SD Guthrie sees Malaysia’s data center boom driving industrial development opportunities

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Malaysia’s data center boom

Highlights

SD Guthrie sees a surge in data center investment in Malaysia, including U.S.$50 billion from SoftBank, driven by geopolitical stability compared with the Middle East.
Data center power demand in Johor has reached 8.77 gigawatts, nearly one-third of installed capacity in 2025, raising energy supply concerns for industry growth.
Haris expects palm oil futures to rise to RM5,000 a tonne by the end of the first quarter of 2027, supported by falling stocks and slower production in Indonesia.

This article was translated from the original. Read the original version by our correspondent here.

Investment opportunities and power constraints

As reported by The Edge Malaysia, SD Guthrie expects Malaysia to attract additional interest from data center investors as global companies become more cautious about geopolitical stability in other alternative locations. Its group president and chief executive officer, Mohd Haris Mohd Arshad, said Malaysia remains the most stable country in Southeast Asia for building large-scale data centers.

Even before the conflict, Malaysia had already attracted data center investments from companies including Alphabet Inc, Amazon.com Inc and Microsoft Corp. Last weekend, Prime Minister Datuk Seri Anwar Ibrahim also said that Masayoshi Son of SoftBank Group Corp had selected a location in the country for a U.S.$50 billion technology investment, although the war was not cited as a direct factor.

According to Haris, the Middle East had previously been highly attractive for data center investment because of its abundant energy options, but the war has raised regional risks. He said investors developing a U.S.$10 billion data center would not choose a location facing the threat of attack, and Malaysia is now well positioned to benefit from this investment flow.

However, the growing number of projects in Johor, which borders land-scarce Singapore, is raising concerns about power supply. Data centers have signed agreements with Tenaga Nasional Bhd for peak demand of up to 8.77 gigawatts, nearly one-third of installed capacity in 2025, and additional generation will be needed if the industry continues to grow.

SD Guthrie’s land strategy and palm oil outlook

SD Guthrie owns more than 210,000 hectares of freehold land, making it Malaysia’s largest landowner, and around 10% of its current landbank has been allocated for industrial development and renewable energy assets. Haris said income from industrial development is expected to account for one-third of the company’s revenue by the end of this decade.

Meanwhile, the company’s core palm oil business faces a more uncertain supply outlook. Haris expects Malaysian production to remain stable at around 20 million tonnes next year despite a severe El Niño, but dry weather in Indonesia could disrupt crop development and delay fruit ripening.

He said the main concerns are now focused on Indonesia, where haze from forest fires is slowing harvesting at plantations in Kalimantan and Sumatra and could weigh on productivity. If Indonesia’s crop size is affected next year, this could become a supply problem for the industry, although Haris expects Malaysia’s stock glut to begin easing by February or March, which could support prices.

Haris expects benchmark palm oil futures to rise to around RM5,000 a tonne by the end of the first quarter of 2027, from around RM4,800 a tonne currently, supported by slower production and strong demand. He also said SD Guthrie is interested in expanding its operations in Indonesia, including in the downstream segment, although greater government control over the commodities sector is creating some uncertainty among producers.

In our earlier coverage of the proposed electricity pricing system “user-pays”, the government is considering special tariffs for large users such as data centers and energy-intensive industries to ensure supply costs are distributed more fairly without burdening households. We also discussed factors driving up electricity bills — including global fuel prices, prolonged hot weather and constraints on plant output — as well as incentives to switch to time-of-use tariffs to manage peak demand.

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