How Malaysia's rotational constitutional monarchy might be driving the industrialization in Johor

Great insights on the longevity of the Johor DC boom

We just wrapped day 2 of the DC trade show here in Singapore. I felt it was worth meeting my Malaysian contact again and he offered some great insights into the drivers of the Johor development boom.

Malaysia operates a unique rotational constitutional monarchy where the nine hereditary rulers of the Malay states take turns serving as the King for a five year term.

The current King is the Sultan of Johor and his term ends in January 2029.

It seems so obvious now in hindsight. The Johor royal family owns vast tracts of land in Johor, and what better way to raise the value of that land than by encouraging massive industrial and infrastructure investment in the state. This is exactly what has been happening in the last three years, coinciding neatly with the Sultan stepping into his role.

This incentive supports a bullish view on continued data centre, power and water investment in the state past 2029. This essentially posits that the King will take steps to encourage such continued investment in 2028 before he ends his term, ensuring a few more years of “enriching” his state. This is in turn founded on the King’s reputation for being very commercial and the most business minded Sultan in Malaysia.

This insight has tempered my concerns about policy stability in Johor as well as my concerns about the future of regional data centre beneficiaries past 2028, although we should definitely think about what Johor is going to do about its water supply.

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We have some exciting intel from day 2 today that we provisionally think confirms very large revenue growth for a Hong Kong listed company. This is being looked into as a matter of priority. Paid subscribers will receive an update shortly.