This article first appeared in Digital Edge, The Edge Malaysia Weekly on July 14, 2025 - July 20, 2025

Malaysia is entering a defining chapter in its digital transformation. With billion-ringgit data centre investments from global technology players such as Google, Microsoft and Nvidia, and smart city developments underway in areas like Cyberjaya, i-City and Iskandar Malaysia, the foundations for a more connected and intelligent economy are steadily being laid.

As progress accelerates, the focus must now shift beyond investment announcements and pilot programmes. The question is no longer whether the country is ambitious, but whether its infrastructure can scale rapidly, sustainably and cohesively enough to translate vision into long-term value.

Malaysia’s smart city ambitions, from traffic systems powered by artificial intelligence (AI) to decentralised health­care, depend on high-density compute infrastructure and the integration of next-generation digital solutions across both public and private sectors. National frameworks like the Malaysia Smart City Framework (MSCF) 2019-2025 reflect policy intent, while projects such as Iskandar Malaysia’s smart monitoring pilots show early traction.

Still, moving from concept to large-scale implementation presents clear challenges. Urban land constraints in Greater Kuala Lumpur and Johor Bahru, combined with a shortage of skilled professionals in AI and data engineering, are limiting deployment speed. The forecast of 81 new data centres by 2040 underscores investor confidence, but also highlights the importance of utility readiness, urban zoning and regulatory agility.

Cyberjaya continues to draw global tech players, yet sustaining innovation will depend on infrastructure strategies that prioritise climate resilience, data governance and long-term policy coherence.

Smart cities demand multidisciplinary execution. Developers, telcos, local councils, utilities and regulators must work in sync, but alignment across these players remains uneven.

Malaysia’s 5G rollout illustrates this challenge. While coverage reached 81.5% by April 2024, plans for a second commercial 5G network remain delayed due to unresolved governance issues at Digital Nasional Bhd (DNB) and a lack of coordination between public and private stakeholders.

At the local level, community resistance, such as that seen in Cheras, points to the importance of proactive engagement and transparent planning.

Fixed broadband infrastructure has encountered similar friction. According to the Auditor-General’s mid-2024 report, nearly 60% of rollout projects were delayed due to prolonged approval processes, often taking four to six months for construction and right-of-way permits. Inconsistent permitting standards across local councils further complicate progress.

At a systems level, the national Pangkalan Data Utama (PADU) platform designed to centralise socioeconomic data has sparked ongoing discussions about data safeguards, opt-in requirements and governance transparency.

These developments highlight the need to build both technical and public trust in the systems that underpin smart city functionality.

In tropical climates like Malaysia’s, thermal infrastructure must be treated as a core strategic priority. Traditional air-based cooling systems, and even some direct-to-chip models, are increasingly ill-suited to the energy and water demands of AI-ready data centres.

A single 100MW facility can consume over four million litres of water per day. Hybrid liquid cooling technologies offer a compelling alternative, enabling up to 40% reductions in energy use and up to 90% reductions in water consumption.

These gains go beyond environmental targets — they reduce pressure on public utilities, support high-density compute and improve site flexibility.

Beyond sustainability, thermal design is increasingly tied to cost competitiveness, site selection flexibility and regulatory approval. In this sense, cooling infrastructure is no longer a technical detail; it is a strategic enabler.

More broadly, efficient thermal design enhances alignment with national sustainability efforts, including the Guideline for Sustainable Development of Data Centres, the Corporate Renewable Energy Supply Scheme (CRESS) and the Green Electricity Tariff (GET). Cooling infrastructure is now central to achieving both environmental and operational objectives as Malaysia scales its digital ambitions.

Within Asean, digital infrastructure development is accelerating. Singapore continues to lead with regulatory maturity and advanced planning. Indonesia is scaling through public-private partnerships. Vietnam is embedding digital infrastructure into its industrial expansion.

Malaysia brings to the table land availability, policy clarity and growing investor interest. But to strengthen its position, infrastructure delivery must match the pace of digital demand.

Key priorities include harmonising planning and permitting processes across federal, state and local levels; embedding sustainability and efficiency standards into development guidelines; formalising public-private coordination mechanisms to improve execution; and designing modular, interoperable systems ready for emerging technologies.

Malaysia’s digital momentum is real and its smart city ambitions are credible. By addressing coordination challenges, integrating sustainability into core infrastructure design and treating advanced technologies like cooling as essential enablers, Malaysia can realise its vision to become a resilient, efficient and regionally competitive digital economy.

Jason Low is APAC director at Iceotope, a liquid cooling solutions provider

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