00:10Hi, welcome back to Consider This, I'm Melissa Idris. Let's continue our discussion about
00:14Johor as Southeast Asia's fastest growing hub for data center infrastructure. Now as Johorians
00:20prepare to vote, is this simply an investment story or has it become a political one? Joining
00:27me on the show now is Adip Salkapli, who is Managing Director of the geopolitical advisory
00:32firm Viewfinder Global Affairs. Adip, thank you for joining me on the show today. Let's
00:37talk about why Johor has become one of the world's fastest growing data center markets.
00:41Why do you think it has happened in Johor and the timing of it, why has it happened now?
00:47I think there are a few factors driving this trend. I think firstly, if you remember, not
00:55too long ago, there was a moratorium in Singapore restricting developments of new data centers
01:03until it was relaxed in recent years. But also the fact that Johor is the more cost effective
01:13destination for data center investments due to its proximity to Singapore, but at the same
01:21time offering a much lower cost and also the availability of space for the data center.
01:27So I think these are the major factors why we're seeing a lot more investments for data
01:33centers in Johor.
01:34Well, when we talk about data centers, often the headline figures are the one that dominates
01:38the news. So when we think about what economic value data centers actually create for Johor
01:44over the long term. How do we think about that? There are critics who argue that data centers
01:50creates relatively few high quality, high value permanent jobs compared to how much resources
01:56they demand. So do you think that's a fair criticism?
02:00I think, yes, I think it's a right question to ask whether these data centers will create
02:07value will create a high quality jobs for local residents. But I think it's important for those
02:15in the industry, also the government, there are governments that have been enabling these
02:20investments to communicate that data center development is a long term economic game for
02:26the state or for the country. The main objective is to build an ecosystem to encourage industries
02:35that rely on these data centers. So I think that aspect may not have been communicated well,
02:41leading to the questions on the economic value of data center investment to the local communities.
02:48Right. So do you think it will become an issue of discussion in this campaign period as Johor
02:58is heading into the elections?
03:01Yeah, I think based on what I've seen on the ground, there are some politicians, some political parties
03:07have been using data center investments, construction of data centers as election issue.
03:14But I don't think it will be a, it doesn't look like it's going to be the main election issue.
03:19Simply because there are other long lists of issues in the state, primarily cost of living.
03:25I think most Johor residents, Johor voters have cost of living high on their agenda.
03:34So data center may not influence their voting decision so much, not as much as some politicians
03:41want them to.
03:43Okay. So who do you think will actually care about this issue? Which voters might care enough
03:50that this issue becomes one that is politically salient, that might change the direction of
03:57their vote? Or do you still think it is far too technical, far too removed from everyday concerns?
04:02I think generally for most voters, data centers may not influence their voting decision.
04:09But having said that, there are a small group of voters, I mean, call them green voters or environmentally
04:16conscious voters, who may think about water usage in the long term, and what the state or
04:23the residents are getting from this high energy consumption, high water consumption investment
04:29would benefit the state, and how much pressure it will put on the local resources.
04:35So I think there will be, I mean, there are a small group of voters who may be thinking
04:40about it. But generally, no, it won't be big enough to influence a voting decision or to
04:45influence the outcome of the election.
04:47Okay. Adip, just now you mentioned that maybe the powers that be have not explained the potential
04:54of data centers well. And I've not communicated this narrative or the story of data centers to the
05:00public as well as they should have. What should they have explained? Talk to me about the
05:05question about what it is that you think needs more and better communication.
05:10Yeah, I think to be fair, it is a bit technical how data centers in your district would benefit
05:16the local residents. But I think the issue started with perhaps some in the government are probably
05:25too excited about data center investments. And they started talking about the numbers and that it leads to very high
05:34awareness
05:34of data center investments in Malaysia compared to other types of investments. So when there's high awareness
05:40among the public, there's also high expectations on the value it brings on the impact it will create whether negative
05:48or
05:48positive to the local communities. Perhaps early on when announcing these investments, the government should have been more careful in
05:57in communicating it to the public and not communicating it as something that would benefit the residents immediately.
06:04or in the short term.
06:06Okay, so if infrastructure of data centers does come under strain, if it does become an issue with local residents,
06:14who then should residents and voters hold accountable?
06:18Is it the Johor State government? Is it the local government? Is it the federal government who plans the policy
06:25for data center investments?
06:28How do we think about the federalism of it all? The different layers of powers involved?
06:33Well, I think the current structure means every layer of government is responsible one way or another. So it is
06:45a bit complicated for ordinary voters to blame just one party.
06:50I think in the worst case scenario, we might see voters blaming everyone in the establishment and going and voting
06:59for perhaps smaller parties that may have spoken again or going to speak up against data centers.
07:07So I think that's the worst case scenario that we can think of. But I don't think we will get
07:12there. I think given how vibrant our democratic space is, I think before we get there, there will be a
07:22strong, credible opposition that would force the government to respond appropriately if ever data center investments lead to deterioration of
07:31quality of life.
07:32Okay. Well, you know, you've been looking at this area for quite some time. What do you see zooming out
07:38is perhaps the biggest policy gap in Malaysia's data center strategy?
07:45I'm wondering what a data center ecosystem that supports the local economic development, what would that look like?
07:53I think given the publicity given to recent data center investment, I think future data center investment will become under
08:06more scrutiny from the regulators and also the public.
08:09And I think based on what we've seen on the ground, I think there's a lot of push for what
08:16we call a social license, meaning support from local community before the construction of data centers.
08:23So I expect I think future investments, future development to take into account the views of local residents or people
08:30living nearby.
08:32Okay. And can I get your final thoughts on what you are expecting with the Johor State elections? I mean,
08:38you are a political analyst as well. What are you watching out for in the next couple of weeks, Adid?
08:42Yeah, I think it looks like it looks very likely that Barisan National will retain the state government. I think
08:53what I think the most interesting to look out for is perhaps which side of the divide will risk the
08:59political temperature the next one week to just to get more voters to come out.
09:05As you know, as you know, we can expect lower turnout. And some parties, I mean, one coalition that may
09:12want their supporters to come out and then vote may try to raise political temperature the next one week to
09:1810 days. So yeah, so I think that's one aspect that is worth watching.
09:24Okay, Adid, thank you so much for joining me on the show today. Adid Zalgapi there from Viewfinder Global Affairs.
09:30Wrapping up this episode of Consider This. I'm Melissa Idris signing off for the evening. Thank you so much for
09:35watching.
09:35And good night.
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