By Remy Majangkim
KOTA KINABALU, On paper, the announcement sounds like a leap into the future: a 130-megawatt (MW) Artificial Intelligence Data Centre (AIDC) rising at the Kota Kinabalu Industrial Park (KKIP), outfitted with next-generation Nvidia chips and backed by eight global strategic partners.
For state planners, the November 12 Memorandum of Understanding (MoU) is a headline-grabbing milestone in Sabah’s digital transformation.
Yet for ordinary Sabahans, many of whom still navigate rotational water rationing, low tap pressure, and sudden blackouts, the proposal raises a far more uncomfortable question: Who truly benefits when a massive, resource-hungry facility plugs into a fragile grid, and will the upcoming environmental scrutiny actually protect local communities?
The Power Paradox: 10% of the Grid for One Complex
To understand the scale of what is being proposed, look at Sabah’s power grid. The state’s total generation capacity hovers around 1,200MW to 1,300MW, often operating with razor-thin reserve margins.
A single 130MW data centre running 24 hours a day represents roughly 10% of Sabah’s entire electricity capacity, enough to power tens of thousands of homes.
There is also an economic catch. While Sabah’s retail electricity base tariff (39.70 sen per kWh) appears lower than Peninsular Malaysia’s, the actual cost of generating that electricity is among the highest in the nation at roughly 45.08 sen per kWh, propped up by hundreds of millions of ringgit in annual federal subsidies.
Under national “user-pays” rules, hyperscale data centres are barred from enjoying subsidized rates and must pay full unsubsidized commercial tariffs.
Still, the physical reality remains: generating and transmitting 130MW of uninterrupted power in a state reliant on costly fossil-fuel independent power producers places an immense burden on local infrastructure.
Cooling Servers in a Water-Stressed Corridor
Beyond electricity lies an even more sensitive resource: water. Servers running intensive AI workloads generate immense heat, and keeping them cool in Kota Kinabalu’s year-round tropical humidity requires constant thermal management.
Project briefs indicate the KKIP facility will utilize liquid cooling rather than traditional evaporative cooling towers, a crucial distinction.
While an old-style evaporative data centre of this size would consume roughly 5.6 to 6.2 million litres of water every single day, a modern tropical liquid-cooled system brings that estimate down to between 0.94 million and 1.87 million litres daily (or roughly 156,000 litres if a completely sealed, zero-evaporation closed loop is enforced).
Even at the lower end, however, 1 to 1.8 million litres a day is equivalent to the daily consumption of 1,200 to 2,300 Malaysian households. In an industrial corridor where surrounding communities already contend with treatment plant bottlenecks, every million litres diverted to cool computer chips is a million litres taken from a strained system.
On the Ground at KKIP: Bleeding Pipes and Unresolved Land Promises
Beyond theoretical projections of megawatts and litres lies the lived reality along the roads leading into KKIP.
For years, the main water supply corridors serving the Sepanggar and KKIP belt have been plagued by systematic water theft and illegal tapping, a major contributor to Sabah’s Non-Revenue Water (NRW) rate, which remains the highest in the country at roughly 60%.
While enforcement teams periodically cut illegal connections, the root causes persist: rapid industrial expansion outpacing basic municipal infrastructure, alongside surrounding settlements left in administrative limbo.
Nowhere is that contrast sharper than in nearby Kampung Malawa. Decades after local villagers were relocated from land carved out for the KKIP industrial zone, families in the resettlement community are still waiting for their promised land grants to be finalized.
To many residents watching from the perimeter, the state’s eagerness to roll out the red carpet for a high-tech AI complex, while neighbouring communities still lack basic land security and reliable tap pressure, raises a fundamental question of priorities.
A Construction Spike, Followed by Empty Corridors
The economic trade-off becomes even starker when examining job creation and value capture. Unlike a manufacturing plant, a hotel, or an agro-processing hub that employs hundreds or thousands of locals for decades, an operational data centre is largely automated.
While the construction phase may employ 1,000 to 2,500 workers over two to three years, a 130MW facility typically requires only 50 to 150 permanent staff once the servers go live. Most high-value AI model training, intellectual property, and software revenue remain with foreign tech clients overseas, while Sabah absorbs the environmental and utility strain.
Why the Environmental Report Is the Ultimate Test
Chief Minister Datuk Seri Hajiji Noor acknowledged these vulnerabilities during the MoU signing, stressing that an agreement on paper is not a blank check and that the project must pass strict government due diligence.
Under Sabah’s Environment Protection Enactment 2002, the state’s Environment Protection Department (EPD) holds the statutory mandate to scrutinize projects of this scale before any ground is broken. In a state prone to grid fluctuations, a 130MW data centre cannot rely on power lines alone. It will require massive banks of industrial backup diesel generators to guarantee uninterrupted uptime. Beyond water draw, the Environmental Impact Assessment (EIA) must publicly account for fuel storage safety, exhaust emissions, thermal discharge, and round-the-clock chiller noise affecting neighbouring settlements like Kampung Malawa.
Because an operational data centre offers minimal long-term employment while demanding massive baseline resources, the EIA cannot be treated as a routine rubber stamp. Before a single pile is driven into the ground at KKIP, regulators, including the EPD, Jabatan Air Negeri Sabah (JANS), and the Energy Commission of Sabah (ECoS), must enforce three non-negotiable conditions:
1. Zero-Discharge Water Mandates: The EIA must require a completely sealed, closed-loop cooling architecture or the use of treated industrial wastewater, guaranteeing that zero treated drinking water is drawn from public mains already struggling with theft and low pressure.
2. Behind-the-Meter Power Generation: Regulators must verify whether the facility will fund its own dedicated solar, battery storage, or private co-generation rather than draining 10% of Sabah’s public grid capacity.
3. Transparent Public Disclosure and Community Accountability: The full EIA findings, including exact daily water draw, generator emissions, and grid impact, must be made accessible for public scrutiny, alongside long-overdue resolution of surrounding community grievances like the Kampung Malawa land grants.
Queries regarding the project’s finalized water-draw projections, power sourcing, and the status of neighbouring resettlement land grants have been directed to North AIDC Sdn Bhd, KKIP Sdn Bhd, and the relevant state authorities.
Without a rigorous, transparent environmental review that holds developers to strict resource limits, Sabah risks trading away its scarcest essentials, clean water, reliable electricity, and land justice, for a windowless warehouse that employs fewer people than a single mid-sized hotel. After all, data centers require a lot of electricity and water.
