Data Centres Surge in Johor, Malaysia: The Toughest Challenge Looms—Creating Jobs
Malaysia has been positioning itself as a center for technology and artificial intelligence (AI) in recent times. These data centers—physical spaces housing computer infrastructures such as servers and storage systems—are essential to the digital economy, supporting services ranging from cloud computing to AI-powered applications.
In particular, Johor has been identified as the swiftest-expanding market for data centers across Southeast Asia, with these facilities being hailed as the state’s upcoming economic forefront. Major participants in this sector encompass leading technology corporations. Microsoft and computing behemoth Nvidia .
Currently, there are 47 planned and active data centers in Johor. Out of these, seven received approval from 2021 through mid-June 2024; four of them have been finished and are now operational, whereas the remaining three are at different phases of planning or construction.
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The Malaysian government along with industry stakeholders have promoted foreign investments in digital infrastructure as key drivers for job creation and economic expansion. Nevertheless, worries persist regarding how these investments might impact the local talent pool. The main concerns fall into three categories: the quantity and nature of new positions generated, the adequacy of available skilled individuals, and the ability to retain this talent within the country.
In line with Malaysia's aspirations to shift towards a digital economy and in anticipation of job creation in the data centre sector, the Johor Talent Development Council launched the first data centre technician programme on March 1. The initiative aims to fill 200 job vacancies, with monthly salaries ranging from 3,500 ringgit to 4,000 ringgit (US$790-US$900) for a minimum diploma qualification. Some youths commute long distances to Johor to attend this scheme, believing that it unlocks promising career opportunities.
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 over time. Usually, a standard data center necessitates only around 30 to 50 ongoing roles, whereas bigger complexes may generate approximately 200 jobs at most.
Given the present total of 47 established and functioning data centers, even with an optimistic projection of 200 workers per center, this would result in fewer than 10,000 positions within these facilities. However, using a more practical assumption of 50 staff members for each facility, we arrive at approximately 2,500 jobs.
Furthermore, numerous large technology firms have historically favored recruiting talent for more senior positions from external sources.
This scenario has also occurred with investments made by these exact companies in other locations. For instance, Microsoft’s data center project in Boydton, Virginia, serves as an example. It was reported that the firm employed external specialists, which resulted in employment opportunities for roughly 25 locals mostly in roles like administration or cleaning services. Concerns regarding the limited job creation possibilities within the data center industry have similarly arisen concerning developments 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 construction industry.
The Malaysia Technology Transformation & Creativity College (MTTC), a private technical and vocational educational establishment, aims to provide students graduating in construction and development fields with advanced technological competencies. In response to an invitation from the Sunway Group, the college extended its reach into Johor Bahru in 2024.
The founder and head of MTTC College, Charlenne Ong, mentioned during an interview that all graduates from their two-year diploma program achieved full employment. She stated, “There’s such great demand for these skills; companies are ready to hire our graduates.” A significant number of alumni secure positions as BIM consultants, serving various sectors like data centers located in the Iskandar Puteri region, facilities management teams, and professionals involved 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 from employees regarding the latest software tools.
This shift toward more valuable positions ought to be viewed with careful optimism. While demand for Building Information Modeling (BIM) is strong, clients remain hesitant about paying extra costs. He noted that both software and skilled professionals come at a premium price. Additionally, industry experts highlighted that a new regulation mandating the use of BIM for Malaysian infrastructure projects over 10 million ringgits ($2.26 million) applies only to governmental initiatives thus far. Nonetheless, contractors are voluntarily embracing BIM technology, which propels the construction sector forward into digital change.
Despite the growing availability of local talent in Johor, retaining them continues to be difficult.
TVET institutions' promotional efforts keep emphasizing Singapore’s higher salaries to draw potential students. During an equity crowdfunding presentation, they showcased job openings in the country with starting pays as high as S$3,600 (US$2,691). This figure represents roughly triple the initial compensation offered in Malaysia and double what one might earn in Johor.
Ong mentioned that TVET institutions such as MTTC have entered into long-term 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 highly skilled positions over the coming half-decade could positively impact talent retention efforts. 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 qualifications akin to a university degree under Malaysia’sSkills Certification scheme.
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 constructing and developing such facilities.
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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