How to Set Up a Data Centre in Malaysia

Malaysia has the potential to become the hub for e-commerce and digital services. It is already home to data centres from big global companies such as Alibaba Cloud, Google and Amazon Web. The data centre industry is anticipated to reach USD800 million by 2025.

In Malaysia, data centres are driving the new data economy, on pace to be a data centre leader in Southeast Asia. Boosted connectivity, easily accessible and inexpensive land, as well as competitive electricity pricing, have improved Malaysia’s ranking. Malaysia is also building up its infrastructure and providing more transparent government to attract potential investment!

Now is a good time to ride the momentum into the new digital economy and set up a data centre in Malaysia.

What is data centre?

The term “data centre” refers to a physical storage site that contains all of the resources, including software and hardware that make it possible to apply data and share it. A few examples of these are electronic mail, file sharing, big data, CRMs (customer relationship management systems), and other business-related activities.

The workspace of a data centre needs to be large enough to accommodate necessary infrastructure, such as uninterruptible power supply, cooling systems, cabling, and so on. There is a wide range of possible configurations for data centres, and the following are two of the most well-known ones:

DCs that are located on-site, which means they are constructed and housed on the same property as the business. These data centres may be entirely owned by the corporation and operated by the company (referred to as Enterprise DCs), or they may be operated by a third party (a Managed Services DCs)

DCs that are located off-site and may be accessed online (also known as a “Cloud DC”) or that are completely housed in another place and operated by a third party (a Colocation DC)

How to set up a data centre in Malaysia?

Step 1: register and incorporate a company

It is necessary to register and incorporate your company before you set up a data centre in Malaysia. The Company Commission of Malaysia (CCM) or Suruhanjaya Syarikat Malaysia (SSM) web platform supports company registration. These are the varieties of companies that can be incorporated:

Sole Proprietorship
Partnership or Limited Liability Partnership (LLP)
Private or Public Limited Company (Sdn. Bhd. Or Berhad)
Companies limited by guarantee

Step 2: registration with the Inland Revenue Board of Malaysia (LHDN)

Forming a Sdn. Bhd. or Berhad is recommended to meet one’s goals with regard to a data centre. These have their own distinct legal entities and provide shareholders with liability protection. After a company has been incorporated, it is expected to implement registration with the Inland Revenue Board of Malaysia (LHDN), in particular in order to get a Sales Tax license.

The licensing platform of the Malaysian Government, also known as Pihak Berkuasa Melesen, is where applications for licenses, permits, and approvals could be submitted (PBM). Licenses are region-specific documents that can be obtained from either the federal government or the authorities of a certain state. The following are the three main classifications of licenses:

General
Industry or sector-specific
Activity specific

Some of the licenses might overlap with one another depending on the specific structure and nature of your data centre company. These approvals include the following possible combinations:

Obtaining a license from the domain of telecommunications
Approvals issued by the Occupational Health and Safety Administration
Approvals for machinery fitness, building plans, etc
Pollution control certification, etc

Want to know more about starting a Sdn Bhd? What’s the best way to start one, and what should you be mindful of? Register and find out in our upcoming webinar!

Are you ready to form your Sdn Bhd with Malaysia’s #1 award-winning Online Company Secretary? Contact us now via WhatsApp @018-767 8055