Budget 2027 was tabled on Friday 9 October. Last week we set out what data centre buyers should watch for. This is our readout: the Budget lines that matter for data centres, and what they mean if you are buying or renewing capacity in 2027. The Headline for data centres: Budget 2027 invests in what […]
Budget 2027 was tabled on Friday 9 October. Last week we set out what data centre buyers should watch for. This is our readout: the Budget lines that matter for data centres, and what they mean if you are buying or renewing capacity in 2027.
The Headline for data centres: Budget 2027 invests in what data centres run on, starting with RM15 Billion from TNB to strengthen the National Grid.
Data centres get only a brief direct mention in the Budget speech, which cites a RM1.25 billion fund already set up by a local developer with EPF and LTAT to develop data centres and logistics assets in Selangor. Yet by MIDA’s count, data centres and cloud took RM95.8 billion, or 44%, of the RM218.5 billion of investment approved in the first half of 2026, a total cited in the Budget speech.
The spending lines up with what the market has been worried about. Based on our data, power and the grid were the challenge raised most often in data centre news this year, followed by water, with connectivity far behind. Here are the lines that matter most to our customers, in order.
Budget 2027 notes that trade along the Bukit Kayu Hitam–Sadao corridor reached RM27 billion in the first half of the year, and commits to further strengthening the Delapan Special Border Economic Zone. It lists a 122-acre logistics and engineering hub, NCT InnoSphere, to complement industry in Kulim and Penang; a cross-border financing framework with Labuan IBFC; and a direct link from the Bukit Kayu Hitam Immigration Complex to the Inland Container Depot.
What it means for buyers: it is the economy a border data centre serves. More trade, logistics and cross-border finance through Bukit Kayu Hitam means more systems that need to run close to the border, with data moving smoothly between Malaysia and Thailand. Our D8-1 data centre sits inside the Delapan zone, under six kilometres from the border, with fibre routes into both countries. In the south, the Budget records RM132 billion of JS-SEZ investment since 2025, with a Master Plan due by the end of the year.
Budget 2027 includes RM15 billion from TNB to strengthen the national grid, and RM1 billion from UEMLestra, including energy storage at KLIA and a 1-gigawatt hybrid energy project in Johor. TNB and PETRONAS will also take part in
cross-border energy projects under the ASEAN Power Grid.
What it means for buyers: based on our data, power is the constraint the market talks about most, so this is the Budget line that matters most. A stronger national grid enhances supply stability and supports the timely delivery of new connections. Energy storage and hybrid supply add flexibility close to the Klang Valley and Johor, two of the country’s main data centre hubs. Together, they strengthen the foundation that new capacity is built on.
Budget 2027 highlights the 40-year Bulk Water Supply Agreement between the Perak and Penang state governments, alongside a RM2.5 billion programme replacing 1,900 km of critical, ageing pipes nationwide.
What it means for buyers: long-term water security for Penang’s growth. Supply under the agreement is expected from 2032, when the state’s demand is projected to reach 1,162 million litres a day. Water was the second most-named challenge this year, after power, so a 40-year agreement is a meaningful signal for industry planning in the north.
As stated in Budget 2027, “Penang is being put on the map as the nation’s technology finance centre”, with a RM100 million Khazanah–InvestPenang Strategic Investment Fund for semiconductor and advanced manufacturing companies in their early stages of growth.
What it means for buyers: compute demand in the north follows the chip industry, and early-stage chip companies buy racks and cages close to their engineers, not 100 MW halls. Market analysts noted in August that Malaysia’s AI story is broadening from data centres into semiconductor equipment and advanced packaging. PE2 in Bayan Lepas already serves semiconductors, AI and cloud customers.
Under the JENDELA programme, Budget 2027 includes the rollout of the MADANI Submarine Cable (SALAM) next year, the domestic cable planned to link Peninsular Malaysia with Sarawak and Sabah.
What it means for buyers: More capacity between East and West Malaysia brings more networks, more traffic that needs a neutral place to be exchanged, and more telecom companies into Malaysia’s network. Because Open DC works with any telco, each new carrier is another route for tenants, and another backup if one connection fails. East Malaysian networks extending into the Peninsula can exchange traffic at the DE-CIX node inside our JB1 data centre in Johor Bahru. Based on our data, connectivity is the least discussed of the three constraints, yet it is the one fixed once a contract is signed.
Budget 2027 enhances and extends green technology tax incentives to 31 December 2030. Companies undertaking green technology projects, and companies buying green technology assets for their own use, can claim an Investment Tax Allowance of up to 100%.
What it means for buyers: Efficiency investment has a longer runway. A more efficient facility spends less energy on cooling and overhead for every kilowatt of IT load, and power is the largest line in a colocation contract. For data centres specifically, MITI’s sustainability guidelines on energy and water efficiency remain the reference, with DESAC applications open until 31 December 2027.
Budget 2027 says the Sovereign AI Cloud now being planned will keep the rakyat’s data and the nation’s strategic information under Malaysian control. The rest of the Budget’s AI for Rakyat measures focus on consumers and skills. For buyers, the point is simple: data that must stay in Malaysia needs Malaysian capacity to run in.
Budget 2027 strengthens what data centres depend on: a grid with RM15 billion of new investment, energy storage and hybrid supply, long-term water for Penang, a submarine cable that brings East Malaysia’s networks closer, and more trade at the Malaysia–Thailand border. These investments build over the coming years. For 2027 plans, the advantage sits with capacity that is available now or coming online through 2027, in the corridors where this investment lands, in buildings open to every carrier.
That is where Open DC operates: D8-1 inside the Delapan zone at Bukit Kayu Hitam, PE1 and PE2 in Penang, CJ1 in Cyberjaya, and JB1 and JB2 in Johor Bahru, all carrier-neutral.
Planning capacity for 2027? Talk to us about the site that fits your plan, from the Malaysia–Thailand border to the Malaysia–Singapore Causeway.
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