Palm oil giants race to power Southeast Asia’s booming AI infrastructure with solar-ready industrial parks.

Malaysia’s palm oil titans are undergoing an unexpected transformation — from climate villains to key players in Southeast Asia’s AI data centre boom. Their vast estates, once associated with deforestation and haze, are now being earmarked for solar-powered tech parks designed to attract global hyperscalers.

A Surprising Pivot to AI Infrastructure

Malaysia has emerged as one of Asia-Pacific’s fastest-growing data centre hubs, fuelled by more than US$34 billion in investments since 2020 from global giants including Google (US$2 billion), Microsoft (US$2.2 billion) and Amazon (US$6.2 billion). With 40% of Southeast Asia’s planned capacity now slated for Malaysia, demand for land and clean energy has skyrocketed.

Palm oil estates, controlling more private land than any other sector, saw an opportunity.

Why Palm Oil Producers Are Entering the AI Race

Data centres are “power and land hogs,” expected to require at least 5 gigawatts of electricity by 2035, or nearly 20% of Malaysia’s current generation capacity. Johor, fuelled partly by Singapore’s moratorium on new centres, has become a hotspot but is already strained. At Sedenak Tech Park, tenants must wait until late 2026 for promised power and water upgrades.

This bottleneck opened the door for palm oil majors to step in as landowners and renewable power suppliers.

The Big Players Making Big Moves

SD Guthrie’s Solar Ambition

SD Guthrie — Malaysia’s largest planter with 340,000 ha — is leading the shift:

• 10,000 ha allocated for solar farms and industrial parks
• Target to produce 1 GW of solar energy within three years
• Enough to power up to 10 hyperscale AI data centres
• Aiming for the new business to contribute one-third of its profits by 2030

Group managing director Mohamad Helmy Othman Basha said: “Every inch of our land going forward will generate income.”

KLK and IOI Join the Race

KLK has launched the 607 ha KLK TechPark, anchored by Chinese EV giant BYD, and is planning a second, even larger park in Johor.

IOI Corporation aims to deploy 300 MW of solar on ageing estates that require replanting.

Together, these three firms control nearly 900,000 ha of land, making their pivot significant for Malaysia’s renewable energy roadmap.

The Economics Behind the Shift

A 2024 Maybank report found profits from large-scale solar can exceed palm oil cultivation returns by 50 times. Smaller firms like Gopeng have already proven this, turning losses into strong shareholder returns after entering renewable energy.

Given the global push for ESG compliance, the incentives are aligned — at least on paper.

Challenges and Accusations of Greenwashing

Industry analysts warn the move isn’t risk-free.
Data centres are location-sensitive, and building in the wrong area could leave estates with expensive, unused parks. Malaysia’s tropical heat also means data centres consume 25% more cooling energy compared with those in cooler climates like London.

Environmental groups remain sceptical. Greenpeace Malaysia argues solar projects merely “monetise aging estates” without reforming core problems like:

• Deforestation
• Peatland degradation
• Labour rights
• Supply chain transparency

CIMB Securities’ Ivy Ng notes that palm oil “will remain core” to these companies, regardless of green ventures.

A Strategic Shift With Regional Impact

Malaysia’s transformation into an AI infrastructure hub — powered partly by former deforestation-linked plantations — will shape the economic landscape of Singapore, Indonesia, and the wider SIJORI region. With data infrastructure demand surging, the region stands to gain new cross-border investment flows, tech jobs, and renewable energy projects.

Whether this shift marks genuine sustainability or strategic green branding will depend on long-term commitments beyond solar farms.

Malaysia’s palm oil giants are rewriting their role in the region’s tech economy, leveraging land and emerging solar capacity to fuel an AI-driven future. While the move strengthens Malaysia’s competitiveness and benefits nearby economies, lasting credibility will require deeper reforms in palm oil production — not just new “green” ventures. Still, the shift signals a significant evolution in how Southeast Asia prepares for the coming wave of AI infrastructure demand.

Sources: Straits Times (2025) , The Star (2025)

Keywords: Malaysia Data Centres, Palm Oil Estates, Solar Industrial Parks, Johor Tech Growth, AI Infrastructure