Malaysia’s long-debated dual network strategy has entered its most important phase, as UMobile accelerates its 5G network rollout and plans for up to 7,000 new sites by mid-2026, While two years of industry discourse have centred on whether the country needs two 5G networks, the question is: with DNB already covering 80% of populated areas, how does building parallel infrastructure serve Malaysia’s digital ambitions?

Gayan Koralage has shaped Edotco Group’s strategy since its formation in 2013 and helped establish the company as Asia’s leading tower company in eight markets with 55,000 towers, and says Malaysia’s 5G infrastructure development must prioritise network resilience over immediate cost savings.

“The design objective is single network failure,” Koralage explained during an exclusive interview with Tech Wire Asia, amid mounting industry concerns about UMobile’s plan to deploy 5,000-7,000 new 5G sites alongside DNB’s existing 80% population coverage. “If you have only one network running the country’s 5G network, then the whole nation risks not having any if there should be a failure with the single network.”

This defence comes at a time when Malaysia’s 5G adoption reveals significant untapped potential. With only 20% of what industry estimates suggest is approximately 33 GB of monthly per-customer data consumption migrated to 5G networks, the vast majority of digital transformation remains ahead. The government’s vision for building parallel networks with substantial capacity addresses this opportunity, positioning Malaysia to accelerate digital adoption and support the projected surge to 50-75 GB per customer by 2030 as AI and machine-to-machine communications drive demand.

The numbers tell the story of Malaysia’s digital trajectory. Current data consumption of 33GB per customer monthly is projected to rise to 50-75GB over the next decade, driven not just by human-to-human communications but also artificial intelligence applications and machine-to-machine interactions.

“The incremental data growth for Malaysia’s 35-40 million population – the data manufacturing capacity we need to build in the country, predominantly AI-based – cannot be handled by a single operator,” Koralage argued.

The 2025 reality: Beyond theoretical debates

Two years after Malaysia announced its dual 5G network strategy, the debate has moved from boardrooms to construction sites. UMobile’s aggressive deployment timeline targets 7,500 sites with 80% coverage by July 2026 and is the largest network rollout in Malaysian telecommunications history. This isn’t theoretical anymore; it’s happening on the ground.

That is why the current moment represents a shift in Malaysia’s telecommunications narrative. Early 2023 discussions focused on whether dual networks made economic sense, yet this year sees operational realities: spectrum allocation is finalised, TM has secured major fibre deals with both networks, and construction crews are building infrastructure nationwide.

Koralage’s strategic oversight helped attract Japanese and Malaysian sovereign wealth fund investments into Edotco in 2017. He views the transition as validation not vindication. “The question is no longer whether we should have two networks,” he said. “The question is how we execute two networks efficiently.”

“Having two networks is not new. It’s something very well tested,” Koralage said when pressed about infrastructure overlap concerns. “You have to have an overlap to have redundancy in this location. Otherwise, if 5G fails, what’s my backup plan?”

Yet redundancy comes with costs. UMobile’s rollout plan includes 2,000 new locations alongside 5,000 tower upgrades, creating the infrastructure duplication that tower sharing principles were designed to eliminate. The irony isn’t lost on industry observers: Malaysia promotes sharing and mandates separation.

Market balance complexities

The current network distribution reveals structural imbalances that the dual strategy attempts to address. “Right now there are three MNOs – CelcomDigi, Maxis, YTL – in one shared 5 G network, while UMobile operates essentially alone,” Koralage said. “The industry could potentially create traffic balance by selectively sharing networks – for example, with indoor coverage, operators can choose which buildings to serve rather than duplicating infrastructure in the same location.”

The rebalancing exercise suggests the dual network strategy serves broader competitive objectives beyond technical redundancy. The government appears to be engineering market dynamics that prevent any single network from achieving monopolistic control, even if its approach contradicts immediate efficiency gains.

The rural connectivity reality check

Beneath the 5G deployment debate lies an economic reality that exposes Malaysia’s digital divide in financial terms. The JENDELA initiative, designed to connect the remaining 4% of Malaysia’s unconnected population, reveals why market forces alone cannot achieve universal coverage.

