A Malaysian company has invested RM30m (US$8.13m) to build a cloud computing and data center at a location near the Senai Airport in Johor, Malaysia, according to a report by Singapore financial broadsheet The Business Times.

The firm, Puncak Semangat Technology Sdn Bhd, says the 465 sq m data center is expected to be ready by next year, and that is planning to build a second, larger data center on 16,200 sq m of land at the Senai Hi-Tech Park nearby. In total, Puncak Semangat plans to spend RM100m (US$27.12m) building data centers in Johor and Kulim in Kedah state over the next three years.

Invitation to Johor

Services that will be offered at the Senai data center include co-location services, cloud services, and IT outsourcing services for small and mid-sized enterprises (SMEs). In addition, four government ministries are also expected to park their data at the facility within the next five years.

“Singapore is getting expensive. At the very least, data recovery centers there could move to Johor, where costs are lower and (computer) standards are on a par,” said chairman Syed Azmin Syed Nor, alluding to how Singapore firms should move across the Straits of Johor to his upcoming data center.

Of course, moving across the border will only work if organizations are first able to resolve the thorny issue of data sovereignty, noted Simon Piff, who is the associate vice president of enterprise infrastructure at IDC. In an email to Datacenter Dynamics, he also brought attention to the fact that Puncak Semangat is closely linked to the Malaysian government, which may be a consideration for some organizations and industry verticals. (Puncak Semangat is one of the key players involved in servicing the IT needs of Malaysian government ministries)

Yet there are also some genuinely compelling reasons for firms to set up base across the border. As we reported in “Malaysia - creating a new data center market” last year, the bustling development that is Iskandar Malaysia is generating new levels of interest for data center developers in the Malaysia state of Johor. For one, data centers there are well positioned to potentially displace some of the pent-up demand for data centers in Singapore, as well as to serve local financial institutions and businesses being established in Iskandar.

Malaysia has several other advantages, too, which includes ample land, an educated workforce, and political stability. Finally, Wong Ka Vin, the managing director of data center operator 1-Net Singapore—who has half a decade of experience running data centers in Malaysia—had told us in an interview last year about how Malaysia still offers the cheapest electricity across the ASEAN region.