Malaysia is being urged to accelerate artificial intelligence adoption across businesses, SMEs and the wider workforce as neighbouring ASEAN economies move rapidly to integrate AI into everyday commercial operations.
In a Merdeka Day commentary published by Malay Mail, Professor Dr Phar Kim Beng, Professor of ASEAN Studies at the International Islamic University Malaysia and Director of the Institute of International and ASEAN Studies (IINTAS), argued that Malaysia’s next challenge is no longer simply attracting data centres or announcing digital strategies. Instead, the country must ensure that AI reaches factories, warehouses, government departments, universities, SMEs and ordinary workplaces at scale.
The call comes as Malaysia enters a more ambitious phase of its national AI development. The government launched AI Malaysia Berhad in July as the country’s national lead AI agency and introduced the National AI Action Plan 2026–2030, aimed at transforming Malaysia into an inclusive and sustainable AI Nation by 2030.
ASEAN’s AI Adoption Race Is Accelerating
Recent figures highlighted in the commentary illustrate how quickly AI adoption is developing across Southeast Asia.
A Business Times survey conducted with Kantar across six major ASEAN economies found that 62 per cent of surveyed Indonesian companies were classified as AI “first movers”, followed by Thailand at 55 per cent and Malaysia at 46 per cent. Singapore recorded 36 per cent, although the commentary noted that its figure may reflect a more mature and cautious approach to AI implementation rather than weaker technological capabilities.
For Malaysia, the figures suggest that the country remains firmly involved in ASEAN’s AI transformation but cannot afford complacency.
The competition is increasingly moving beyond which country possesses the most advanced digital infrastructure. What matters is whether businesses and workers can translate that infrastructure into higher productivity, stronger competitiveness and commercially useful applications.
Indonesia Highlights the Importance of Local AI Capabilities
Indonesia’s AI development offers an important regional comparison.
Its Sahabat AI initiative, involving Indosat Ooredoo Hutchison, GoTo, Nvidia and AI Singapore, is developing AI models capable of understanding Indonesian languages, dialects and cultural nuances.
The initiative reflects a broader movement towards technological sovereignty — ensuring that countries do not simply consume AI systems developed elsewhere but build capabilities that understand their own languages, societies and economic requirements.
The commercial potential is already becoming visible. According to figures cited in the commentary, Indosat has incorporated AI into functions including human resources and sales, with the technology helping the company optimise or reallocate as much as 22 per cent of its capital expenditure. The company estimates AI could contribute between US$200 million and US$300 million in additional EBITDA over three years.
For Malaysia, such examples demonstrate why AI adoption must increasingly be measured through real economic outcomes rather than infrastructure investment alone.
Malaysia’s Next Challenge Is Mass AI Literacy
A central argument emerging from the commentary is that AI literacy cannot remain concentrated among programmers, technology companies, universities and specialised professionals.
AI tools are increasingly relevant to logistics coordinators, accountants, administrators, managers, sales teams, warehouse personnel, researchers and business owners.
This makes widespread workforce training one of the most important components of Malaysia’s AI transition.
Malaysia already possesses many of the foundations required to compete, including universities, semiconductor capabilities, sophisticated corporations, expanding cloud infrastructure and major investments from international technology companies. The challenge identified in the commentary is achieving scale.
AI adoption must therefore move beyond technology hubs and become part of everyday economic activity across industries and communities.
SMEs Could Determine the Success of Malaysia’s AI Transition
Malaysia’s SMEs and MSMEs will be particularly important.
Large corporations generally possess greater resources to invest in enterprise AI platforms, consultants and specialised employees. Smaller businesses may face considerably higher barriers involving cost, knowledge and access to training.
The commentary highlighted an initiative involving GD XCHANGE, VSTECS and Amazon Web Services (AWS) intended to provide AI access to 10,000 Malaysian SMEs through a six-month programme.
GDEX has also promoted free virtual training designed to help business users, executives and managers learn how AI can assist with tasks including emails, reporting, research, data analysis and repetitive workplace processes without requiring a coding background.
Initiatives of this nature demonstrate how AI adoption can shift from abstract technological ambition towards practical productivity improvements for ordinary businesses.
Workforce Transformation Makes Reskilling Urgent
Greater AI adoption will inevitably reshape jobs.
The regional survey cited in the commentary found that 56 per cent of respondents expect substantial disruption to operational and manufacturing roles by the end of 2026, with occupations such as logistics coordinators, inventory managers, procurement analysts and demand planners among those expected to experience significant transformation.
This does not mean workforce development should focus solely on highly specialised AI engineering roles.
Instead, Malaysia will increasingly need workers across different industries who understand how to incorporate AI into existing responsibilities, evaluate AI-generated information and work effectively alongside increasingly automated systems.
Training therefore becomes an economic resilience issue as much as an educational one.
