Malaysia's Data Center Costs 15% Lower Than Saudi Arabia, Attracting Tech Giants

en.Wedoany.com Reported - Hong Leong Investment Bank Research, in its "2026 Second Half Strategy Outlook Report" released on July 1, 2026, pointed out that the cost of building a data center in Malaysia is only USD 9.6 million (approximately MYR 39.25 million) per megawatt (MW), about 15% lower than in Saudi Arabia and comparable to the UAE. This cost advantage, coupled with a stable investment environment, is driving international tech giants to reassess their data center investment strategies and shift new projects to Malaysia.

The report believes that in this wave of investment migration driven by geopolitical risks, Malaysia stands out with two core advantages: its long-standing geopolitical neutrality and the rapid improvement of its digital infrastructure in recent years. The report predicts that Malaysia will continue to attract international tech capital inflows and take over data center investments shifting from high-risk regions in the global supply chain.

According to the report, Malaysia's approved investment volume reached MYR 92.8 billion in the first quarter of 2026, with 65.5% flowing into the services sector, where data center-related information and communications fields accounted for a significant share. The report noted that although a temporary ceasefire memorandum has been signed in the Middle East, the confidence of international tech companies in the local investment environment has been notably shaken. Due to concerns that regional tensions could threaten the security of digital infrastructure, US tech giants led by Microsoft, Google, and Nvidia, along with hyperscale cloud service providers, are reassessing their data center investment plans in the Middle East and leaning toward shifting new projects to Malaysia.

The report mentioned that during the most intense period of the Iran war situation in March 2026, drones struck three data centers owned by Amazon (AWS) in the UAE and Bahrain. Subsequently, the Islamic Revolutionary Guard Corps publicly listed the offices and data centers of companies including Google, Microsoft, Palantir, IBM, Nvidia, and Oracle as potential targets, sparking heightened concern in the tech industry over regional cybersecurity. The report believes that the continued expansion of the data center sector will be a key growth driver supporting the Malaysian stock market. Hong Leong Research maintains its end-2026 target for the FTSE Bursa Malaysia KLCI at 1,770 points and is bullish on multiple sectors benefiting from the data center construction boom, including construction, power infrastructure, real estate, plantations, utilities, and renewable energy.