# Thailand and Malaysia pause datacentre projects as water and power concerns mount > Thailand froze 49 datacenter projects and paused 117 more, citing weak oversight. The region's pipeline had drawn $27bn in planned investment before governments hit the brakes over power and water strains. - Type: AI news - Page: https://completeaitraining.com/news/thailand-and-malaysia-pause-datacentre-projects-as-water/ - Published: 2026-11-09 - Updated: 2026-11-08 - Author: Jeroen Erne - Jobs: Executives and strategy, Government, Insurance, IT and development, Legal, Operations, Real estate and construction - Reading time: 3 min Thailand has frozen construction on 49 datacentre projects and paused approval decisions on 117 more as of September 2026, citing insufficient regulatory and monitoring frameworks. The move, alongside permit revocations in Indonesia and mounting resource constraints across Malaysia, signals a sharp deceleration in what was one of the world's fastest-growing datacentre markets just months earlier. The region's pipeline had ballooned to roughly 50% of all under-construction datacentre capacity in Asia Pacific, according to a 2026 Cushman and Wakefield report. Thailand alone had attracted a planned $27bn in investment from companies including TikTok, UAE-based Skyline datacentre, and Singapore's Bridge datacentres. Now governments are hitting the brakes as the physical costs of that growth become impossible to ignore. #### Power grids under pressure Energy demand from datacentres is reshaping electricity markets across south-east Asia. In Johor, the Malaysian state that has become the region's largest datacentre hub, operational capacity surged from 94MW in 2023 to 1,110MW in 2026, with another 3,088MW under construction or planned. Wood Mackenzie estimates datacentres already consume 24% of Johor's total power, a figure that could reach 40% by 2035. "The rapid growth of datacentre developments in Johor has the potential to create localized grid connection bottlenecks and increase the need for transmission network upgrades as well as new power supply capacity," said Alvin Tan, research analyst at Wood Mackenzie. Thailand's energy minister, Akanat Promphan, has called for a new electricity user category with higher tariffs for datacentre operators, pointing to the expensive imported gas required to generate the power they consume. The strain is not theoretical: it is already priced into national energy budgets and grid planning. #### Water scarcity collides with cooling needs Water consumption adds another layer of friction. Operational datacentres in Johor require an estimated 675 million cubic meters of water per day, and the state is prone to droughts. In Indonesia, a Tenggara Strategics report found that water-cooled facilities in hot, humid lowland environments consume far more water than those in temperate climates. In Thailand's Eastern Economic Corridor, the Khlong Luang Reservoir in Chonburi has become a flashpoint. Somnuck Jongmeewasin, research director at EEC Watch, said authorities are piping water from the already shallow and strained reservoir to industrial estates. Local residents are pushing back. In February, Johor saw its first public protest against datacentre construction, with demonstrators picketing a ZData Technologies project over dust pollution and water supply fears. #### Operators respond, but gaps remain Datacentre operators are investing in efficiency measures. Bridge datacentres built a water reclamation plant and pipe network in Johor for its upcoming facility. AirTrunk partnered with sewage treatment operator Johor Special Water in April to recycle wastewater for cooling, and said its campuses "are designed to operate significantly more efficiently than conventional datacentres." The company did not provide detailed efficiency data when asked. Microsoft, which committed $2.2bn to Malaysian cloud and AI infrastructure in 2024, has said it is pursuing clean energy projects in the region. But its own published Power Usage Effectiveness (PUE) figures show its Asia-Pacific facilities rank as the least energy-efficient in its global portfolio. Jie-Sheng Tan-Soo, assistant professor at Singapore's Lee Kuan Yew School of Public Policy, framed the trade-off bluntly: "While datacentres may create substantial investment and construction activity, they generally generate fewer long-term jobs than many other industries requiring comparable amounts of land, electricity and water. Communities may therefore reasonably ask whether they are receiving a proportionate share of the benefits while bearing the environmental and infrastructure costs." #### Regulatory tightening spreads across the region Singapore's 2019-2022 moratorium on new datacentres set an early precedent. Since then, approvals have been tied to power efficiency and carbon emissions, with just 95MW of operational capacity added between 2023 and 2026. Other governments are now following with their own guardrails. Malaysia formed a datacentre taskforce to review projects through the lens of energy and water security. Johor announced it will no longer approve Tier 1 and Tier 2 datacentres, which can use up to 50 million litres of water daily - equivalent to the drinking water needs of 25 million people. Thailand's new approval framework factors in energy and water use, power guarantee requirements, and higher tariffs for operators. Indonesia's West Java governor halted a project that lacked permits and a completed environmental assessment. Tan-Soo advocates for integrated policy frameworks that force operators to face "the full social opportunity cost of the resources they consume." He added: "South-east Asia is increasingly aware but only partially prepared." #### Why this matters for executives and strategy leaders The south-east Asian datacentre slowdown rewrites site-selection assumptions for any organisation planning AI or cloud infrastructure in Asia Pacific. Approvals are no longer a formality. Power tariffs are being restructured upward specifically for datacentre operators, and water access is becoming a negotiation point rather than a given. For real estate and construction executives, the pipeline of 49 paused projects in Thailand and the new restrictions in Johor mean timelines must now account for regulatory review cycles that did not exist a year ago. Legal and operations teams should expect environmental impact assessments and resource-use disclosures to become standard conditions of approval, not optional additions. For CTOs and IT leaders evaluating capacity partners, the efficiency metrics operators choose to share - or withhold - are now a material factor in vendor due diligence. [AI Technology Leadership Courses](https://completeaitraining.com/learningpath/ai-for-ctos-chief-technology-officers/) can help technical executives build the cross-functional fluency needed to assess infrastructure decisions where energy, water, and regulation intersect with compute demand. --- This is the Markdown form of https://completeaitraining.com/news/thailand-and-malaysia-pause-datacentre-projects-as-water/. The whole site is mapped at https://completeaitraining.com/llms.txt.