By Viktor Yoshimura – 24th September 2026
The Circularity Brief — independent intelligence on IT asset disposition and the circular economy, Asia-Pacific & Japan.
Johor has become one of Southeast Asia’s fastest-growing data-centre hubs. It’s also inside the country that just shut its border to imported e-waste. Put those two facts next to each other and you get the clearest test case in the region for a question the whole industry is circling: what happens to retired hardware as the cheap-export option becomes controlled?
I wrote recently about the export doors narrowing across APAC, Basel’s 2025 amendments bringing e-waste under Prior Informed Consent, Malaysia’s absolute import ban, the general tightening of cross-border movement. Johor is the case study that makes it concrete, but only if we’re precise about what’s actually changed, because a sloppy version of this argument falls apart on contact with someone who knows the law.
The DC boom is happening — and that certainly matters
It’s worth being precise, because a lot of APAC data-centre numbers are announcement, not concrete. Johor is not that. The market is absorbing capacity almost as fast as it’s built, a sign that this is demand-backed growth, not capacity built ahead of demand (contrast Bangkok or Jakarta, where a large share of built capacity sits empty). Johor is attracting major digital-infrastructure investment, and Malaysia’s investment minister has said the state is expected to host around 60% of national data-centre capacity by 2030.
(A caveat worth stating plainly: Johor’s forward pipeline figure varies wildly by source, I’ve seen 3,088 MW, 5,700 MW, and 8,542 MW quoted, depending on methodology. So I lean on the reliable signals, absorption and the government’s own 60%-by-2030 figure. I treat any single pipeline number with suspicion. Whats important here is that the direction is not in doubt)
The regulation
Now the second fact, and this is where we have to be careful.
The import door is shut. From 1 April 2026, Malaysia made e-waste an absolutely prohibited import under the Customs (Prohibition on Imports) Order amendment, removing the previous permit-based route for bringing e-scrap into the country entirely.
The export door is not shut, it’s narrower. Since January 2025, the Basel amendments brought essentially all transboundary movements of e-waste (including non-hazardous streams, under the new Y49 entry) into the Prior Informed Consent regime. This is the distinction the lazy version of this argument gets wrong: PIC is not a ban. It doesn’t prohibit exports, it turns them into a controlled transaction requiring notification to, and written consent from, the importing and transit states. Malaysia’s own rules still permit exporting scheduled waste in defined circumstances, for instance, where no domestic facility can process it and the export isn’t for disposal.
So the honest framing isn’t “Malaysia has sealed its borders in both directions.” It’s: Malaysia has closed the import door, while the export door has become more regulated, more conditional, and more expensive.
The distinction the whole argument turns on: product vs waste
Here is the nuance that most of this conversation misses, and it’s the one that makes this an ITAD argument rather than a generic recycling one.
Every additional megawatt of IT capacity in Johor creates a growing installed base, servers, storage, networking and batteries that will eventually need refresh, redeployment, remarketing or recycling. But not all of it becomes waste, and the timing is lagged: a build today is end-of-life hardware years from now, not tomorrow, and not every megawatt produces the same equipment profile (hyperscale AI, conventional colocation and storage-heavy infrastructure retire very differently).
Crucially, a large share of data-centre refresh material doesn’t become waste at all. It gets redeployed, transferred to another facility, returned to the OEM, remarketed to a second user, or harvested for components long before anything is genuinely scrap. And Basel itself recognises the distinction: used equipment destined for legitimate reuse, repair or refurbishment can be treated differently from waste.
That distinction is the strategic heart of it. Good equipment should still move as product internationally wherever legitimate reuse exists. That is not the constrained part, and nothing here argues for shredding everything in Malaysia. The constrained part is the fraction that becomes genuine waste: that downstream route increasingly has to be compliant, traceable, and economically viable without assuming an overseas recycler will always be available to take it.
What that means for Johor
So the material generated in Johor increasingly needs a compliant domestic processing route, not “recycled in Johor” (it can move to a Malaysian processor in Selangor or elsewhere), but handled within a system that no longer relies on unrestricted cross-border waste arbitrage. Malaysia needs enough domestic downstream capacity to manage the waste fraction as the import door shuts and the export door narrows.
And Malaysia’s recyclers now face the other edge of the import ban: they can’t bring in foreign feedstock to build the scale that makes processing economic. So the market has to build domestic capability, largely on domestic feedstock, which is exactly the in-region-processing pressure, in one observable place.
The complicating twist: water, and a genuine counter-claim
There are real constraints on the boom, and I won’t wave them away, but the picture is contested, which we need to be honest about. Water availability has affected the timing and design of some Johor expansion, with reporting pointing toward deferrals into 2027. But Malaysia’s MITI stated in February 2026 that no data-centre investment had actually been deferred or transferred because of water constraints, pointing to alternative water sources and cooling approaches such as immersion cooling.
So “the boom is now constrained” would be too definitive. The accurate version: water has shaped timing and design, the government says it’s engineering around it, and the pace is genuinely contested rather than settled. That uncertainty doesn’t change the structure of the waste argument, it just means the speed of the future stream is unclear.
Why Johor is the one to watch
Most of the APAC in-region-processing argument is directional, you can see the controls tightening, but the consequences are a few years out and spread across many markets. Johor concentrates it: a large, demand-backed generation of future hardware, forming inside a country that has removed itself as a destination for imported e-waste, at the same moment cross-border movement of the waste fraction is becoming a controlled, costly transaction rather than a frictionless one.
If domestic ITAD, reuse, refurbishment and compliant downstream recovery are going to become structurally more important anywhere, Malaysia is where it shows up first, because Malaysia has removed the easy alternatives for the waste, while leaving the door open for product.
My personal read, and the challenge
My read: whoever builds the compliant capability to sort product from waste in Malaysia, to determine what’s still reusable, remarketable and component-recoverable, move that as product where reuse is legitimate, and responsibly process only what’s genuinely waste on a domestic route , is positioning for a growing local feedstock base. That’s “move product, not waste” made concrete in a single market: reuse and remarketing can stay international; waste can no longer be treated as a frictionless export commodity.
But I’d hold it as a read, not a certainty, because there’s a real counter-case: material has a way of finding the cheapest exit, and a statute on paper is not the same as enforcement on the ground. Plastic scrap kept moving for years after the first bans. So the honest open question is whether the controlled export door actually holds for Johor’s waste fraction, or whether that material quietly finds a way out.
That’s where I land, and I’d genuinely like it tested. If you operate in Malaysia, or you’re watching the Singapore–Johor–Batam corridor from closer than I am, where am I wrong?
Figures: Johor absorption and capacity characterisation from Cushman & Wakefield / Knight Frank APAC data-centre reporting (H1 2026); 60%-by-2030 per statements by Malaysia’s investment minister; e-waste import prohibition per Malaysia’s Customs (Prohibition on Imports) Order amendment effective 1 April 2026; Basel PIC/Y49 per the 2025 e-waste amendments; water position per Johor state reporting and MITI statements (Feb 2026). Forward pipeline figures for Johor vary materially by source and are directional only.