PETALING JAYA: Malaysia is stepping up efforts to build an AI-powered economy by 2030 through initiatives such as the National AI Office and a RM1.36bil allocation under Budget 2026, but IT specialists warn progress will depend on talent development, ecosystem strength and stronger governance.
Despite established infrastructure such as data centres being in place, many firms continue to report skills shortages as a barrier to AI adoption, particularly among mid-career professionals, said Universiti Malaysia Sarawak educational technology expert Chuah Kee Man.
“Malaysia is making genuinely strong moves, but we are not quite there yet. It is like building a world-class kitchen but being short of chefs,” he said.
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Chuah stressed that Malaysia must grow its own AI ecosystem and nurture local companies that develop products for domestic and regional markets.
This includes providing start-ups and SMEs with better access to funding, infrastructure and pathways to pilot solutions with government and industry.
“A strong ecosystem also depends on closer collaboration between universities, industries, investors and public agencies so that research can move more quickly into real-world deployment,” Chuah said.
He said that guideline-based frameworks alone may not provide sufficient safeguards as AI becomes embedded in decision-making.
“The National AI Governance and Ethics Guidelines are a solid start, but guidelines are not as strong as legislation.
“The question is not whether Malaysia needs an AI law, but how long we can afford to wait before the absence of one starts costing us, in public trust, in foreign investor confidence, and in the rights of ordinary Malaysians,” he said.
Universiti Putra Malaysia AI specialist Dr Azree Nazri agreed that Malaysia is on a promising trajectory but cautioned that structural gaps remain.
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He said the Malaysian situation reflects a wider trend in developing countries where data centres are expanding quickly especially in Johor where global tech firms are investing billions, but the country faces limits in its own computing power, access to advanced chips and the availability of skilled AI workers.
“Malaysia currently has 29 operational data centres with eight more under construction, many driven by foreign hyperscale investors, while local operators are also building facilities.
“But without strengthening talent pipelines, sovereign AI computing capabilities and data governance frameworks, we risk lagging behind regional leaders despite strong infrastructure growth,” he said.
While policies such as the National Artificial Intelligence Roadmap 2021–2025 and the Personal Data Protection Act provide some guidance, Dr Azree said that they are not designed to handle issues like accountability for algorithms or large‑scale AI regulation.
Without stronger safeguards, he warned, foreign AI platforms could dominate the Malaysian market, raising risks around data sovereignty, technological dependency and market concentration.
He stressed that Malaysia must prioritise three areas to remain competitive – accelerate AI talent development, invest in sovereign computing infrastructure and strengthen the innovation ecosystem to protect and grow local AI firms.
“Prioritising these areas will help Malaysia keep pace with regional leaders such as Singapore, Korea and Japan,” he said.
