Leveraging neutrality in the Belt and Road Initiative for digitalisation

The Malaysia Digital Economy Blueprint (2021 – 2030) and the New Industrial Master Plan 2030 aim to develop digital industry clusters through innovative business models, human capital development, and integrated ecosystems. There are two interrelated issues critical to our restructuring towards a digital economy.

Firstly, how can Malaysia effectively tap resources, experiences and partnerships from China’s Belt and Road Initiative (BRI) and its Digital Silk Road (DSR)? China’s digitalisation success is remarkable. Recently, Digital China 2025 was planned for further acceleration in the digital industry, including the development of Artificial Intelligence (AI). Malaysia can learn and benefit from such experience, knowledge and investments from China. Secondly, how can Malaysia utilise its neutral position while tapping into the vast potential of the BRI and DSR? As an Asean member, Malaysia can play a key role as a strategic partner and host for China under the BRI, particularly in facilitating trade and investment.

On the first issue, China, through the BRI and its broader economic engagement, has played a significant role in realising Malaysia’s digitalisation ambition to be a regional data centre hub. Chinese tech giants, such as Alibaba Cloud and ByteDance (owner of TikTok), have already established or are significantly investing in data centres in Malaysia. Under the DSR, Malaysia stands to benefit from China’s expertise by seeking greater collaboration in the areas of the digital economy and Artificial Intelligence (AI).

BRI can enhance foreign investments from China in cutting-edge digital economy industries and green energy, offering attractive new career paths with higher pay to retain talent. Malaysia has developed a range of digital telecommunications cooperation initiatives with China over the years. For example, in 2024, Malaysian telco Maxis successfully collaborated with Chinese telco Huawei and staged the first 5G-Advanced (5.5G) technology trial in Malaysia and Southeast Asia. Malaysia and China also agreed to establish a Joint Working Group for a Single Window Cooperation to enhance cross-border trade and ease of doing business by digitalising trade regulatory processes.

In July 2025, the Ministry of Digital announced securing RM2.97bil in confirmed digital investments from leading Chinese technology players, paving the way for the creation of over 6,800 high-value digital jobs across the country. Among the involved prominent technology firms from China are Baidu (via Wisetech), Tsing Digital, iSoftStone, Inspur Group, China Mobile International, and China Unicom.

China and the BRI can attract high-tech capital investments and foreign expertise (brain gain) as well as open an alternative network among BRI member countries for Malaysian exports. This is particularly important given that Singapore has recently reformed its foreign workforce policy to attract high-skilled talent. To propel Malaysia into becoming a developed country, there is a more pronounced need to stop the nation’s brain drain in order to develop our digital economy. Developing our own digital economy through BRI networks and collaboration with China greatly helps to retain Malaysian talent.

Another commendable collaboration between Malaysia and China is the Smart City pilot projects. Under this collaboration, Ipoh and Seberang Perai are chosen as living laboratories for testing new technologies for smart solutions. One of the pilot projects is Smart Infrastructure, which will focus on energy-efficient systems, smart metering, home automation, and Internet of Things (IoT) - based building management. The Digital Connectivity project will test integrated apps for residents to manage services like facilities booking, security, and maintenance. The Green Technology project integrates solar energy, waste separation systems, and water-saving technologies, while Social Innovation aims to design housing with features that are elderly-friendly and family-centric.

Malaysia can draw lessons from Hangzhou’s City Brain 3.0, which seeks to integrate AI-driven self-evolving digital intelligence into urban management. The Shenzhen Futian District Smart City Data Platform also provides a good role model for Malaysian cities moving towards data-driven city management and data governance.

On the second issue of neutrality, the current reciprocal tariffs on many countries may spark a global trade war and heighten the possibility of a global recession. Malaysia, as a relatively small and open economy, may suffer especially if it is or is perceived to be entangled in global geopolitical conflicts.

It is notable that Malaysia assumes the Asean Chairmanship in 2025, and our Prime Minister has expressed the Asean commitment towards neutrality and inclusive engagement. As for Malaysia, this presents an opportunity to avoid direct involvement in geopolitical conflicts while increasing economic engagement and investments in our digital economy sector from China and the BRI. Through Asean, Malaysia can act as a strategic host for trade and investment to companies from China, especially in the digital economy.

In the future, Malaysia should engage with China and other countries collectively through the BRI as well as the Asean platform on digital trade policies and investment. Initiatives like the Asean Digital Economy Framework Agreement (DEFA) aim to harmonise digital trade rules and facilitate cross-border data flows, which can enhance engagement through the BRI and, at the same time, may create a Greater BRI through inclusive partnerships. These will create a win-win outcome for everyone.

Foreign investments and partnerships with China and Asean countries not only benefit our transformation towards a digital economy but also enhance our neutrality standing and enlarge the benefits from the BRI towards developing our digital economy.

Dr. Har Wai Mun is an Assistant Professor at Universiti Tunku Abdul Rahman. The views expressed here are entirely the writer’s own.

The SEARCH Scholar Series is a social responsibility programme jointly organised by the Southeast Asia Research Centre for Humanities (SEARCH) and Tunku Abdul Rahman University of Management and Technology (TAR UMT).