Malaysia Moves Towards AI Nation 2030
The push for wider adoption aligns closely with Malaysia’s evolving national AI strategy.
The National AI Action Plan 2026–2030 aims to accelerate responsible AI adoption, development and governance across government, business and society. It comprises 28 national initiatives, divided into 14 sector-specific Impact Engines and 14 Foundation Enablers covering areas including talent, research, data, computing and governance.
The plan sets ambitious targets, including generating an estimated 0.8 to 1.2 percentage points of incremental GDP growth annually, equivalent to roughly RM13 billion to RM20 billion, alongside creating between 300,000 and 500,000 AI-related jobs. Malaysia is also targeting a top-10 global AI readiness position by 2030.
These objectives reinforce the importance of translating national AI investments into widespread economic participation.
AI Malaysia Provides a Permanent Institutional Driver
Another significant development is the establishment of AI Malaysia Berhad, launched by Prime Minister Datuk Seri Anwar Ibrahim on July 28, 2026.
The organisation replaces the incubation-stage National AI Office with a permanent national institution responsible for driving AI implementation, coordination and ecosystem development under the Ministry of Digital.
Its responsibilities include national AI strategy and foresight, implementation of the National AI Action Plan, governance and assurance, international partnerships, capability development and the Malaysia AI Safety Institute (MY-AISafe).
The transition signals Malaysia’s movement from establishing an AI policy foundation towards sustained national implementation.
Technological Sovereignty Goes Beyond Data Centres
Malaysia has attracted substantial attention as an emerging location for data centres and cloud infrastructure, but infrastructure alone does not create technological sovereignty.
As Phar argued, sovereignty should not mean isolating Malaysia from major international technology ecosystems such as AWS, Google, Microsoft, Nvidia, OpenAI or Chinese technology platforms. Instead, it means developing sufficient domestic knowledge to evaluate and use those technologies strategically while protecting Malaysian data, languages, institutions and national interests.
This distinction will become increasingly important as ASEAN economies seek to benefit from international technology investment while developing their own capabilities.
Malaysia’s official AI Nation strategy similarly identifies the development of globally competitive “Made by Malaysia” AI solutions as an important part of strengthening national capabilities rather than limiting the country to technology consumption.
Responsible AI Must Accompany Rapid Adoption
Accelerating AI adoption must also be balanced with responsible governance.
Malaysia’s existing National Guidelines on AI Governance and Ethics identify seven principles for responsible AI: fairness; reliability, safety and control; privacy and security; inclusiveness; transparency; accountability; and the pursuit of human benefit and happiness.
Malaysia also supports the ASEAN Guide on AI Governance and Ethics, helping align national efforts with wider regional principles for trustworthy and interoperable AI development.
This combination of adoption and governance will be essential. Moving quickly can strengthen competitiveness, but sustainable AI development also requires public confidence that emerging systems are safe, transparent and beneficial.
From AI Infrastructure to an AI-Enabled Economy
Malaysia’s broader digital strategy already reflects this shift.
Malaysia Digital 2030 aims to accelerate AI adoption across government, industry and society while supporting the country’s aspiration to become an inclusive and sustainable AI Nation by 2030. Among its targets are reaching the global top 10 in both the Stanford AI Index and Oxford Government AI Readiness Index by the end of the decade.
The next measure of success will therefore be less about whether Malaysia possesses AI infrastructure and more about whether businesses and citizens actually use it productively.
A sophisticated data centre contributes infrastructure. A factory using AI to improve production efficiency, an SME automating repetitive administration, a logistics company optimising its operations and a worker using AI to increase productivity demonstrate economic transformation.
Scaling those everyday applications across millions of Malaysians could ultimately determine the country’s position in ASEAN’s emerging AI economy.
Looking Ahead
Malaysia does not necessarily need to outperform every ASEAN neighbour on every AI indicator. Regional technological development can create opportunities for cooperation rather than becoming a zero-sum competition.
However, the comparison between Indonesia’s 62 per cent and Malaysia’s 46 per cent AI first-mover rates provides a timely signal that infrastructure and policy ambition must increasingly be matched by adoption.
Malaysia now possesses a national roadmap, a permanent AI institution, growing digital infrastructure, semiconductor capabilities and partnerships with some of the world’s largest technology companies. The next stage is ensuring those advantages reach SMEs, workers, classrooms, factories, government agencies and communities nationwide.
The country’s AI ambitions will ultimately be measured not by how frequently artificial intelligence appears in national strategies, but by whether technology translates into stronger productivity, better jobs, competitive Malaysian businesses and locally developed capabilities.
As Malaysia enters its next chapter following Merdeka 2026, expanding AI literacy and democratising access could become one of the country’s most important economic priorities — transforming the ambition of AI Nation 2030 from a technology strategy into a nationwide productivity and capability movement.
