JS-SEZ, RISING FDI BOOST MALAYSIA’S DATA CENTRE, ADVANCED MANUFACTURING SECTORS

By Muhammad Fawwaz Thaqif Nor Afandi

KUALA LUMPUR, Feb 9 (Bernama) -- Malaysia is seeing strong momentum in data centre and advanced manufacturing developments, driven by rising foreign direct investment (FDI) and the Johor-Singapore Special Economic Zone (JS-SEZ), according to Australia-based project advisory and management consultancy firm, TBH Consultancy.

Its country manager, Michael Tan said that the JS-SEZ acts as a major growth catalyst by accelerating cross-border investment between both countries.

"The JS-SEZ is a coordinated economic ecosystem designed to attract global firms, accelerate FDI and integrate markets between Malaysia and Singapore. The benefits will be twofold: direct infrastructure delivery and the indirect developments that this growth will generate," he told Bernama in an exclusive interview.

Tan said the JS-SEZ will spur development projects in Johor Bahru, Iskandar Puteri and surrounding areas, alongside new industrial parks, logistics hubs and data centre developments.

He added that the FDIs are also likely to be concentrated in high-tech data centres, driving demand for logistics, warehousing and wider supply-chain hubs.

Commenting on the power and water issues that are common in data centre projects, Tan said that the availability of these resources has become the main bottleneck for Malaysia's data centre industry, and construction sector players must adapt quickly to address the challenge.

"The resource demands of data centres require a holistic, lifecycle-based planning approach that integrates resource management and project controls from the earliest stages.

"In this context, Johor’s decision to ban approvals for water-intensive Tier 1 and Tier 2 facilities -- some of which can consume up to 50 million litres of water per day -- proves that resource management is no longer merely a technical consideration; it is now a fundamental planning and regulatory risk," he said.

Tan said future projects must prioritise sustainable site selection and alternative cooling technologies to protect the community water supply while supporting Malaysia’s energy transition goals.

He added that sustainability must also be embedded into how projects are delivered, with indicators such as water-use efficiency and carbon footprint becoming core performance metrics rather than compliance items.

"Against this backdrop, project execution has become increasingly planning-centric. Early planning and coordination now involve the participation of specialist contractors, vendors and authorities, helping to reduce risks during the execution phase.

"As a result, project coordination has become data-driven with real-time reporting and dashboard-based monitoring that provides near-instant visibility across design, procurement and construction," he said.

Tan added that the country's strong growth in infrastructure, energy and digital development has created an increasing demand for specialist project management and advisory services, particularly for complex and high-risk programmes.

He also believes that Malaysia will be a focal point for major regional technology and renewable energy developments over the short to medium term.

Looking ahead, Tan said the biggest challenge for the construction sector is no longer the availability of projects but the ability to execute them efficiently amid growing complexity and constraints.

However, despite these headwinds, he said significant opportunities remain for companies that can adapt.

“Contractors with strong mission-critical delivery teams and fast-track construction capability will be well positioned to benefit from the growth in data centres and advanced manufacturing,” he said.

He added that stronger upfront planning, closer collaboration across the value chain and wider use of digital and data-driven tools can substantially improve productivity and resilience across the industry.

-- BERNAMA