Data Centres in Selangor and Johor Receive Only 21% 28% of Requested Water Supply, Says Fadillah

Data centres operating in Selangor and Johor were allocated significantly less water than they initially requested last year, according to Energy Transition Minister Datuk Seri Fadillah Yusof. Despite these reduced allocations, he said the capital contribution fees and special tariffs imposed on data centres are sufficient to fund both the construction and maintenance of the supporting water-supply infrastructure.

Allocated Water Significantly Lower Than Requested

In a parliamentary written reply on Nov 18, Fadillah confirmed that data centres received only a fraction of their requested daily allocation:

• Selangor:
  Nine data centres requested 5.71 million litres per day (MLD) but were allocated 1.61 MLD — about 28% of what they applied for. This sits against Selangor’s total statewide consumption of 5,308 MLD in 2024.

• Johor:
  Thirteen data centres requested 29.1 MLD, but allocations amounted to only 6.10 MLD, or 21% of the original request. Johor consumed 2,001 MLD in total last year.

The figures indicate strict control and prioritisation in state-level water distribution, as policymakers balance data-centre growth with residential and industrial needs.

Water Demand Expected to Rise Sharply

Fadillah noted that Planning Permission (KM) data shows a substantial rise in water demand from data centres over the next six years. By 2030, projected demand is expected to reach:

• 73.88 MLD in Selangor

• 384 MLD in Johor

• 56 MLD in Negeri Sembilan

This surge aligns with Malaysia’s rapid expansion in cloud, hyperscale and AI-driven digital infrastructure — particularly in areas with strong industrial ecosystems.

For stakeholders tracking property trends in industrial land in Selangor, industrial property in the Subang area, and technology-linked industrial corridors near factory hubs in Puchong, this rising demand reflects the region’s increasing attractiveness to global data-centre operators.

Capital Contributions and Special Tariff Cover Infrastructure Costs

Responding to Sri Gading MP Aminolhuda Hassan, Fadillah clarified that revenue generated from data-centre water contributions is guided by the Water Services Industry (Deposits, Fees and Charges) (Amendment) Regulations 2025, which took effect on Sept 1.

Under these regulations:

• Capital contribution charges cover the construction of water-supply systems from designated connection points to each data-centre facility.

• Maintenance costs are recovered separately through a special tariff of RM5.30 per cubic metre.

“Collections from capital contributions and the special tariff are sufficient to fund both the construction and maintenance of water supply systems for data centres,” Fadillah stated.

He added that revenue projections cannot yet be estimated, as many data-centre projects remain in early planning stages.

Implications for the Broader Property Market

With Selangor and Johor emerging as core data-centre hubs, the government’s strict water-allocation controls highlight the importance of sustainable infrastructure planning. This development is relevant not only to the digital-infrastructure sector but also to adjacent real-estate markets, including:

• Commercial property in KL

• Office space in Bukit Jalil supporting tech firms

• Industrial land in Selangor attracting new data-centre investments

• Factory zones in Puchong and

• Industrial property in the Subang area

As demand for digital infrastructure rises, surrounding industrial and commercial markets are likely to experience renewed interest and supporting development.