“The cost to build a tower in a rural area is three times [higher],” Koralage said, outlining the brutal mathematics of rural connectivity. “Off-grid sites require specialised solutions – backup power, satellite backhauling, full macro towers rather than simple poles. The total cost of ownership becomes three times higher, while the revenue you can generate is only one-third of urban levels.”

This creates what Koralage describes as a “10 times problem” – three times the cost multiplied by one-third the revenue equals a nine-fold economic disadvantage, rounded to ten for practical purposes. The maths explain why government intervention through revenue sharing becomes necessary for rural deployment.

The bureaucratic challenges reveal a fundamental disconnect between urban and rural infrastructure development processes. “The site acquisition permitting process is taking much longer than we expected, because in urban cities, the process is well-known. In those rural locations, the landlords would have to visit government agencies. The process is not quite there, and to top it off, the council doesn’t meet often,” Koralage explained, describing what he characterises as “inherent, intrinsic issues” that complicate rural deployment.

The contrast is stark: urban tower deployment benefits from established relationships between municipal councils, landlords, and telecommunications companies. Rural areas lack this institutional knowledge and infrastructure. Local councils convene less frequently than their urban counterparts, landowners are unfamiliar with telecommunications infrastructure requirements, and government agencies haven’t developed standardised approval processes for remote locations.

Koralage describes Edotco as Malaysia’s “National Tower company. It’s delivered 257 towers in seven states for JENDELA Phase One, but these delays represent more than operational challenges – they undermine universal connectivity objectives. The company has committed to 90-day delivery timelines, down from previous 180-day standards, but rural permitting processes often extend beyond targets.

“The government has an ambitious plan with JENDELA: to get it done in six months. The approval process is something which we have to work on,” Koralage said, suggesting that regulatory reform may be necessary to achieve JENDELA’s connectivity goals.

The company advocates for a single-window approval system in all states, which could standardise rural deployment processes and reduce bureaucratic friction that currently hampers national connectivity initiatives.

State-backed competition and industry fragmentation

The proliferation of state-backed tower companies adds another layer of complexity to Malaysia’s infrastructure landscape. The entities emerged partly as a response to what Koralage terms “indisciplined rollout by mobile operators” – situations where multiple towers were constructed in proximity of one another without coordination.

“You’d see situations where we have two towers on the same rooftop, or two towers on the same hilltop – parallel towers built without coordination. That’s the history where the state found that the city’s aesthetic appeal was being compromised. It doesn’t look good, and some towers were built without proper approvals,” he said, defending the rationale behind state-backed companies as a response to industry indiscipline.

Today, Malaysia’s tower industry includes approximately 150 companies, with 40-plus remaining active. Edotco controls 6,000 towers out of 20,000 owned by independent tower companies: significant market fragmentation that enables competition yet complicates coordination.

The company advocates for a single-window approval system in all states to streamline deployment timelines. Edotco has already improved its delivery commitments from 180 days to 90 days, but regulatory bottlenecks remain problematic.

“Right now, we are committed to 90-day delivery. It used to be 180 days, but when network traffic grows in a location and operators decide to add infill sites, they cannot wait 180 days. The network traffic has already increased, calls are losing quality, and by the time 180 days pass, the situation has changed completely. Operators need a faster, more rapid approval process,” Koralage said.

Technology evolution beyond traditional infrastructure

Malaysia’s infrastructure development extends beyond conventional tower deployment into emerging technologies that may reshape rural connectivity economics. Edotco is exploring low-earth orbit (LEO) satellite integration for areas where terrestrial infrastructure proves economically unviable, particularly in Sabah and Sarawak, where point-of-presence locations may be 50 kilometres apart.

The company is also diversifying into adjacent services, including electric vehicle charging infrastructure through its ChargeSini partnership, which targets 200-plus locations using existing tower footprints. Out of the 100 EV charging stations deployed so far, Edotco uses its in-building locations, taking parking lots for ChargeSini charging through revenue-sharing arrangements.

