GEORGE TOWN, Nov 19 — Malaysia’s palm oil giants, long criticised for deforestation, haze and threats to wildlife, are repositioning themselves as unlikely players in the country’s booming AI data centre market, according to Bloomberg.

According to the report, the companies are earmarking some of their vast land holdings for industrial parks equipped with data centres and solar panels, with the latter intended to feed the insatiable energy needs of the former.

Data centres are both energy- and land-intensive, and by 2035, they could require at least five gigawatts of electricity in Malaysia — nearly 20 per cent of the country’s current generation capacity.

Palm oil firms control more land than any other private entity in the country, making them natural candidates to host these facilities.

Bloomberg reported that Malaysia has become a hotspot for regional data centre growth. Last year, it was the fastest growing data centre market in the Asia Pacific, and roughly 40 per cent of all planned capacity in Southeast Asia is now slated for Malaysia, according to industry consultant DC Byte.

Over the past four years, US$34 billion (RM159 billion) in data centre investments has flowed into the country, with Alphabet Inc.’s Google committing US$2 billion (RM9.3 billion), Microsoft Corp. announcing US$2.2 billion (RM10.3 billion), and Amazon.com Inc. spending US$6.2 billion (RM29 billion).

The government aims to have 81 data centres operating by 2035, the report said. 

Johor, just across the causeway from Singapore, has emerged as a hub of construction and server farms, including for Singapore Telecommunications Ltd., Nvidia Corp., and ByteDance Ltd. Bloomberg noted that delivering on promised renewable energy for these centres is proving challenging.

Sedenak Tech Park, one of Johor’s flagship sites, has informed potential tenants that promised water and power hookups under its second-phase expansion will only be ready in the fourth quarter of 2026, according to DC Byte.

The vacancy rate in Johor’s operational facilities is just 1.1 per cent, said Knight Frank, whose head of data centres for Asia Pacific, Fred Fitzalan Howard, added that six gigawatts of capacity are expected to be built over time.

This potential bottleneck has prompted palm oil leaders like SD Guthrie Bhd. to market themselves as both landowners and green power suppliers.

Group managing director Mohamad Helmy Othman Basha told Bloomberg: “This is where we can play a crucial, significant role in this ecosystem.”

The company, the world’s largest palm oil planter by acreage with more than 340,000 hectares in Malaysia, is pivoting to solar farms and industrial parks.

SD Guthrie has earmarked 10,000 hectares for such projects over the next decade, clearing old rubber estates and low-yielding palm plots near data centre and semiconductor hubs.

Helmy told Bloomberg the company aims to achieve one gigawatt of solar capacity within three years, enough to power up to 10 hyperscale data centres used for AI computing.

The new business is expected to account for about a third of SD Guthrie’s profits by the end of the decade. “Every inch of our land going forward will generate income,” he was quoted as saying. 

Rivals are following suit

Kuala Lumpur Kepong Bhd. (KLK) Recently, a 1,500-acre KLK TechPark was launched, with China’s electric car giant BYD as an anchor tenant. A second park, nearly twice that size, is planned for Johor. IOI Corporation Bhd. has allocated plantation land in Johor for solar projects, although CEO Lee Yeow Chor said there are no concrete deals yet. “Being a relatively large landowner, we are aiming to establish solar plants of a certain size,” he said, targeting at least 300 megawatts.

Vivian Wong, lead analyst at DC Byte, told Bloomberg: “It’s a unique opportunity for palm oil plantations in Malaysia, given the large tracts of land that present scalability for data centre developments.”

But Bloomberg cautioned that risks remain, with Fitzalan Howard noting that building industrial parks in the wrong location could prove costly and that tropical heat means Malaysian data centres may use roughly 25 per cent more energy for cooling than facilities in cities such as London.

Environmental groups remain however, sceptical. Greenpeace Malaysia, as quoted by Bloomberg, said that green energy projects may improve an organization's ESG standing on paper, but true sustainability depends on addressing core issues in palm oil operations, such as deforestation, peatland degradation, labour rights, and supply chain transparency.