KUALA LUMPUR: Malaysia is expected to attract more interest as a data centre (DC) hub following the outbreak of the US-Iran war, according to SD Guthrie Bhd
, giving the palm oil giant and the country’s biggest landowner an opportunity to capitalise on the boom.
Even before the Middle East conflict, Malaysia was already drawing DC investment from companies including Alphabet Inc’s Google, Amazon.com Inc and Microsoft Corp.
Over the weekend, Prime Minister Datuk Seri Anwar Ibrahim said Masayoshi Son of SoftBank Group Corp chose locations in the country for US$50bil in technology investments.
While the war wasn’t cited as a factor in Son’s investment, SD Guthrie president and group chief executive officer Mohd Haris Mohd Arshad said Malaysia was the “most stable country” in South-East Asia for building DCs.
The world’s biggest palm oil planter by acreage previously flagged plans to use some of its lower-yielding land for industrial development to tap into the DC boom.
The Middle East had been particularly attractive for DC investment because of its abundant energy options, but the war has heightened risks in the region, Mohd Haris said during an interview last Friday, his first with foreign media since taking the helm in January.
“If you’re gonna build DCs for US$10bil, you’re not gonna put it in a place where you might be bombed,” he said.
“We are riding that wave of investment that is coming into Malaysia.”
A large share of DC investment flowing into Malaysia has been earmarked for Johor, which is adjacent to land-constrained Singapore.
But as investment pledges roll in, Mohd Haris warned that energy constraints will need to be addressed for the region to realise its full potential.
DCs have signed agreements with Tenaga Nasional Bhd for as much as 8.77 gigawatts of peak demand, according to officials, equivalent to almost a third of 2025 installed capacity.
More power generation will be needed if the industry is to expand. In Johor, the DCs could consume as much as 23% of Peninsular Malaysia’s energy supply by 2031, according to BMI.
SD Guthrie has over 210,000ha of freehold land, making the company Malaysia’s largest landowner, and has earmarked roughly 10% of its current landbank for industrial development, along with renewable energy assets.
The palm oil producer expects income from industrial development to account for a third of its revenue by the end of the decade, Mohd Haris said.
Even as it seeks to capitalise on the DC boom, SD Guthrie’s core palm oil business faces a more uncertain supply outlook.
Mohd Haris said Malaysian production is expected to remain steady at around 20 million tonnes next year despite a severe El Nino, although dry weather across Indonesia will likely disrupt crop development and delay fruit ripening.
The company operates plantations in both countries.
“The concern is in Indonesia,” said Mohd Haris, adding that haze stemming from wildfires is slowing harvesting at estates in Kalimantan and Sumatra and could weigh on productivity.
“Indonesia may potentially struggle with crop size next year and this could then become a supply problem for the industry.” — Bloomberg
