia and Regal Orion Sdn Bhd.

       Listed property developer Glomac Bhd is also engaged in early discussions with two data centre operators to build their new facilities.

       In Johor, global tech giants are eyeing to build HDCs there because of its close proximity to Singapore.

       It is interesting to note that these global tech players already have their data centres in Singapore.

       Singapore’s political stability and reliable infrastructure has attracted global tech giants to build HDCs on the island republic.

       However, more than three years ago, Singapore began limiting approvals for HDCs there. This is because HDCs consume large amounts of electricity and water.

       Data centres in Singapore accounted for around 7% of the country’s total electricity consumption last year, according to its Ministry of Trade and Industry.

       This has pushed investors to build HDCs in Johor, which is less than 30km from Singapore.

       Gary Goh, chief executive officer of Johor-based property developer Paragon Globe Bhd, says he is negotiating with five large global players to set up HDCs in Johor.

       “The word is that 10 global players are now looking to set up HDCs in Johor.

       “We are in talks with five of them,” says Goh.

       He says some sites in Johor Baru appeals to some large tech players already in Singapore because of the availability of high data speed connections between Johor and Singapore.

       Lower cost is another obvious reason.

       “A number of big firms are scanning Johor to build HDCs on the back of availability of electricity at a cheaper price compared with Singapore. Lower land cost is another advantage,” says Goh.

       With the increased inflow of global tech players into Malaysia, Goh reckons that there will be an additional 150MW of data centre capacity added to the country’s total capacity.

       Malaysia’s current data centre capacity is between 120MW to 150MW, according to an industry analyst.

       Goh says that the 10 tech players are typically large multinational companies with each having more than 10 data centres around the world.

       According to an industry source, the companies that intend to build HDCs in Johor also include the world’s largest data centre player, Equinix and China’s largest data centre provider, 21Vianet.

       Goh, who is playing a key role in getting the global tech players on board with Paragon reveals that the company along with a strategic partner, is providing competitive rates for leasing fibre optic network connection to transmit data to Singapore.

       “This has drawn some investors to come to us given that leasing a cable can be a significant amount that needs to be forked out every year,” he says.

       Goh says that leasing fibre optic cables could account to between 20% to 30% of a HDC operator’s cost, amounting to between RM5mil and RM25mil a year.

       “Paragon’s competitive advantage is that we have a strategic partner that will provide discounted value to lease the fibre optic cable that traditional telcos are not able to provide.

       “We are also sorting out the power availability for the tech players as our land is near Tenanga Nasional Bhd’s substations,” explains Goh.

       He hopes that there would be more accommodative and supportive policies in Malaysia to attract investors to build more data centres in the country.

       Goh says that a number of global tech players point to the need for supportive regulations in Johor compared with Singapore which had accommodative policies for the past 15 years.

       “Currently, the local players in Johor are merely providing land and approvals for the global tech giants, but more can be done for the local companies to grow in this industry.

       “We need to form a cluster of partnerships to go into this industry. Government-linked companies or GLCs that have the financial capability could also be motivated to partner with the global tech giants to create a good ecosystem,” he says.

       The largest data centre owner in Malaysia is Telekom Malaysia Bhd via TM One, which has 12 data centres with a total data centre space of more than 180,000 sq ft, followed by players like Bridge Data Centres, NTT Malaysia, Strateq, AIMS (Time dotCom) and Keppel Corp.