5 rules to ensure data centres benefit everyday Malaysians

 America ran the great data centre experiment first, and the results are in: Where governments designed well, residents got tax cuts and new schools; where they did not, families got power bill shocks. Malaysia still gets to choose which of those households it puts its rakyat in.

Johor now commands the largest data centre pipeline in the entire Asia Pacific, a staggering 8,542 megawatts of incoming capacity, according to property consultancy Knight Frank.

Nationally, Malaysia approved 143 data centre projects worth RM144.4 billion between 2021 and the middle of 2025.

Yet the mood is curdling, with Malaysians asking the same questions Americans asked five years ago: will these server farms drink our water, hog our electricity and then hand us the bill?

Here’s the good news: America has run this experiment at full scale, and its mixed results read like an instruction manual written for us.

Start with the cautionary tale. In the Pennsylvania-New Jersey-Maryland (PJM) energy interconnection line in the United States – the wholesale power market serving 13 American states including Virginia, the world’s data centre capital – independent monitor Joseph Bowring blamed data centres for 63% of a recent price surge of some RM38 billion, calling their load growth “the primary reason” for those punishing prices.

Virginia’s retail electricity prices leapt 26.3% in the year to February 2026, nearly triple the American national average of 9%.

The jobs story disappoints too. Meta’s RM41 billion campus in Indiana employs about 300 permanent staff, but more than 4,000 construction workers packed up and left after its construction.

Sound familiar? The Organisation for Economic Co-operation and Development said in July that Malaysia’s own boom had brought growth but few jobs, and that our 25 flagship digital-status projects expect to create just 1,429 jobs.

Now the other side of the ledger. Loudoun County in Virginia, the densest data centre cluster on earth, draws 38% of its county revenue from data centres, more than RM400 million in fresh money a year, and has cut its property tax rate ten years running.

In Quincy, a small farming town in Washington state, two decades of data centre tax revenue built the new library, the police station, the medical centre and the high school. Same technology, opposite endings.

So what separates the winners from the losers? Design, not luck. Here are the five rules that decide whether this boom will ever reach the ordinary Malaysian’s pocket; and the good news is that we have already made a start on most of them.

1. Make them pay their own way

Tenaga Nasional Berhad’s July 2025 tariff restructure loads the heavier capacity and network charges onto data centres while shielding households using under 1,000 kilowatt hours a month.

Putrajaya has also ordered operators to use at least 85% of the electricity they book, after some were found using barely half. Deputy investment, trade and industry minister Liew Chin Tong said the rule guards against “stranded assets and cost transfers to other consumers”.

2. Guard the water like the treasure it is

Johor already rejects nearly 30% of applications for failing sustainability requirements, charges data centres a dedicated water tariff of RM5.33 per cubic metre while most family rates stay untouched, and makes new projects run on recycled water that would otherwise be dumped. As state executive councillor Lee Ting Han put it: “It’s not the sufficiency, it’s the management.”

The next step is making closed-loop and air-cooled designs, which sip almost nothing, the national default. Microsoft has already designed data centres that use no water for cooling at all.

3. Tax them in full, and keep the receipts

Virginia usefully ran both experiments at once: Loudoun County taxed the server racks fully and grew rich, while the state government exempted the same equipment from sales tax and forfeited RM2.8 billion in a single year.

Malaysia’s incentives are rightly tied to efficiency standards, but the government should publish what they cost us in forgone revenue every year. The richest customers ever to knock on our door will pay full price if we hold our nerve.

4. Keep them off our farmland

Vivek Ramaswamy, the Republican running for governor of Ohio, pledged this month that data centres must pay full property taxes with no abatements, fund tax relief for homeowners, and be steered onto industrial land rather than farmland.

His free electricity plank may prove more slogan than system, resting on gas plants and grid permissions that do not yet exist. But the siting rule travels perfectly: server farms belong on industrial estates that already have the wires, never on paddy land.

5. Sell the truth about jobs

The grey box is a tax machine, not a job machine. The honest pitch is that schools and hospitals will be funded by tax from server racks, and that the real employment will come in the supply chain of builders, power and cooling around them.

That work pays handsomely, with American projects paying skilled trades roughly 30% above ordinary construction wages. Our polytechnics should be churning out the electricians, welders and cooling technicians this decade of building will demand.

America has shown us both endings: Loudoun’s tax cuts and Quincy’s high school on one path, Virginia’s power bills on the other.

The servers are coming either way. Whether they arrive as guests or gatecrashers is entirely up to us. - FMT

The writer can be contacted at kathirgugan@protonmail.com.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.