Beyond Malaysia, Edotco’s influence extends to eight Asian markets with 47,000-plus towers, though Koralage acknowledges political instabilities in markets like Myanmar create operational challenges. The company’s RM1 billion annual revenue demonstrates the scale of infrastructure operations, with government projects representing less than 5% of total revenue – contradicting perceptions of heavy government dependency.

“We consider ourselves as the national tower company,” Koralage said, pointing to Edotco’s delivery of 1,200 tenancies in Malaysia last year and projections of around 800 this year. “[That’s] the largest rollout ever conducted by any Malaysian company in the history of the Malaysian tower or telecom industry.”

Edotco’s positioning reflects broader infrastructure responsibilities. The company owns 400 out of Malaysia’s 1,000 IBS-capable buildings, including shopping malls, universities, and iconic locations like the Kuala Lumpur International Airport. UMobile has selected 200 of these for 5G upgrades, representing approximately RM200 million in new business and highlighting how indoor coverage – which handles 70% of Malaysia’s cellular traffic – becomes crucial for network quality.

Critical industry assessment

While Koralage presents a technically sound defence of Malaysia’s dual network strategy, several challenges warrant scrutiny. The economic justification relies heavily on projected data consumption growth and AI adoption – assumptions that remain unproven at scale. Singapore’s successful dual network model may not translate directly to Malaysia’s more complex geography and economic structure.

The regulatory environment appears fragmented, with multiple approval processes creating deployment inefficiencies that undermine the speed advantages 5G networks are supposed to provide. The persistence of 42% operator-owned towers suggests that commercial incentives for infrastructure sharing may be less compelling than theoretical models indicate.

The rural connectivity economics expose uncomfortable truths about market-driven universal access. If remote towers require three times the investment for a third of the revenue, the business case for private investment disappears without government subsidies. This reality challenges assumptions about telecommunications market efficiency.

Malaysia’s approach to 5G infrastructure development reflects a broader tension between market efficiency and strategic resilience. The dual network strategy may indeed provide redundancy benefits, but at costs that extend beyond immediate financial calculations. Success will depend on whether the nation can justify redundancy premiums and deliver the connectivity foundation necessary for the country’s digitally-based economic aspirations.

As Malaysia navigates between efficiency and resilience, the telecommunications industry watches closely. The outcome may determine whether other ASEAN nations follow Malaysia’s redundancy-first approach or pursue more traditional efficiency-focused strategies. Either way, the experiment will provide valuable data points for regional digital infrastructure development.

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As financial regulators worldwide grapple with the challenge of overseeing artificial intelligence deployment in banking and finance, Malaysia has taken a step forward with Bank Negara Malaysia’s publication of a discussion paper on AI governance, initiating a ten-week consultation period that will shape how banks, insurers, and fintech companies deploy machine learning technologies.

The regulatory framework addresses a global challenge facing central banks from Singapore to the European Union, where policymakers balance innovation with financial stability as AI adoption accelerates in the sector.

Governor Abdul Rasheed Ghaffour used the MyFintech Week event to outline a broader regulatory roadmap extending through to the end of 2025, including forthcoming exposure drafts on open finance and asset tokenisation that represent Malaysia’s collected approach to emerging financial technology oversight.

Three-pronged regulatory approach

Speaking at Sasana Kijang on August 5, 2025, Governor Ghaffour outlined BNM’s immediate regulatory priorities. “We have released a Discussion Paper on Artificial Intelligence today, outlining our regulatory and developmental approach, including priority areas for industry-led collaboration and responsible adoption of AI in financial services,” he said, during the opening ceremony of MyFintech Week.

The regulatory roadmap extends beyond AI. By year-end 2025, BNM will issue an Exposure Draft on Open Finance, establishing a framework for customer-permissioned data sharing in Malaysia’s financial ecosystem. And, a discussion paper on Asset Tokenisation will follow, addressing potential use cases and safeguards for the adoption of tokenisation.

