Malaysia to Approve Data Centre Projects Only When Energy and Water Supplies Are Sufficient, Says MITI

KUALA LUMPUR: The Malaysian government will only approve new data centre projects after ensuring that adequate electricity and water supplies are available, with the needs of residents and local industries taking priority, the Ministry of Investment, Trade and Industry (MITI) said.

Deputy Investment, Trade and Industry Minister Sim Tze Tzin said the government has established the Data Centre Task Force (DCTF) to conduct comprehensive assessments of every proposed data centre project before approval is granted.

According to Sim, the task force evaluates each application based on the availability of power and water resources to ensure that the rapid expansion of Malaysia’s digital infrastructure does not compromise the country’s long-term sustainability.

Speaking during the Dewan Rakyat session on Thursday, Sim stressed that the government would not allow data centre developments to place additional pressure on public utilities.

“The water supply must be prioritised for residents and Malaysians. Only when there is surplus capacity will approvals be given for data centre companies,” he said while responding to a supplementary question from Datuk Wira Dr Ku Abd Rahman Ku Ismail (PN–Kubang Pasu).

He added that the government is committed to ensuring sufficient electricity generation capacity so that the increasing demand from data centres does not negatively affect households or existing industries.

Despite the growing number of investment proposals, Sim said Malaysia currently has sufficient surplus capacity to accommodate the applications being evaluated by the Data Centre Task Force.

During the same parliamentary session, Sim also highlighted the positive progress of the National Semiconductor Strategy (NSS), saying the initiative has begun delivering encouraging results.

From January 2024 to March 2026, Malaysia approved RM91.9 billion in semiconductor investments, demonstrating continued confidence in the country’s high-tech manufacturing sector.

Of the total approved investments, RM82.9 billion came from foreign direct investment (FDI), while RM8.9 billion was contributed through domestic direct investment (DDI).

Sim said talent development remains another key pillar of the government’s strategy to strengthen Malaysia’s semiconductor and artificial intelligence industries.

The government aims to train 60,000 skilled workers, and as of December 2025, a total of 18,062 Malaysian talents had already completed training programmes.

“The progress has been encouraging and the initiative remains on track to achieve its long-term objectives,” he said.

Sim was responding to a question from Chong Zhemin (PH–Kampar) regarding the government’s strategy to attract new investments in the semiconductor and artificial intelligence (AI) sectors while ensuring Malaysia remains competitive as a regional technology and innovation hub.

The government reaffirmed that future digital infrastructure development will continue to balance economic growth with sustainable resource management, ensuring that the interests of Malaysians remain the top priority.