After being lauded as Asia’s booming data centres hub, Johor has announced its limit on approval for Tier 1 and 2 data centres.
It was reported that the tiers mentioned could use up to 50 million litres a day, an amount that could supply more than 300,000 households or meet the daily drinking needs of 25 million people.
Datuk Mohd Jafni Md Shukor, chairman of the State Housing and Local Government Committee, said in a statement that the decision was part of new requirements for data centre development in the state.
Johor received reviews from 20 agencies before implementing the new rule, making it Malaysia’s most stringent and coordinated state-level regulation.
Tier 1 and Tier 2 data centres, which are classified as heavy water users, consume approximately 200 times more water than Tier 3 and Tier 4 centres, which typically uses 200,000 litres per day.
Data centres rely heavily on fresh water for cooling, resulting in unsustainable consumption levels.
“We do not make decisions to approve data centres lightly,” Jafni told the New Straits Times.
According to him, Johor will no longer accept applications for Tier 1 and Tier 2 facilities, instead focussing on Tier 3 and Tier 4 projects that provide greater value and lower environmental impact.
The Johor Data Centre Development Coordinating Committee, the country’s first of its kind, handles approvals. It is made up of technical and non-technical federal and state government agencies.
The committee examines six key areas: water and electricity usage, environmental impact, water and power usage effectiveness, availability of fibre-optic infrastructure, water-saving cooling technologies, and alternative water sources.
It also assesses sustainability criteria such as green technology initiatives, carbon reduction and compliance with the Green Building Index, Jafni said.
He also stated that new applications would go through five levels of vetting under PlanMalaysia, which included screening, technical committee evaluation, a full state coordinating committee meeting, a state planning committee session, and final approval by the relevant local council.
“The bar has been lifted. We demand sustainability that benefits Johor’s economy and Johoreans, not systems that drain them.
“The committee will not approve any data centre applications that do not add value to Johor,” he said.
Jafni, who chairs the committee, said the state is guiding investors towards advanced Tier 3 and Tier 4 facilities, which will only be allowed in designated industrial zones and not in commercial areas.
“Digital growth cannot come at the cost of taps running dry for households. The future approval math is simple: high compute, low impact,” he said.
Even where water is required, he stated that data centres must use reclaimed water rather than supplies from Syarikat Air Johor.
“The move ensures that data centres are located away from housing estates and commercial areas, avoiding negative impacts on nearby communities,” he explained.
In collaboration with Johor Special Water and the Indah Water Konsortium, several Johor campuses have already started using reclaimed water for cooling via reverse-osmosis systems modelled after Singapore’s NEWater.
As of November, Johor had approved 51 data centre projects, confirming its status as one of the region’s fastest-growing digital hubs.
17 of these are operational, 11 are under construction, and 23 have been approved, representing a total investment of RM182.96 billion and 7,561 high-skilled jobs for local youth.
