Southeast Asia's data centre boom is stalling as governments across the region slow or halt projects that local power grids and water supplies can no longer support. Thailand has paused construction on 49 projects and frozen approval decisions on 117 more, Malaysia's Johor state has stopped approving the most water-hungry designs, and a provincial governor in Indonesia has halted one site over missing permits, according to a Guardian report published on 7 November.

Thailand's data centre policy board took the decision at its first meeting on 4 September, asking operators of 49 projects already under construction to pause voluntarily while four subcommittees draft national standards for electricity and water use, site safety, environmental safeguards and economic returns. TechRepublic reports that Thai authorities currently lack the power to compel the 49 projects to stop, but can withhold permissions from the 117 still awaiting approval. The country's Board of Investment had already stopped approving new data centre projects in April as the government worked to close gaps in fragmented oversight.

The pause followed a strong start to the year. Early in 2026, Thailand's Board of Investment approved projects from TikTok, UAE-based Skyline and Singapore's Bridge Data Centres with a combined planned investment of $27 billion. Energy minister Akanat Promphan has argued that data centres run on expensive imported gas and should pay a new, higher electricity tariff.

Johor, the Malaysian state across the border from Singapore, is the clearest example of the boom. Its operational capacity grew from 94 megawatts in 2023 to 1,110 megawatts in 2026, with another 3,088 megawatts under construction or planned, and the state says it has attracted $40 billion of data centre investment. Energy consultancy Wood Mackenzie estimates data centres already use 24 percent of Johor's electricity and could reach 40 percent by 2035. Malaysia has set up a data centre taskforce to review new projects for energy and water security, and Johor will no longer approve Tier 1 and Tier 2 facilities, the designs that use the most water.

In Indonesia, the governor of West Java ordered an immediate stop to construction of Singapore-based BDx Data Centres' 640-megawatt AI campus after inspectors found missing permits, including an environmental impact assessment. The region holds about 50 percent of all data centre capacity under construction in Asia Pacific, according to a 2026 Cushman & Wakefield report cited by The Guardian, making it one of the main places where AI computing is being built outside the United States and China. The region became the overflow market after Singapore paused new data centres from 2019 to 2022 and then approved new capacity only selectively; now the overflow market is setting its own limits.