The coordinated approach reflects what Minister of Finance II Amir Hamzah Azizan described as the “F-I-N-D agenda” – Foster, Invest, Nurture, and Democratise – emphasising responsible innovation and shared infrastructure development in Malaysia’s financial sector.

AI adoption momentum in Malaysian finance

The timing of Malaysia’s AI financial regulation discussions aligns with industry adoption trends. According to BNM’s AI Survey 2024, 71% of banking institutions and development financial institutions had implemented at least one AI application by the end of 2024, up 56% on the previous year. Insurance and takaful operators showed similar growth, with AI adoption rising from 58% to 77% of companies.

According to the discussion paper unveiled at MyFintech Week, “Most AI applications currently in development or expected to be deployed in the near-term are designed to augment rather than replace human decision-making.” Simply put, financial service providers are primarily focusing on customer analytics, internal operational improvements, and fraud detection rather than core financial risk functions.

The AI survey also revealed that over 60% of banking institutions and insurance operators view AI as a strategic priority for the next one to three years, with particular interest in generative AI applications for internal process improvements.

Regulatory philosophy: Technology-neutral yet targeted

BNM’s approach to Malaysia’s AI financial regulation emphasises parity, proportionality, and neutrality. “Activities bearing the same types of risks will be regulated the same way, while regulatory expectations and supervisory rigour are calibrated to be commensurate with the materiality and likelihood of risks,” the discussion paper states.

The central bank maintains that existing technology-agnostic, outcome-focused regulatory requirements remain broadly adequate for current AI applications. However, BNM acknowledges that emerging AI use cases may require specific regulatory attention as the technology evolves. “As AI technologies and state of adoption in FSPs continue to grow and evolve, we recognise that AI use may introduce new risks that are not adequately addressed by the existing regulatory framework,” the paper states.

Industry collaboration and responsible innovation

The discussion paper emphasises “win-win-win” use cases – AI applications that benefit consumers, enhance outcomes for service providers, and align with regulatory objectives.

Examples include AI-driven fraud detection systems that reduce false positives and protect consumers, and personal financial management tools that improve financial litreacy through consumer-permissioned data analysis.

Leading financial institutions are already implementing specialised governance structures for AI projects. The survey found that institutions with more AI projects demonstrate greater confidence in managing concerns around staff expertise, model interpretability, and regulatory uncertainty.

BNM encourages industry-led collaboration through the Chief Risk Officers’ Forum, which developed an AI Governance Framework outlining responsible AI principles, including fairness, accountability, transparency, and reliability for Malaysian financial institutions.

Economic context and digital infrastructure

Malaysia’s economic fundamentals support this regulatory advancement. BNM has revised GDP growth projections to 4%-4.8% for 2025, while inflation is expected to remain moderate at 1.5%-2.3%. The ringgit has appreciated 5.55% against USD as of August 4, 2025, reflecting improved investor confidence in Malaysia’s structural reforms.

The country’s digital infrastructure foundation strengthens the case for comprehensive Malaysia AI financial regulation. With 97% of Malaysian households having internet access and 98% with smartphones, the financial sector considers itself well-positioned for AI adoption.

Malaysia currently ranks second globally in QR payment adoption, with DuitNow becoming integral in many daily transactions. Digital banks, digital insurers, and takaful operators are expected to accelerate digital-native model adoption in the industry.

Feedback timeline and implementation

BNM seeks comprehensive industry feedback on the AI discussion paper through to October 17, 2025. Responses should be submitted to aipolicy@bnm.gov.my with the subject line “AI in the Malaysian Financial Sector: Feedback from [name of institution/individual].”

The central bank specifically requests input on whether formal sector-specific AI definitions would benefit the industry, regulatory clarity, and AI trends that could shape the sector over the next 3-5 years.

