Malaysia’s data centre hub tightens approvals on water worries

KUALA LUMPUR – Johor, the Malaysian state emerging as a regional artificial intelligence (AI) data centre hub, is raising the bar for new projects as the authorities seek to curb the heavy water use that is straining local supplies.

The state will stop approving applications for so-called Tier 1 and Tier 2 data centres that have more basic infrastructure and

can guzzle as much as 50 million litres of water a day,

The Star reported on Nov 26. That is equivalent to about 20 Olympic-size swimming pools.

Such water use is up to 200 times larger than that of higher-tier data centres, the southern Malaysian state’s housing and local government committee chairman, Mr Mohd Jafni Md Shukor, was cited as saying.

The move marks one of Johor’s most forceful interventions in South-east Asia’s fastest-growing data centre hub that has expanded on the back of spillover demand from Singapore. While the computing facilities have drawn billions of dollars in investment, driven by demand for AI, their outsized demand for electricity and water is straining local infrastructure.

The shift may redirect investment towards more efficient, higher-tier facilities. Johor wants all data centres to meet stricter sustainability and energy-efficiency standards in line with international benchmarks, Mr Jafni told the state assembly.

A member of the legislative assembly had expressed concern over data centres’ massive water consumption, with complaints about supply disruptions increasing every year, according to the report.

Johor has approved 51 data centre projects as at November, with a total investment value of RM182.96 billion (S$57.7 billion), Mr Jafni was cited as saying. Of these, 17 are already operating, 11 are under construction and 23 were approved in 2025, the Star newspaper reported. BLOOMBERG