Ambition To Action: How Budget 2026 Can Accelerate Malaysia’s Net-Zero Goals
By Eugene Quah
What will it take for Malaysia to thrive in a world driven by artificial intelligence (AI), sustainability, and economic resilience?
Malaysia finds itself at a pivotal point. As businesses adopt digitalization and AI to remain competitive, they encounter major challenges, including high initial investment costs, persistent threats of global economic instability, talent shortages, and fragmented support systems. Without targeted supporting policies and incentives, the country risks hindering its progress towards sustainability and digital transformation.
The Green Impact Gap and Data Centre Sustainability
Our recent Green Impact Gap survey, conducted with 500 Malaysian business leaders, revealed both progress and persistent barriers. Encouragingly, 93% of companies have set sustainability goals, while 45% have successfully translated them into actionable strategies. However, businesses cited economic uncertainties (56%), budget constraints (47%), weak incentives (46%), and inconsistent policies (35%) as the most pressing obstacles.
For small and medium enterprises (SMEs), the challenge is especially sharp. Many lack access to green financing or ESG-linked loans and often rely heavily on external vendors for expertise. To meet the country’s sustainability goals, Malaysia must not only increase awareness of current initiatives but also make them accessible fairly across different industries and business sizes.
Globally, data centers consumed between 1% and 1.5% of total electricity in 2023, estimated to reach 945 TWh by 2030. With AI expected to quadruple energy demand by 2030, the challenge is clear. Locally, Malaysia is projected to add 2.2 GW of new data center capacity, consuming an additional 12,920 GWh annually, which is equivalent to the energy consumption of approximately two million cars on the roads.
The government has already announced a Sustainable Data Centre Framework, set for launch in October 2025, with the Ministry of Energy Transition and Water Transformation due to release the latest National Energy Efficiency Action Plan (NEEAP 2.0) by year’s end.
These initiatives, alongside the Energy Efficiency and Conservation Act, as well as the rise of water and energy tariffs, are timely. However, higher tariffs and stricter efficiency targets will add pressure on operators already grappling with rising costs.To this end, we hope that the government will allocate funds and introduce initiatives to enable businesses to implement technology and strategies that can help them cope with the rising cost of utilities and make their operations more sustainable in the long run.
The author is the Country President for Malaysia, Schneider Electric