Balancing innovation with systemic risk

The discussion paper’s most sobering assessment concerns the potential for AI to create new forms of systemic risk. “Convergence by the financial sector on the use of the same foundation models and/or the same datasets may introduce or amplify interconnections among FSPs,” the document says, highlighting how widespread adoption of similar AI systems could trigger synchronised market reactions during periods of volatility.

The concern reflects a deeper regulatory philosophy emerging in global financial centres: that AI’s promise of enhanced fraud detection, improved financial inclusion, and operational efficiency must be weighed against the possibility of creating more interconnected and potentially fragile financial networks.

BNM’s approach appears calibrated to navigate the tension through a regulatory sandbox. The central bank’s emphasis on “win-win-win” use cases – those benefiting consumers, financial institutions, and regulatory objectives simultaneously – suggests a pragmatic framework that prioritises demonstrable value over technological novelty.

The October 17 consultation deadline will test whether Malaysia’s financial industry shares this approach or wants to push for a more aggressive AI deployment.

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Malaysia has managed to secure a 19% tariff rate from the US, down from the initially threatened 25%, following negotiations that concluded with Prime Minister Anwar Ibrahim’s phone call with President Trump on July 31. The deal is said to have involved multiple components beyond traditional trade discussions, raising questions about whether the Malaysian approach represents a new model for regional engagement.

Multi-faceted negotiation strategy?

If Malaysia’s approach is proven true, it would differ from typical trade discussions by incorporating several non-traditional elements. According to The Straits Times‘ official sources, “the call was made earlier in the morning of July 31, after it was proposed by the Americans just a few hours back,” indicating last-minute urgency in the negotiations.

Potential factors in the negotiations may have included addressing US concerns about China’s market dominance. Sources suggest Malaysia could supply rare earth elements to the US, using the country’s deposits of more than 16 million tonnes worth an estimated RM1 trillion.

The would address Washington’s dependency concerns, given China’s current dominance in critical mineral production. Currently, rare earth ore mined in Malaysia is exported to China due to the country’s lack of domestic processing technology.

Malaysia may also recognise US halal certification for pharmaceuticals, representing a regulatory alignment opportunity. Malaysian trade officials told The Straits Times that “their certification is quite good” and the Malaysian Islamic Development Department has vetted the process, though no official arrangements have been confirmed.

Conflict resolution as a trade component

An unusual aspect of the tariff negotiations between Malaysia and the US involved regional conflict mediation. Anwar Ibrahim facilitated peace talks between Thailand and Cambodia on July 28, following Trump’s threat to halt tariff negotiations with both countries unless they resolved their two-month border conflict that resulted in multiple casualties.

Malaysia’s successful mediation resulted in a joint statement recognising the US as a “co-organiser” of the talks, with China as an “active participant” – a delicate diplomatic balance that satisfied all of the many stakeholders.

The innovative approach to linking regional stability with trade negotiations could become a template for other ASEAN nations seeking to enhance their value in US trade discussions.

Technology and policy boundaries

Malaysia’s approach appears to have balanced cooperation with maintaining policy independence. Since negotiations began, the country increased US gas purchases and tightened controls on “origin washing” and AI chip movement to address US concerns about Chinese sanctions evasion – measures that have been publicly confirmed.

However, Ibrahim maintained firm boundaries on domestic policies, specifically citing the Bumiputera policy as non-negotiable. The exemption of semiconductor exports from tariff coverage, 7.9% of Malaysia’s total exports, also protected a key technology sector.

Economic impact assessment

The US tariff outcome for Malaysia generated mixed reactions from analysts. UOB Kay Hian Wealth Advisors Sdn Bhd investment research head Mohd Sedek Jantan told Bernama (the Malaysian National News Agency)that “investor sentiment has also responded with relative composure” due to the lower-than-expected rate.

The tariff affects non-exempted goods, including furniture, rubber products, palm oil derivatives, and machines – sectors representing about 40% of Malaysia’s US$26 billion in US exports. Malaysia’s 19% rate compares to China’s 34% and Vietnam’s 20%.

