AI boom is turning Malaysia’s palm oil estates into data centres
AI boom is turning Malaysia’s palm oil estates into data centres
The rush is partly a spillover from Singapore, where a years-long moratorium on new centres forced operators to look north
19/11/2025 (Business Times), Kuala Lumpur - Malaysia’s palm oil giants, long-blamed for razing rainforests, fuelling toxic haze and driving orangutans to the brink of extinction, are recasting themselves as unlikely champions in a different, potentially greener race: the quest to lure the world’s artificial intelligence (AI) data centres to the South-east Asian country.
Palm oil companies are earmarking some of the vast tracts of land they own for industrial parks studded with data centres and solar panels, the latter meant to feed the insatiable energy appetites of the former. The logic is simple: data centres are power and land hogs. By 2035, they could demand at least five gigawatts of electricity in Malaysia, almost 20 per cent of the country’s current generation capacity and roughly enough to power a major city such as Miami. Malaysia also needs space to house server farms, and palm oil giants control more land than any other private entity in the country.
The country has been at the heart of a regional data centre boom. Last year, it was the fastest-growing data centre market in the Asia-Pacific region and roughly 40 per cent of all planned capacity in South-east Asia is now slated for Malaysia, according to industry consultant DC Byte. Over the past four years, US$34 billion in data centre investments has poured into the country – Alphabet’s Google committed US$2 billion, Microsoft Corp. announced a US$2.2 billion investment and Amazon.com is spending US$6.2 billion, to name a few. The government aims for 81 data centres by 2035.
The rush is partly a spillover from Singapore, where a years-long moratorium on new centres forced operators to look north. Johor, just across the causeway, is now a hive of construction cranes and server farms – including for firms such as Singapore Telecommunications, Nvidia and ByteDance. But delivering on government promises of renewable power is proving harder.
The strains are already being felt in Malaysia’s data centre capital. Sedenak Tech Park, one of Johor’s flagship sites, is telling potential tenants they will need to wait until the fourth quarter of 2026 for promised water and power hookups under its second-phase expansion, according to DC Byte. The vacancy rate in Johor’s live facilities is just 1.1 per cent, according to real estate consultant Knight Frank. Despite its rapid growth, the market is nowhere near saturation, with six gigawatts of capacity expected to be built out over time, said Knight Frank’s head of data centres for Asia Pacific, Fred Fitzalan Howard.
That potential bottleneck has incentivised palm oil majors such as SD Guthrie to pitch themselves as both landowners and green-power suppliers.
“This is where we can play a crucial, significant role in this ecosystem,” said Mohamad Helmy Othman Basha, group managing director of the US$8.9 billion palm oil producer SD Guthrie. It’s the world’s largest palm oil planter by acreage, with more than 340,000 hectares under its control in Malaysia.
SD Guthrie is pivoting to solar farms and industrial parks, betting that tech giants hungry for server space will prefer sites with ready access to renewable energy. The company has reserved 10,000 hectares for such projects over the next decade, starting with clearing old rubber estates and low-yielding palm plots in areas near data centre and semiconductor investment hubs.
The company’s calculation is based on this: one megawatt of solar requires about 1.5 hectares. Helmy said SD Guthrie wants one gigawatt in operation within three years, enough to power up to 10 hyperscale data centres used for AI computing. The new business is expected to make up about a third of its profits by the end of the decade.