Notes on JB: The Data Center Boom Next to Singapore

Personal analysis. Data from Knight Frank 2024/2025 Malaysia Data Centre reports, Johor Investment Authority, TNB, and official press releases. Capacity figures as of mid-to-late 2025. March 2026.

I live in Kuala Lumpur. Since 2023, every week brings another data center announcement in Malaysian business news. Microsoft. ByteDance. Google. Equinix. Billions of dollars, all heading to Johor Bahru. I kept reading the headlines without understanding what was really happening.

This is what I found when I looked into it.

Why JB

Singapore ran out of space.

In 2019, Singapore stopped approving new data centers. Data centers were using 7 percent of Singapore's electricity, and the government froze approvals for sustainability reasons. The ban lifted in 2022, but large hyperscale projects have stayed hard to approve.

Then ChatGPT launched in November 2022 and demand for AI compute jumped — at exactly the moment Singapore was closed. JB was the clear answer. Not because it was the cheapest option, but because it is one kilometer from Singapore.

That one kilometer matters. Under 5ms latency to Singapore makes a JB data center work just like being in Singapore for multinationals based there. Bangkok and Jakarta cannot match this. The distance is the advantage.

The formal structure came next. Malaysia and Singapore signed an MOU in January 2024. The Johor-Singapore Special Economic Zone (JS-SEZ) agreement was signed by both governments on January 7, 2025. Companies in qualifying activities get corporate tax rates as low as 5 percent for up to 15 years. Land in JB is plentiful and cheap. The Johor state government has run industrial parks for many years and has been actively bringing in investment.

The Scale

Numbers from mid-2025 (these likely understate where things are now):

• Live capacity: 487MW
• Under construction: 324MW
• Committed: 1.4GW
• Pipeline: 3.4GW

These numbers are for Johor state. Across Malaysia, total IT capacity is expected to reach 6.4GW by 2031, up from about 1.5GW today.

Who Is Building: Developers, Tenants, Capital

The industry has four layers.

Developers and operators come from many countries. Malaysian: YTL (275-acre, 500MW campus in Kulai). Singapore-based: Keppel, Princeton Digital Group, STT GDC, Nxera (Singtel's infrastructure arm). Chinese: GDS and Bridge DC (Bain Capital-backed). Western: Yondr, Vantage, AirTrunk, EdgeConneX, Equinix.

Tenantsare mainly US and Chinese hyperscalers: Microsoft (planning a second Azure region in JB), ByteDance, AWS, Google, Oracle, Sea (Shopee's parent).

Construction (EPC) goes to Malaysian contractors. IJM won a RM1.4 billion contract for a JB data center. This is where investment most directly reaches the local economy.

Financingcomes from large international lender groups. Yondr's JB campus brought in IFC, DBS, Deutsche Bank, BlackRock's GIP, HSBC, ING, and Natixis CIB for over $900 million.

The US-China Problem

ByteDance has committed over $2.1 billion in Malaysian investment. Bridge DC is widely understood to have ByteDance as its main tenant. GDS mainly serves Chinese tech companies.

Many people assume Malaysia is outside US chip export controls. It is not.

In February 2025, three people were charged in Singapore for illegally reselling NVIDIA GPUs through Malaysia to China. Questions came up about whether NVIDIA chips in Malaysian data centers were used to train DeepSeek models. The US named Malaysia as a possible GPU transit route and started drafting export license rules. Malaysia's trade minister set up a task force and tightened controls under the Strategic Trade Act 2010.

Malaysia is stuck between attracting Chinese investment and being watched by the US as a bypass route. Anwar's “non-alignment” position reflects this directly. China has criticized Malaysia for working with the US against Chinese firms. The US keeps pushing for tighter controls. JB's boom is right in the middle of this.

Power, Water, and the Regulatory Shift

JB has had blackouts and water shortages before. A drought in 2016 forced water rationing for residents. Large Tier 1 and 2 data centers can use up to 50 million liters of water per day — equal to the daily needs of over 300,000 households, according to Johor state authorities.

TNB (Malaysia's national utility) has committed about RM43 billion in grid upgrades for 2025–2027. Whether this can keep up with the 3.4GW pipeline is unclear.

The government response has tightened in steps: a review committee in June 2024 (rejected about 30% of applications); Tier 1 and 2 approvals paused in November 2025; Anwar declared a stop on non-AI data centers nationwide in February 2026.

This has little effect on the existing pipeline. The $41 billion already committed keeps moving regardless.

Local tension is growing. Residents near JB sent a formal complaint to the Johor Chief Minister's office in February 2026, citing construction noise, dust, and worries about power and water. The mayor of JB said at an investor conference: “People are too hyped about data centers. We do not have enough water and power. Investment should not come at the expense of local people.”

Employment: The Honest Answer

Anwar has made investment approval depend on local benefits — good jobs and knowledge transfer.

Construction is local and direct. IJM and other large contractors are winning big contracts.

Operations technicians are hired locally at MYR3,500–4,000/month — below the Malaysian information and communications sector median of MYR5,300/month.

Engineers and management are the real problem. Data center engineer pay in JB is above the Malaysian ICT median, but Singapore's ICT median is SGD7,600/month (~MYR26,000). Crossing the causeway more than doubles the salary. As long as that gap stays, engineers will keep moving to Singapore.

1.86 million Malaysians live abroad. 1.13 million of them are in Singapore. So construction is local, but operational expertise comes from abroad or has gone across the causeway.

The MYR Effect

Data center investment brings FDI inflows, which increase demand for MYR. In 2025, MYR was Asia's best-performing currency — up about 9% against the dollar to 4.07, the strongest since 2018. Analysts expect RM3.95–4.10 by end-2026, with DC-related FDI as ongoing support.

Who benefits: The Malaysian economy broadly, people holding MYR assets, consumers (cheaper imports).

Who pays: Anyone earning in a foreign currency while spending in MYR. In KL, this is a real group — education migrants, people on foreign-currency contracts paying local rent and school fees. A stronger MYR hurts them directly.

The Asymmetries That Don't Get Resolved

The buildings were developed by companies from many countries. The compute is used by US and Chinese hyperscalers. The money came from Western institutional investors. The construction was done by local contractors. Operational expertise comes from expats or Malaysian engineers who moved to Singapore. JB's residents carry the power and water costs. A stronger MYR hurts people living on foreign income in Malaysia. The US-China geopolitical risk falls on Malaysia.

The shift from approving everything to picking quality projects has started. But the $41 billion already committed keeps flowing, and these imbalances are not being fixed — they are being managed while the pipeline runs.

Watching from KL, that's what it looks like from here.

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