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid also told Bernama that negative impacts may be “slightly mitigated” by policy frameworks outlined in Malaysia’s 13th Malaysia Plan, although trade tariffs typically show measurable GDP effects 12 to 15 months after implementation.

Regional context and questions

Trump’s confirmation of attendance at the October ASEAN Summit in Kuala Lumpur indicates continued US regional engagement, though the sustainability of this situation under in different administrations remains uncertain. Singapore Institute of International Affairs senior fellow Oh Ei Sun told The Straits Times that Trump recognises Southeast Asia as”one of the most dynamic regions of the world.”

The question for other Southeast Asian nations is whether Malaysia’s multi-component approach, if proven true – combining resource access, diplomatic mediation, and selective policy adjustments – represents a replicable model or reflects Malaysia’s unique circumstances and relationships.

The Ministry of Investment, Trade and Industry stated that the 19% rate was achieved through “a thorough and methodical negotiating process,” while Malaysia “stood firm on various ‘red line’ items,” specifics of which remain largely undisclosed.

Assessment and uncertainties

The tariff negotiations between Malaysia and the US illustrate evolving patterns in US-Southeast Asian trade relations, where traditional economic discussions increasingly incorporate broader strategic considerations, including resource security, technology cooperation, and regional stability.

However, several questions remain unanswered, particularly regarding what specific commitments were made beyond the tariff rate itself. The details of potential arrangements reported by The Straits Times – including rare earth supply agreements and halal certification recognition – have not been confirmed officially by either government.

It’s unclear whether this negotiation approach scales beyond Malaysia’s specific circumstances – including its non-aligned foreign policy positioning, strategic resource endowments, and Anwar’s diplomatic relationships. Other ASEAN nations may find different combinations of concessions and broader elements necessary, based on their particular economic profiles and political constraints.

The 19% tariff rate represents the confirmed near-term outcome, but the broader implications for technology transfer, supply chain resilience, and regional diplomatic dynamics will likely unfold over the coming years as both nations implement any commitments and navigate ongoing US-China competition in Southeast Asia.

(Image source: Photo by Minister of Investment, Trade & Industry Malaysia)

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Data centres are a core part of how countries manage and protect information today. Without local infrastructure, governments and businesses must rely on services from abroad – raising concerns around data privacy, performance, and national control. For countries like Malaysia, building out a strong data centre industry supports domestic needs and opens the way to becoming a regional hub for digital exports, including AI model training and cloud services.

A new report [PDF] from the Asia Pacific Data Centre Association (APDCA), prepared by KPMG, lays out how important the sector has become for Malaysia. The study found that in 2024 alone, data centres contributed around USD 1.4 billion to the national economy and supported more than 4,400 jobs. By 2030, those numbers are expected to grow significantly – reaching roughly USD 34 billion in output and supporting over 30,000 jobs.

A key piece of digital infrastructure

Data centres are essential for running everything from AI and fintech to e-commerce and public services. They help businesses run smoothly, make government operations more efficient, and give Malaysia a competitive edge in the global digital economy. Reliable infrastructure is no longer just a nice-to-have – it’s central to long-term growth and sovereignty.

Malaysia’s push to lead in digital services depends heavily on data centres. Beyond the construction and maintenance work involved, they unlock broader productivity gains in multiple industries – from cloud computing to artificial intelligence. The makes them a crucial part of Malaysia’s strategy to grow its knowledge economy and reduce brain drain.

The sector creates high-skilled jobs in areas like cloud infrastructure, network security, and data engineering. The are roles that help retain local talent and attract tech-focused foreign investment. According to LinkedIn data, over 357,000 professionals in Malaysia already work in digital-related roles – a sign that the workforce is well-positioned to support continued growth in this space.

Johor takes the lead

Much of Malaysia’s data centre capacity is concentrated in Johor, which in 2024 accounted for nearly 80% of the country’s total. The region has become a top destination for hyperscale and enterprise data centres, with a very low vacancy rate and strong interest from global tech players.

