SHAH ALAM - Australia-based digital infrastructure company NEXTDC officially launched its first overseas data centre in Petaling Jaya, marking a major milestone in the country’s push to become a regional artificial intelligence (AI) and digital infrastructure powerhouse.
Launched by Selangor Menteri Besar Datuk Seri Amirudin Shari on May 14, the RM2.8 billion facility, known as KL1 Kuala Lumpur, is designed to support next-generation AI systems, cloud computing and high-performance digital workloads.
Beyond being a massive technology investment, the project also reflects intensifying regional competition among Southeast Asian countries to attract data centres powering the global AI boom.
What is KL1 Kuala Lumpur?
KL1 Kuala Lumpur is NEXTDC’s first international data centre outside Australia and serves as the company’s entry point into Southeast Asia’s rapidly expanding digital economy.
Located in Petaling Jaya, the facility was built specifically to handle AI-driven computing demands and large-scale cloud infrastructure.
NEXTDC said the data centre was designed with 65 megawatts (MW) of IT capacity and incorporates Tier IV design principles, which represent some of the highest international standards for reliability and operational resilience.
The company expects KL1 to become the first Uptime Institute Tier IV-certified data centre in Peninsular Malaysia.
Why is this data centre important?
The launch comes amid explosive global demand for AI computing infrastructure as businesses increasingly adopt generative AI, cloud services, automation and advanced analytics.
NEXTDC chief executive officer Craig Scroggie described the project as part of a much larger technological transformation.
“We are in the Fourth Industrial Revolution and AI is redefining the requirements of critical infrastructure. The challenge is no longer access to technology, but the ability to deploy it at speed, at scale, and within sovereign governance frameworks.
“KL1 was developed to provide companies with a high-performance and sovereign-ready environment, capable of supporting advanced computing operations while maintaining security, governance and compliance requirements.
“This is not only about entering a new market. It is about NEXTDC establishing infrastructure platforms in the locations where customers need to operate, connect and scale in the AI economy,” he said.
The facility also connects users directly to cloud providers, telecommunications carriers and technology ecosystems through a single integrated infrastructure hub.
Why is Malaysia becoming a data centre hub?
Malaysia has increasingly emerged as one of Southeast Asia’s most attractive destinations for data centre investments due to growing AI adoption, relatively competitive operating costs, available land and expanding power infrastructure.
According to the Malaysian Investment Development Authority (Mida), Malaysia approved RM144.4 billion worth of data centre and cloud computing investments between 2021 and mid-2025.
The Department of Statistics Malaysia also reported that information and communications technology (ICT) and e-commerce contributed RM451.3 billion or 23.4 per cent, to the Malaysian economy in 2024.
Malaysia’s government has also aggressively promoted AI and digital transformation initiatives under its AI Nation 2030 agenda.
Digital Minister Gobind Singh Deo described KL1 as a key part of those ambitions.
“The launch of NEXTDC’s KL1 facility is a significant milestone in our mission to establish Malaysia as the premier digital hub of Southeast Asia and a key driver of the regional AI economy.
“As we advance toward our AI Nation 2030, facilities such as KL1 are essential to provide the resilience, security and scale required for the next generation of cloud-driven innovation,” he said.
Gobind added that the RM2.8 billion investment reflected growing global confidence in Malaysia’s digital ecosystem while supporting job creation and digital talent development.
Why are AI data centres suddenly expanding across Southeast Asia?
AI systems require enormous computing power, advanced cooling systems, stable electricity supplies and high-speed connectivity.
As demand rises, countries such as Malaysia, Singapore, Indonesia and Thailand are increasingly competing to attract global technology firms and cloud infrastructure operators.
Malaysia’s expansion is also linked to energy development plans. Reuters reported in June 2025 that Tenaga Nasional planned to invest RM43 billion to strengthen the national electricity grid, partly to support higher electricity consumption from AI systems, battery storage and data centres.
Malaysia is also expected to add between 6GW and 8GW of gas-fired power capacity by 2030 to meet future demand.
At the same time, international companies continue pouring investments into the country. Reuters also reported in May that Equinix planned to invest more than US$190 million in a fourth Kuala Lumpur data centre featuring liquid cooling technology for AI workloads.
What does KL1 mean for Selangor And Australia?
Amirudin said the facility places Petaling Jaya “on the global AI map.”
He noted that construction began following the project’s groundbreaking ceremony on June 9, 2023, describing it as a major development for large businesses, financial institutions, government agencies and critical industries operating in the region.
Meanwhile, Australian High Commissioner to Malaysia Danielle Heinecke said the project reflected Australia’s long-term commitment to Malaysia’s digital economy.
“NEXTDC, like many Australian companies, is a reliable and long-term investor in Malaysia, committed to building a sustainable digital economy sector in Malaysia, with Malaysia and for Malaysian customers,” she said.
She added that the Australian government supports investments such as KL1 under its “Invested: Australia’s Southeast Asia Economic Strategy to 2040.”
Construction and future expansion
The KL1 project has also generated major construction contracts locally. On April 13, Mitrajaya Holdings secured another RM54 million contract linked to the facility from NEXTDC’s Malaysian unit.
The contract involved early works for the “KL1 Stage 4 Data Centre ST4-GC01” development and followed earlier contracts that had already expanded to RM844.66 million after multiple variation orders.
NEXTDC first announced plans for the Malaysian project in 2023 as part of a long-term regional investment strategy estimated at around RM3 billion over five to 20 years.
Bigger than just a building
While KL1 is physically a data centre, industry observers increasingly view such facilities as the backbone of the modern AI economy.
From cloud computing and digital banking to generative AI systems and government services, massive digital infrastructure projects like KL1 are becoming essential national assets.
For Malaysia, KL1 represents not only a technology investment, but also a signal that the country intends to position itself at the centre of Southeast Asia’s rapidly evolving AI and digital infrastructure race.