Malaysia Draws First Data Center Protest Over Pollution, Water

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(Bloomberg) — The rapid increase in data centers in Malaysia came under the microscope on Saturday, with the AI-driven buildout drawing its first public protest in the Southeast Asian country.

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More than 50 people gathered in front of a data center construction site close to a residential area in the southern state of Johor, demanding an end to dust pollution and compensation for any negative impact that the project might have on their health. The protesters also expressed concern the facility will impact their water supply.

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Those gathered say they represent nearly 1,000 residents strewn across four housing estates in the Gelang Patah district. Located less than a kilometer (about half a mile) from the closest homes, the project is being developed for China’s Zdata Technologies Co. The developers didn’t meet the protesters, who dispersed after 90 minutes under the watch of dozens of police personnel. 

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Malaysia has emerged as Southeast Asia’s main data center hub, attracting companies from Oracle Corp. and Amazon.com Inc. to Alibaba Group Holding Ltd. and ByteDance Ltd. — all needing more storage and processing capacity as data-hungry artificial intelligence services gain users. Tech giants are targeting the country for its relatively low cost and reliable infrastructure, as well as its close proximity to business centers such as Singapore.

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Zdata and the project’s local developer Tropicana Firstwide Sdn., a unit of Tropicana Corp., didn’t respond to requests for a comment.

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The Gelang Patah project is unusually close to a residential area. By contrast, a majority of completed facilities and ongoing data center constructions are taking place in former plantations or dedicated industrial land, far from residential dwellings.

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Johor has been the biggest beneficiary of Malaysia’s data center boom since 2022, approving 164.45 billion ringgit ($41.7 billion) in data center investments as of mid-2025. That’s made it Southeast Asia’s fastest-growing data center hub.

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Zdata broke ground on the project in early 2025. Problems started creeping up toward the end of the year, with a two-week stop work order issued by local authorities for poor construction standards.

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As the project progressed, local residents began to voice concerns about construction dust pollution disrupting their daily lives. 

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“Every day I have to wash my car, every day I have to wash my porch and balcony, and I can’t get fresh air anymore in my own home,” said Venu Kannan Samraj, a 42-year-old resident, who participated in the protest. “I get back home, and I immediately close the living room door.”

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Residents say they can’t dry laundry on their yards or balconies anymore, while air purifiers are signaling dangerously poor levels of air quality.

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There are also lingering concerns about the water demands of the Zdata project. Johor last year stopped approving Tier 1 and 2 data centers due to their high usage of water — up to 50 million liters of water a day. State officials haven’t disclosed what tier Zdata’s facility falls under. Its approval was granted before the new ban was instituted.