Malaysia freezes 24 data centre applications pending infrastructure review

Malaysia's authorities have suspended processing of 24 data centre applications as part of efforts to manage the country's energy and water resources more effectively. The freeze comes as the government seeks to balance rapid growth in the digital infrastructure sector with the capacity of existing utility networks to support expanded operations.

Investment, Trade and Industry Minister Johari Ghani announced that the moratorium would allow officials to conduct comprehensive checks on water and power availability before clearing new projects for development. The measure reflects growing concerns that an unchecked expansion of data centres could place unsustainable strain on Malaysia's critical infrastructure, particularly in regions where demand is already approaching capacity limits.

The government has signalled its commitment to supporting the 117 data centre projects that have already received approval, positioning these developments as priorities for advancement. However, officials want to ensure that future approvals do not compromise the viability of existing operations or create bottlenecks in utility distribution.

The announcement underscores a more cautious approach to digital infrastructure development, with authorities now implementing more rigorous pre-approval assessments. Industry observers expect the review process to take several months, during which detailed audits of regional water and electricity supplies will be completed to inform decisions on the suspended applications.