# Malaysia seeks to shield farmland from AI and chipmaking booms > Source: > Published: 2026-08-05 00:23:34+00:00 # Malaysia seeks to shield farmland from AI and chipmaking booms This comes amid rising competition between industrial and agricultural activities [SINGAPORE] Malaysia is working with state governments to protect farmland from industrial and real estate expansion as the explosive growth in data centres and [chip manufacturing](https://www.businesstimes.com.sg/international/asean/penang-looks-past-hyperscale-data-centres-doubles-down-chips) intensifies competition for land. The South-east Asian nation has already set aside about 25,000 hectares through the Permanent Food Production Zones programme, which will help protect land from encroachment by industries, said Chan Foong Hin, deputy minister of agriculture and food security. That is nearly 5 per cent of Malaysia’s farmland, excluding palm oil and rubber plantations. The ministry plans to propose expanding the area of protected arable land, he added, declining to specify by how much, or when the proposal would go to the cabinet. “We hope to maintain a certain percentage,” Chan said in an interview in Putrajaya, Malaysia’s administrative capital. “Especially, the current producing area should remain protected.” Billions of dollars have flowed into data centres in Malaysia in recent years, with HSBC estimating total investments amount to almost 18 per cent of the country’s gross domestic product. The South-east Asian nation has also [emerged as a hub for manufacturing artificial intelligence hardware](https://www.businesstimes.com.sg/international/asean/ai-and-chips-are-turning-malaysia-asias-growth-standout), ranking among the world’s four largest net exporters. The breakneck growth has lured even the country’s palm oil giants into [hosting server and solar farms on some of the vast tracts of land they control](https://www.businesstimes.com.sg/international/asean/ai-boom-turning-malaysias-palm-oil-estates-data-centres). There is growing “competition between industry and agricultural activities”, Chan said, adding that the state and local governments see data centres as more profitable or more advanced than agriculture. “That’s the dilemma.” ## Food security threat Land use is administered by local authorities and the federal government plans to align policies across states to strengthen food security while remaining attractive to industry, Chan said. Urbanisation is adding to the pressure on agricultural production. The sector’s share of Malaysia’s economy and employment has steadily declined over the past two decades, World Bank data show, sparking concerns about food security. Frequent global supply chain and climate disruptions have only heightened those worries. Land for livestock farming in particular has shrunk nearly 50 per cent since 2017, pressured by infrastructure and urban growth as well as non-food crops, according to a statement by Agriculture and Food Security Minister Mohamad Sabu in March. Malaysia’s farmland is dwarfed by plantations, mainly palm oil and rubber, which are mostly controlled by large companies. “There is no simple answer and we have to show the government’s commitment to food security by creating the permanent food-producing areas,” Chan said. BLOOMBERG Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free. Share with us your feedback on BT's products and services [TRENDING NOW](/pulse?ref=trending-now) UOB CEO’s youngest child Grant Wee turns burnout into a wellness business Cold Storage moves into convenience retail with On The Go, to replace FairPrice at 58 Esso stations Three Arrows going after founder Zhu Su’s wife for US$40 million from Dubai property sale A ‘shadow bank’ hiding in Singapore’s Little India casts light on financial services gap