Malaysia to Table Digital Infrastructure (Data Centre) Bill in Cabinet Next Year to Regulate Data Centre Growth

Malaysia is moving to establish a dedicated legal framework for its rapidly expanding data centre industry, with the government planning to draft the Digital Infrastructure (Data Centre) Bill for submission to the Cabinet next year. The proposed legislation is designed to regulate the sector's growth in line with the country's energy and water supply capacity, marking a significant step toward aligning digital infrastructure investment with resource constraints and environmental sustainability.

Economy Minister Akmal Nasrullah Mohd Nasir said the measure aims to ensure that investments in the industry add value to the domestic economy, in addition to addressing utility constraints and avoiding imbalances in environmental impact. The proposal to draft the bill forms part of a strategic regulatory plan agreed upon by the National Economic Action Council (NEAC) at a meeting chaired by Prime Minister Datuk Seri Anwar Ibrahim. The agreement was reached following the presentation of the National Strategic Direction Towards Sustainable Data Centre Development by the Ministry of Digital.

"This step is taken to address utility constraints, avoid environmental impact imbalances, and ensure that data centre investments provide real economic spillovers to the local digital ecosystem," Akmal Nasrullah said in a statement. The NEAC also agreed that four lead ministries — the Ministry of Housing and Local Government, the Ministry of Investment, Trade and Industry, the Ministry of Science, Technology and Innovation, and the Ministry of Human Resources — along with implementing agencies, would adopt the Circular Economy Framework (CEF) presented by the Ministry of Economy. The framework is intended to guide the country's transition from a linear "use-and-dispose" economic model to a circular economy that optimises material lifespan, reduces waste and preserves resource value.

"This integrated policy was formulated to address the issue of fragmented implementation across ministries in the past, to avoid economic losses due to the loss of valuable resources, and to support the Net Zero aspiration by 2050," the minister said. The meeting also reviewed the National Economic Resilience Framework presented by the Economic Affairs Division of the Prime Minister's Office as a comprehensive long-term measure to address external economic shocks, with the proposal set to be presented to the Cabinet and further discussed at a meeting of ministry secretaries-general and heads of service.

The regulatory push reflects growing concerns across Southeast Asia that unfettered data centre expansion could strain power grids and water resources, particularly as hyperscale operators accelerate construction across the region. Malaysia has emerged as a major destination for data centre investment in recent years, and the government's move signals a shift toward more structured governance of the sector. Akmal Nasrullah emphasised that the agreed policies must be implemented in an integrated manner to enhance resource efficiency, ensure data centre investments deliver domestic economic value, and strengthen the country's preparedness for external shocks. The Ministry of Economy, as the NEAC secretariat, will coordinate and monitor follow-up actions with relevant ministries and implementing agencies. "The government's priority is not just growth and investment, but a more productive, sustainable, and resilient economy with real benefits for the people and businesses," he added.