Malaysia's palm oil estates earmarked for data centres amid AI boom

Malaysia’s palm oil giants, long blamed for razing rainforests, fuelling toxic haze and driving orang utans 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 Southeast Asian country.

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Amid a regional data centre boom, Malaysia needs space to house server farms, and palm oil giants control more land than any other private entity in the country. PHOTO: REUTERS

(PHOTO: REUTERS)

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 like 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. In 2024, it was the fastest-growing data centre market in the Asia-Pacific region 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 (S$44.3 billion) in data centre investments has poured into the country - Alphabet’s Google committed US$2 billion, Microsoft announced a US$2.2 billion investment and Amazon 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 Singtel, Nvidia and ByteDance. But delivering on government promises of renewable power is proving harder.