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KUALA LUMPUR (April 7): New data centre projects may still stand a chance in Malaysia, even as energy prices rise with the protracted Middle East conflict, helping to keep construction firms busy, analysts said.
Operators may incur higher electricity costs in Malaysia though preliminary analysis indicate that any rise would still be manageable, RHB Research said in a note on the construction sector. The costs to develop a data centre in Malaysia are relatively affordable versus other markets, the house said.
“Even with risks of higher material costs, we view that such risks may apply to other countries too as material prices are correlated with energy prices,” RHB Research said.
Utility costs are set to climb in the coming months amid surging prices of natural gas and coal — the main inputs for power generation in Malaysia — as the Iran war dragged into its sixth week.
Further, Malaysia has implemented a slew of changes to the country’s electricity tariffs that shift the burden to heavier consumers. Energy-guzzling data centres, in particular, may see higher electricity bills from higher peak and off-peak charges from their round-the-clock operations.
For Kenanga Investment Bank, data centres remain the construction sector’s anchor for 2026 underpinned by persistent demand and sustained capital expenditure commitments from global technology firms.
“We expect the data centre boom to persist for at least the next two years” which could result in construction projects worth about RM21 billion each year, the research house said.
Tenaga Nasional Bhd (KL:TENAGA), the national electric utility company, has signed seven data centre projects in 2025, bringing the cumulative total to 56 projects, of which 35 are already completed.
Both RHB Research and Kenanga are maintaining their ‘overweight’ call on the construction sector.
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