Tier Data Centre Approvals Over Rising Water Stress
Malaysia’s Data Centre Hub Tightens Approvals on Water Worries
By IFCCI News Desk
Johor — The southern Malaysian state of Johor, a key regional hub for data centres, has officially tightened its approval regime for new data-centre projects, citing concerns over excessive water consumption that could strain local supplies.
🚫 Suspension of Low-Tier Data Centre Approvals
State authorities announced an immediate suspension on the approval of so-called Tier 1 and Tier 2 data centres, which are known to consume up to 50 million litres of water per day — equivalent to around 20 Olympic-size swimming pools daily.
The move reflects growing concern over water sustainability as the data-centre boom has surged, particularly driven by spill-over demand from neighbouring Singapore.
Water Stress and Resource Management Under Spotlight
Data-centre operations — especially those using water-based cooling systems — require substantial, continuous water supply to manage heat from servers operating 24/7. This demand has raised alarms among regulators, as existing water infrastructure is being stretched.
The decision comes amid warnings from the national water regulator that existing water allocation systems may not be able to sustain the rising demand, prompting calls for alternative water sources (such as recycled or non-potable water) and stricter evaluation of future applications.
Regulatory Shift Reflects Aftermath of Rapid Expansion
Johor has emerged in recent years as a hotspot for data-centre investments, drawing major global tech firms seeking lower-cost land and operational efficiency.
However, the rapid growth has come with growing scrutiny over environmental and infrastructural viability. According to official figures, many applications have been rejected in recent months because developers failed to meet requirements around sustainability, resource usage, or infrastructure readiness.
Implications for Malaysia’s Digital Infrastructure Strategy
The tighter approval stance may slow down some data-centre developments, particularly lower-end facilities with high water demand. However, for sustainable, well-planned high-tier centres — especially those adopting water-efficient cooling technologies or alternative water sources — the pathway remains open.
For investors and international technology firms eyeing expansion in Malaysia, the regulatory shift underscores the country’s emphasis on balancing digital infrastructure growth with environmental and resource sustainability.
According to IFCCI’s Digital Infrastructure Research Division, the change may also accelerate demand for green data-centre solutions — such as air-cooling systems, water recycling, and sustainable resource usage, which may become new requirements for future approvals.
