Cover image via Prime Ministers Department
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The Malaysian government is tightening approvals for data centres to protect the nation's electricity and water supplies
During Prime Minister's Question Time, Datuk Seri Anwar Ibrahim revealed that Malaysia has, for the past two years, stopped approving "basic" data centres that don't offer high-tech value.
Responding to concerns over the massive environmental footprint of these facilities, Anwar clarified that the government is now much more selective.
He noted that many companies had previously flocked to Malaysia simply to take advantage of subsidised or lower-cost utilities.
"All new applications that are unrelated — data centres that only want to use cheaper water facilities and energy prices — have already been halted," he said.
However, if a project brings actual innovation to the table, the door remains open.
"If there are benefits in terms of adding high technology and AI, they are easily approved."
The issue was raised by Besut member of parliament (MP) Che Mohamad Zulkifly Jusoh
In his question, Jusoh pointed out that data centres in the US already consume roughly 4.4% of the country's electricity.
He raised concerns that a massive influx of AI investments could lead to overloading the national grid, electricity tariff hikes for domestic users and SMEs, and excessive water usage (millions of litres) for cooling servers.
Anwar sought to ease these fears, stating that the Ministry of Energy Transition and Water Transformation's current projections show Malaysia is safe for now.
"So far, according to projections by the Ministry of Energy, there is still capacity for the new applications for the next couple of years," he added.
Looking beyond 2027, the government is planning a massive energy expansion to ensure domestic users and local SMEs aren't left in the dark
The PM highlighted two major energy projects currently in the works:
- The ASEAN Energy Grid: A cross-border project linking Vietnam through Peninsular Malaysia to Singapore.
- Sarawak Energy Link: Plans to funnel power from Sarawak directly to the Peninsula and Singapore.
"This will, God willing, meet these needs in the long term," he said.
While there were calls to include "carbon footprint ceilings" in the upcoming AI Governance Bill, Anwar suggested environmental regulations might be better handled by existing energy laws and utility providers
"I do not think it falls under the provisions of this specific legislation [the AI Bill], but rather under existing legislation or improving provisions under… the management of energy and TNB."
He concluded by assuring the Dewan Rakyat that the government is taking the surge in energy and water usage "quite seriously" to prevent a national overload.
Key highlights from the PM's reply:
- Moratorium on Non-AI Data Centers: For nearly two years, the government has restricted the entry of new data centres that are not related to AI.
- Prioritising High-Tech: Applications that provide significant benefits in high technology and AI development are still being approved.
- Ending "Resource Grazing": The PM stated that applications for data centres intended only to exploit Malaysia's cheaper water and energy rates have been stopped.
- Grid Stability: Projections from the Ministry of Energy indicate that the national grid has the capacity to support new AI-related applications for the next 1–2 years.
- Long-Term Energy Solutions: To meet future demands, the government is looking toward the ASEAN Energy Grid and sourcing energy from Sarawak.
