If data centers are seen as manufacturing facilities, they will pay less for electricity

The AIMS Group hopes that the Malaysian government will reclassify the data center industry as a manufacturer in the 2018 budget so it can enjoy correspondingly lower power tariffs, according to a report in the New Straits Times.

“In order for Malaysia to become a world-class data center hub… it is necessary that this reclassification is awarded to the data center industry. Otherwise we risk losing our attractiveness in the global market looking to store their data in Asia,” said AIMS Group chief executive officer Chiew Kok Hin.

The AIMS Group provides carrier-neutral data center and managed services, with data centers in Malaysia, Singapore, Thailand, Vietnam and Hong Kong.

Price woes

Electrical bills contribute to almost half of business costs for data center operators, and Chiew Kok Hin warned that high costs will hinder the growth and lessen the attractiveness of Malaysian data centers.

“The current tariff is much higher than in Singapore. This has made us less attractive as the choice for Asia and has led to us losing out on significant collaborations with international brands,” he said.

This wasn’t the first time that industry players in Malaysia have called for preferential treatment. When the power tariff was last revised in 2014, the Malaysian Data Centre Alliance (MDCA) called for special rates for data center operators with national utility company, Tenaga Nasional Bhd (TNB).

The MDCA is an alliance of 17 data center providers that includes some of Malaysia’s largest infrastructure businesses such as AIMS, Basis Bay, CSF and NTT MSC Sdn Bhd.

In Malaysia, power is predominantly generated from a mixture of coal and natural gas, with a small amount (4 percent) coming from hydroelectric power. The increase in tariffs is part of the Malaysian government’s plan to gradually phase out costly fuel subsidies.

The government had previously agreed to maintain the power tariff rebate for Peninsular Malaysia for this year, maintaining the current price. The next decision on the electricity tariff is scheduled to take place in January next year.