PETALING JAYA: Malaysia's ambitions to become a regional leader in artificial intelligence (AI) could be derailed by new tariffs from the United States, according to a cybersecurity expert.
AI Society president Dr Azree Shahrel Ahmad Nazri said the US-imposed tariffs, particularly those targeting Chinese goods, have already had widespread repercussions across global supply chains, affecting Malaysia's own AI and data centre aspirations.
"As a vital hub in tech manufacturing, Malaysia relies heavily on imported components like servers, processors and networking equipment that are now costlier and harder to obtain. This disruption puts our AI leadership goals at risk," he said when contacted.
Experts have pointed out that although Malaysia's semiconductors were exempted from the sweeping US tariffs which could help mitigate any direct impact on chip production costs, uncertainties persist around potential cost increases.
Azree cited a major RM1bil data centre project in Johor, led by a prominent US tech company, as a case in point.
"The project, intended to accelerate our digital economy, saw a 15% surge in costs – an additional RM150mil – due to hardware tariffs. The resulting delays underscore how vulnerable we are to external trade policies," he added.
Azree said directly countering the tariffs may not be a viable option, but Malaysia could learn from Indonesia's Tingkat Komponen Dalam Negeri (TKDN) policy which offered a potential solution.
"By mandating a percentage of tech products to include locally made components, they have strengthened their domestic manufacturing base.
"Companies have set up assembly lines in Jakarta to comply with the policy, enhancing their resilience against global trade shocks," he said, adding that a similar model here could reduce reliance on imported technology components and protect local industries from tariff-driven cost spikes.
Azree also pointed to AI@Work 2.0, a government initiative with Google, as a promising step in the right direction.
"While it doesn't involve hardware manufacturing, the programme mirrors TKDN's localisation philosophy.
"It encourages local adoption of AI tools in the public sector – reducing our dependence on foreign software ecosystems.
"For example, we can develop tools like PutraGPT in parallel with platforms like Google Gemini, embedding local AI capabilities into government workflows," he said.
He said Malaysia could extend this localisation push by incentivising the domestic production of AI-related hardware and software using AI@Work as a blueprint.
"Building up local manufacturing capacity will require substantial investment. There may be initial gaps in quality compared to global benchmarks.
"But with the right government incentives – such as tax breaks, subsidies and skills training – we can overcome these hurdles," he said.
The Centre for Market Education chief executive officer Dr Carmelo Ferlito said the reciprocal tariffs announcement by US President Donald Trump signalled the start of a new era of economic uncertainty.
"These tariffs perhaps are not just about protectionism for its own sake. Trump's objective is to put the United States at the centre of global trade negotiations.
"The tariffs are a tool to create leverage and bring other countries to the negotiating table," Ferlito said.
He said Malaysia must seize the moment to steer the Asean bloc towards genuine free trade partnerships, especially with the European Union and other key economies.
"Malaysia's position is pivotal. True free trade agreements are simple: you can sell to me without tariffs, and I can sell to you without tariffs," he added.
On Malaysian businesses, Ferlito said the impact of the tariffs will vary depending on the sector.
"There's not much that businesses can do on their own. This is where the Malaysian government must step in – to aggressively negotiate new trade deals and reduce dependency on unpredictable trade partners," he said.
Ferlito urged policymakers to view the situation not just as a risk but also as an opportunity to reaffirm Malaysia's leadership in Asean and chart a more independent, sustainable trade future.
Trump's sweeping tariffs – including a 24% levy on Malaysian goods – shook global markets last Wednesday, with analysts warning of a looming trade war and rising inflation if retaliation follows.
