AI boom is transforming Malaysia’s palm oil estates into data centre hubs

Malaysia’s major palm oil companies are increasingly redirecting portions of their vast land holdings toward the development of industrial parks equipped with data centres and solar power facilities. The strategy aims to meet the rapidly growing space and energy needs of the global artificial intelligence sector. By 2035, data centres in Malaysia may require at least five gigawatts of electricity, making access to large tracts of land and renewable energy a key competitive advantage.

Malaysia has become one of the fastest-expanding data centre markets in the Asia-Pacific region. Over the past four years, the country has attracted US$34 billion in data centre investments, with Google, Microsoft and Amazon announcing substantial long-term projects. Around 40% of all planned data centre capacity in Southeast Asia is now expected to be built in Malaysia, where the government aims to establish more than 80 facilities by 2035.

Demand for new sites has surged particularly after Singapore imposed a moratorium on new data centre construction, driving operators to look north toward Johor. Rapid expansion, however, has created bottlenecks in water and power infrastructure, prompting major landowners like SD Guthrie to position themselves not only as land providers but also as suppliers of renewable energy. The company has earmarked 10,000 hectares for industrial parks and plans to install up to one gigawatt of solar capacity within the next three years.

Other major players are moving in the same direction. Kuala Lumpur Kepong has launched a tech park anchored by electric vehicle manufacturer BYD and is preparing additional sites in Johor, while IOI Corporation is planning large solar projects on plantation areas slated for replanting. Analysts note that the scale of these land banks gives companies the ability to rapidly develop large projects and respond to the accelerating demand for data centre infrastructure.

The shift also opens new opportunities for technological partnerships and business diversification. Plantation companies see significantly higher potential returns compared to traditional agricultural operations, and investors view Malaysia as an increasingly attractive destination for AI-related infrastructure. As SD Guthrie’s group managing director Mohamad Helmy Othman Basha noted, the company aims to ensure that every hectare of land contributes to new high-tech ventures, including renewable energy and modern data centre ecosystems.

Tags: Malaysia, palm oil, margin, AI