Data Centres Surge in Johor, Malaysia: The Toughest Challenge Looms – Creating Jobs
Malaysia has positioned itself as a center for technology and artificial intelligence (AI) in recent years. Data centers—physical locations housing computer equipment such as servers and storage systems—are crucial to the digital economy, supporting services ranging from cloud computing to AI-powered applications.
In particular, Johor has been identified as the quickest-expanding market for data centers within Southeast Asia, with these facilities being touted as the next major economic driver for the state. Leading participants in this sector encompass technology corporations like Microsoft and computing behemoth Nvidia .
Currently, there are 47 planned and functioning data centers in Johor. Out of these, seven received approval from 2021 through mid-June 2024; four have been finished and are now operating, whereas the remaining three are at different phases of planning or development.
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The Malaysian government along with industry stakeholders have promoted foreign investments in digital infrastructure as key catalysts for job creation and economic expansion. Nonetheless, worries persist regarding how these investments might impact the local talent pool. The main concerns fall into three categories: the quantity and nature of positions generated, the accessibility of skilled individuals, and employee retention rates.
Aligning with Malaysia’s goals to transition into a digital economy and anticipating new employment prospects within the data center industry, the Johor Talent Development Council initiated the inaugural data center technician program on March 1st. This effort seeks to address 200 open positions, offering starting wages between 3,500 Malaysian Ringgit and 4,000 Ringgit ($790-$900 per month) for candidates holding at least a diploma. Many young individuals travel considerable distances to Johor specifically to participate in this scheme, convinced that it opens up lucrative career paths.
Nevertheless, the pledge of employment opportunities within the data center industry, particularly positions demanding technical expertise, could prove deceptive.
A significant part of the issue stems from the essence of data centers, often likened to conventional infrastructure projects such as roads or bridges, where their main worth primarily resides in functionality rather than sustained employment generation over time. Generally, a standard data center necessitates only about 30 to 50 enduring roles, whereas more extensive setups might yield approximately 200 jobs at most.
Given the present total of 47 established and functioning data centers, even with a bold projection of 200 workers per center, this would result in fewer than 10,000 positions within these facilities. However, a more plausible assumption, considering only around 50 staff members for each center, suggests approximately 2,500 employment opportunities.
Furthermore, numerous major technology firms have historically favored recruiting skilled professionals for advanced positions from external sources.
This scenario has also occurred with investments made by these exact companies in other locations. For instance, when Microsoft invested in a data center in Boydton, Virginia, they allegedly employed external experts, which resulted in approximately 25 positions mainly filled by locals working as either administrative support or custodial personnel. Concerns regarding similar limited employment opportunities due to the nature of the industry were similarly voiced concerning the data centers being developed in Johor.
But even if the data-centre division fails to generate a huge demand for technical skills, it needs to be supported by a skilled workforce in ancillary industries, particularly the construction industry.
Constructing and developing data centers demands specialized expertise, and the construction sector as a whole is experiencing a digital revolution. Consequently, this presents an opportunity for the data-center field to stimulate demand for technical abilities that can be applied throughout the broader construction industry.
The Malaysia Technology Transformation & Creativity College (MTTC), a private Technical and Vocational Education and Training (TVET) center, aims to provide building and development graduates with advanced technological expertise. In response to an invite from the Sunway group, the institute extended its reach to Johor Bahru in 2024.
The founder and head of MTTC College, Charlenne Ong, mentioned during an interview that all two-year diploma graduates from their institution secured jobs immediately after graduation. She remarked, “There’s such a great demand for these skills; companies are eager to hire our graduates.” A significant number of alumni go on to become BIM consultants, working with various entities like data centers located in the Iskandar Puteri region, facility management teams, and professionals specializing in 3D modeling design.
The head of a BIM consultancy emphasized the significant skill requirements for constructing data centers. They mentioned that the tight one-year schedule for these projects along with strict client expectations necessitate constant updates on the latest software for the workforce.
This shift toward more valuable positions should nevertheless be viewed with careful optimism. While demand for BIM is strong, clients remain hesitant about paying extra costs. Both software and skilled professionals come at a premium price,” he noted. Additionally, industry insiders highlighted that a new regulation mandating the use of BIM for Malaysian infrastructure projects valued at 10 million ringgits ($2.26 million) or more applies only to governmental initiatives thus far. Nonetheless, contractors are proactively embracing BIM technology, thereby driving the construction sector toward digital progress.
Despite the growing availability of local talent in Johor, retaining them continues to be difficult.
Marketing efforts by TVET institutions persist in emphasizing Singapore’s higher salaries to entice potential students. During an equity crowdfunding presentation, data revealed job openings in the country offering starting wages as high as SGD $3,600 (USD $2,691). This figure represents approximately triple the initial compensation in Malaysia and double that in Johor.
Ong mentioned that TVET institutions such as MTTC have entered into extended agreements with companies based in Singapore to supply these firms with a continuous flow of skilled individuals.
The Johor-Singapore Special Economic Zone The aim to generate 20,000 high-skilled positions over the coming half-decade could significantly enhance talent retention. Additionally, the Johor Talent Development Council disclosed a higher minimum wage of 4,000 ringgits for certificate holders and an even more substantial floor at 5,000 ringgits for individuals possessing skills certifications akin to a university degree.
Should these plans come to fruition, they would play a crucial role in tackling the persistent problem of brain drain. Currently, there seems to be an increasing availability of knowledge workers for data centers, as well as those who can assist with their construction and growth.
Sara Loo serves as a Research Officer for the Malaysia Studies Programme at ISEAS - Yusof Ishak Institute. The article initially appeared on the institute’s commentary platform. fulcrum.sg
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