Kuala Lumpur, 23 December 2025- Think about the last time your Touch ’n Go eWallet offered the perfect promo code for your morning teh tarik. Or when a chatbot on Maybank’s M2U resolved an issue faster than any call centre. Perhaps you rely on Waze to navigate the Federal Highway or use MySejahtera for health appointments. Our daily lives are becoming smoother, smarter, and more connected, all thanks to Artificial Intelligence (AI), which is already quietly shaping how Malaysia works and lives.
Without even realising it, AI has seamlessly integrated into daily routines. At its core, it’s about machines learning, reasoning, and adapting, mimicking human thought to solve problems. In practical terms, this powers everything from personalised shopping suggestions to apps that renew insurance, pay parking fees, or manage household bills. AI is no longer a technology of the future; it is the infrastructure of the present.
A Nation Gears Up for an AI Future
AI has moved beyond being just a vogue term to become the next major economic frontier—one that Malaysia is determined to lead, not follow. The establishment of the National AI Office (NAIO) reflects this ambition, serving as a central body to steer national strategy and implementation.
AI investments are forecasted to grow at an impressive 29% annually between 2024 and 2028. In response, Budget 2026 has allocated RM20 million to NAIO, a significant boost aimed at cultivating AI talent, strengthening digital infrastructure, and building a sustainable innovation ecosystem.
Malaysia’s growing reputation as a data and AI hub has also attracted major global players. Microsoft’s USD2.2 billion investment will establish the Malaysia West Cloud Region, while Google’s USD2 billion data centre and Google Cloud Region in Selangor signal confidence in the country’s digital potential. These moves firmly position Malaysia as a regional nexus for digital transformation.
Bridging the Gap: From Bold Ideas to Real-World Solutions
While government policies and foreign investments set the macro direction, the engine of innovation often lies with local start-ups and SMEs. However, fuelling this engine requires navigating a complex funding landscape.
Typically, early-stage start-ups rely on government grants or angel investors to build prototypes, while mature companies turn to commercial banks for expansion loans. Yet, a challenging “missing middle” remains for high-growth AI companies. These ventures are often too mature for small grants but lack the physical assets—like land or factories—required by traditional banks. Venture Capital (VC) is an option, but not every founder is willing or able to dilute their equity early on.
To fill this specific liquidity void, the financial ecosystem has had to evolve, with specialised technology financiers stepping in to offer alternative debt funding. Malaysia Debt Ventures Berhad (MDV) plays a central role in this space, acting as a financier under the Ministry of Science, Technology and Innovation (MOSTI), designed specifically to value intellectual property and innovation potential over traditional collateral.
“AI companies, particularly in their early stages, possess immense potential but often lack the collateral or track record for conventional bank loans,” says Rizal Fauzi, Chief Executive Officer of MDV. “Financiers must look beyond traditional parameters to empower innovators to test, refine, and ultimately bring their AI solutions to market.”
Among those benefiting from this specialised support is Boss Boleh, Malaysia’s first fully online company secretary and accounting platform. While the company had strong growth metrics, their asset-light model made traditional financing difficult. MDV’s valuation of their technology roadmap allowed them to secure the capital needed to automate.
“Our AI-driven tools automate company registration, SSM submission, bank accounts opening, bookkeeping and tax filing, making our processes up to ten times faster and more accurate,” says Angie Ng, Co-founder and COO. “It has allowed us to scale efficiently, helping over 2,000 companies get started and stay compliant without being bogged down by manual paperwork.”
Similarly, CommerceDotAsia Ventures Sdn Bhd is appreciative of MDV’s support as it played a role in transitioning the e-commerce and social commerce enabler from standard logistics to AI-driven operations. The capital injection allowed them to deploy robotic warehousing systems and advanced data models that optimise inventory picking speed.
“AI is a great equaliser,” says Ganesh Kumar Bangah, Executive Chairman of CommerceDotAsia. “It gives SMEs access to the kind of automation and insights once exclusive to multinationals—leveling the playing field for Malaysian businesses. We are now using machine learning models for predictive analytics, which drastically improves how we forecast sales trends and optimize campaign spending.”
In healthcare, Naluri Hidup Sdn Bhd, a digital health and wellness start-up, is using similar backing to transform how Malaysians approach well-being. Their AI-enabled platform integrates sentiment analysis and nutrition tracking to provide predictive health insights.
“AI enables us to dramatically improve the efficiency of healthcare professionals by 10-fold, by systematising the predictable, so that we can humanise the exceptional”, explains Azran Osman-Rani, CEO and Co-Founder. AI picks up early signs of mental or physical distress, enabling timely intervention before problems escalate, and guides our clinicians to focus on the moments when human empathy and connection are needed the most.
However, Azran acknowledges that health tech adoption comes with challenges, from proving tangible outcomes and integrating with existing corporate systems to ensuring data privacy. As Naluri expands regionally, strong data governance frameworks and supportive financing policies remain crucial to sustaining the sector’s momentum.
Through initiatives like the Technology Acceleration and Commercialisation Scheme (MDV-TACT), MDV continues to champion these homegrown innovators, ensuring promising ideas can survive the “missing middle” and transform into commercial realities.
Towards an AI-Embedded Future
The growth of Malaysia’s AI ecosystem goes beyond technology; it’s about empowering people, driving productivity, and sustaining progress. A thriving local AI landscape can create high-skilled jobs, reduce dependence on imported systems, and strengthen homegrown innovation.
With continued investment in talent, research, and digital infrastructure, Malaysia can build context-driven solutions that enhance competitiveness while advancing sustainable development. Though still early in its AI journey, the nation’s path is clear to expanding into frontier technologies like robotics, quantum computing, and advanced analytics to build a digital economy that is inclusive, future-ready, and globally competitive. As AI continues to evolve, Malaysia’s commitment to innovation and inclusivity will determine how strongly it stands in the global digital era.
Source: https://sme.asia/the-significant-rise-of-ai-in-malaysia-driving-the-next-economic-leap/