Malaysia plans Data Centre Bill to align industry growth with power and water capacity
Malaysia plans to draft a Digital Infrastructure (Data Centre) Bill to regulate the data centre industry in line with energy and water supply capacity, with Cabinet submission targeted for 2027. The proposal comes as 27 projects worth RM225.97 billion have been approved under the Data Centre Task Fo
PUTRAJAYA — Malaysia plans to draft legislation to regulate the data centre industry's growth in line with the country's energy and water supply capacity, with the proposed bill intended for submission to the Cabinet in 2027.
Economy Minister Akmal Nasrullah Mohd Nasir said the proposed Digital Infrastructure (Data Centre) Bill aims to address utility constraints and environmental concerns while ensuring investments benefit the domestic economy, Bernama reported. The proposal follows a strategic regulatory plan agreed upon by the National Economic Action Council (NEAC) at its meeting on Monday (Oct 19), chaired by Prime Minister Datuk Seri Anwar Ibrahim.
The proposal comes amid a substantial development pipeline. In a written parliamentary reply reported on Oct 14, the Digital Ministry said 27 projects with an estimated investment value of RM225.97 billion had been approved under the Data Centre Task Force (DCTF) as of July 2026. Of these, 16 were in Johor, 10 in Selangor and one in Negeri Sembilan. The ministry said one had begun operations, while the remaining 26 were under construction. The 27 projects formed part of the 84 data centre projects approved nationwide as of July.
Existing sustainability and planning guidelines already address resource use and project locations. According to the Malaysian Investment Development Authority's (MIDA) Guideline for Sustainable Development of Data Centre, new facilities in Peninsular Malaysia should avoid water-stressed areas, and operators may use reclaimed or reused water. The document sets out energy- and water-efficiency criteria, with its conditions applying to tax-incentive applications under the Digital Ecosystem Acceleration (DESAC) scheme until Dec 31, 2027.
Meanwhile, PLANMalaysia Johor's April 2024 data centre development planning guidelines state that electricity-supply requirements must be reviewed and approved by Tenaga Nasional Bhd before development proceeds, and water-supply management requirements must also be reviewed and approved by the relevant authorities. The Johor guidelines specify a minimum 50-metre buffer between the building line of a data centre, including related support structures, and residential lot boundaries. These existing planning guidelines are separate from the proposed federal legislation.
On domestic economic participation, the Digital Ministry said projects approved under the DCTF were subject to a minimum 30% local-content requirement. MIDA monitors implementation and compliance through project implementation reports submitted every six months. The projects were expected to create 4,053 jobs, including 3,523 highly skilled positions in fields such as electrical and mechanical engineering, networking, cybersecurity, and data centre operations and maintenance, according to the ministry.
Bernama's Oct 19 report did not detail the proposed bill's regulatory requirements or how existing projects would be treated.
