KUALA LUMPUR (Dec 26): Selangor’s new requirement for a minimum of 30% local content in data centre developments, following Johor’s stricter regulations, is expected to shift the market toward fewer but larger and more valuable projects, according to BIMB Securities Research.
The research firm highlighted that this structural change from a focus on volume to quality will create data centres that are more capital-intensive and technically advanced, benefiting experienced developers and contractors capable of delivering hyperscale-grade projects.
Announced in November 2025, Selangor’s local economy development policy aims to maximize domestic economic benefits from data centre investments. Every new facility must incorporate at least 30% local content, providing opportunities for Malaysian companies, tech vendors, and the local workforce to participate in the sector.
BIMB Securities noted that the policy addresses long-standing concerns about data centre investments, which, despite their high capital requirements, have historically contributed limited economic spillover domestically. By mandating local participation in areas such as integrated circuit design, cooling systems, engineering, and other services, the policy seeks to strengthen domestic supply chains, encourage technology transfer, and expand workforce engagement.
The research house also pointed out that Selangor’s proactive stance surpasses current federal initiatives, such as those by the Malaysian Investment Development Authority, which have yet to impose similar local content requirements. This move reflects confidence in the capabilities of local vendors, who are now equipped to compete with entrenched foreign suppliers.
Selangor’s policies follow Johor’s more stringent measures, where new approvals for Tier I and II data centres are restricted due to high water usage. With river capacities reaching limits, Johor now only allows highly efficient Tier III and IV facilities.
BIMB Securities concluded that this environment favors Tier-1 construction players, such as Gamuda Bhd and Sunway Construction, which are well-positioned to meet higher technical, sustainability, and local content standards. Over time, this is expected to reinforce a sustainable and investable data centre ecosystem.
Looking ahead, Johor’s data centre capacity is projected to reach 500MW by 2025 and grow to 3GW by 2030. Selangor, while smaller in scale, is set to host two major 1GW projects within the next three years, creating significant demand for industrial land in Selangor and surrounding areas.
For investors and businesses seeking opportunities in industrial property in Subang area, factory developments in Puchong, or office space in Bukit Jalil, Selangor’s evolving data centre landscape offers strong potential for long-term growth.
