Data centre operators in Malaysia may face financial penalties if they overstate their water or electricity requirements, Deputy Prime Minister Fadillah Yusof told the Dewan Rakyat today.
Fadillah, who is also the energy transition and water transformation minister, said the federal government aims to curb “phantom demand”, where companies reserve large amounts of utilities but do not fully utilise them.
“Previously, they would state a certain amount of requirement. But now, if they declare that amount, they must commit to it. If they do not use it later, they will be fined,” he said during Ministers’ Question Time.
He was responding to Suhaizan Kaiat (PH–Pulai), who raised concerns over frequent water disruptions in Johor Bahru, Pulai, Iskandar Puteri and Larkin.
Suhaizan also highlighted that 17 data centres are currently operating in greater Johor Bahru, with water demand at 1,274.1 million litres per day, projected to rise to 1,600 million litres per day by 2030.
Fadillah said the government is tightening oversight to ensure accurate reporting of utility needs, particularly from high-consumption industries such as data centres.
He stressed that priority will always be given to ensuring sufficient water supply for the public before industrial allocation.
A federal Data Centre Task Force, chaired by the Ministry of Investment, Trade and Industry, will evaluate water and electricity requirements for proposed data centres before approval is given at state level.
The government is also encouraging data centre operators to adopt recycled water and advanced cooling technologies that reduce water and energy consumption.
On Johor’s water situation, Fadillah said the state currently has a water reserve margin of about 14.4 per cent, with some disruptions linked to maintenance works and technical issues.
He added that Johor’s raw water consumption stands at 2,052 million litres per day, while several infrastructure projects are underway, including new dams, riverbank storage systems, barrages, raw water transfer schemes and water treatment plants.
Reclaimed water has also been integrated into Johor’s long-term water strategy, particularly for high-demand industries such as data centres.
Fadillah said Indah Water Konsortium and Johor Special Water Sdn Bhd are already supplying 12 million litres per day of reclaimed water for data centre cooling in Johor, marking the first initiative of its kind in the country.
