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- The research firm said this structural shift from quantity to quality in data centre growth will make projects bigger, more capital-intensive and more valuable, benefitting hyperscale-grade experienced developers and contractors.
KUALA LUMPUR (Dec 26): Selangor’s 30% local content rule, after Johor’s tighter rules, will result in fewer but bigger and more valuable data centre projects, said BIMB Securities Research.
The research firm said this structural shift from quantity to quality in data centre growth will make projects bigger, more capital-intensive and more valuable, benefitting hyperscale-grade experienced developers and contractors.
In November 2025, Selangor announced a local economy development policy which focuses on boosting local economic benefits from data centres. It requires every new data centre to use at least 30% local content, helping Malaysian companies, tech providers and workers benefit from the industry.
BIMB Securities said the local-content mandate is aimed at addressing longstanding concerns about data centre investments. While these are highly capital-intensive investments, they generate limited multiplier effects for the domestic economy.
Under the policy, local participation is required across segments such as integrated circuit design, cooling systems, engineering works and related services, a move intended to deepen domestic supply chains, enhance technology transfer and broaden workforce participation.
The research house noted that Selangor’s move places it ahead of federal agencies such as the Malaysian Investment Development Authority, which have yet to implement similar requirements. It said this reflects the state’s confidence that local vendor capabilities are now sufficiently developed and that, without intervention, operators would continue to rely on entrenched foreign suppliers.
Selangor’s rules follow Johor’s tighter approvals, which block new Tier I and II data centres due to high water use. With rivers already at capacity, Johor now only approves more efficient Tier III and IV data centres.
“All things considered, we believe this environment is supportive for Tier-1 players such as Gamuda Bhd (KL:GAMUDA) and Sunway Construction (KL:SUNCON), which are better positioned to meet higher technical, sustainability and local-content thresholds, reinforcing a more sustainable and investable data centre ecosystem over the medium term,” the research house added.
Johor is expected to feature about 500MW in data centre capacity by 2025, growing to 3GW by 2030. Selangor, though smaller, has two major 1GW projects expected in the next three years.
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