Johor’s location in the Johor-Singapore Special Economic Zone (JS-SEZ) gives it a strategic edge. Combined with solid infrastructure and available land, it’s become a natural choice for developers. As demand grows, new investments are also flowing into other parts of the country, like Selangor and the Klang Valley, helping to distribute benefits more widely.

Malaysia’s capacity is expected to rise from around 505MW in 2024 to roughly 3,600MW by 2030. That growth is being driven by demand for colocation, edge computing, and large-scale cloud operations.

Supporting broader economic goals

The impact of data centres goes well beyond the facilities themselves. They support jobs in construction, electrical work, HVAC systems, and more. They also create demand for digital services – everything from software engineering to customer support – that extend in industries.

The data centres serve as the foundation for high-growth sectors like AI, advanced manufacturing, and smart logistics. They enable better public services, rural internet access, and digital tools in education and healthcare. All of this contributes to better living standards and a more connected society.

The government sees this potential and has backed the sector through major infrastructure plans, including the Malaysia Digital Economy Blueprint and the Twelfth Malaysia Plan. A number of regulatory and incentive programs have also helped draw in investment, including tax breaks and energy supply improvements.

A fast-growing, competitive market

Malaysia is one of the fastest-growing data centre markets in Asia Pacific. Between 2025 and 2030, total data centre capacity is projected to double from 1.26GW to 2.53GW. At the same time, colocation revenue is expected to jump from $710 million to $1.87 billion. That growth is being driven by demand from hyperscale cloud providers and enterprise customers looking for reliable, cost-effective infrastructure in the region.

Compared to mature but capacity-limited markets like Singapore, Malaysia offers available land, lower costs, and growing government support. These factors make it a strong option for global providers looking to expand in Southeast Asia.

Supporting AI growth

The rise of AI has pushed global demand for data centre services even higher. Since the launch of tools like ChatGPT, companies have been racing to build infrastructure capable of training and deploying large models.

Malaysia is seen as well-positioned to meet this demand. The government has established the National AI Office (NAIO) to guide AI development and has set targets for inclusive AI growth and talent development. AI is expected to contribute around $115 billion to Malaysia’s economy between 2025 and 2030.

Local infrastructure is a big part of that. Owning and operating AI-ready data centres gives Malaysia more control over how data is handled, offers national security benefits, and strengthens its position in areas like renewable energy and sustainable facility design.

A broader supply chain opportunity

The growth of data centres also creates export potential for related industries. Malaysia could become a provider of AI and cloud services to nearby countries in ASEAN. It could also export technologies like cooling systems, develop expertise in managing electronic waste, and grow local capabilities in building GPU infrastructure.

This kind of industrial diversification supports long-term job creation and helps Malaysia build a more complex, tech-focused economy.

The policy environment matters

The government has already approved over $24 billion in data centre projects, most of it coming from foreign investors. To keep that momentum going, clear and consistent policy will be important.

Initiatives like the Green Lane Pathway – developed by Tenaga Nasional Berhad (TNB) – have helped speed up infrastructure setup. It now takes around 12 months to get power access, compared to the usual 36 – 48 months.

Other frameworks, like the Corporate Renewable Energy Support Scheme (CRESS), help providers tap into clean energy. At the same time, the new Planning Guidelines for Data Centres and upcoming rules around energy and water use show that Malaysia is also trying to manage sustainability more seriously.

Still, some areas need improvement. Unclear tax and energy tariff changes could reduce Malaysia’s appeal compared to other countries. Engaging with data centre operators and offering better regulatory certainty could help address this.

Building the workforce

Malaysia has made strong progress in growing its digital talent pool, but there’s still a gap when compared to other mature markets like Singapore, South Korea, and Japan. Lower attrition rates in Thailand and Vietnam also point to the need for better talent retention strategies.

Closer partnerships between government, industry, and education providers could help bridge these gaps and ensure that Malaysia remains competitive.

A strong outlook

Malaysia’s data centre market is set to expand quickly and play a key role in supporting national digital goals. The combination of strong government support, demand from global providers, and available resources gives the country a clear opportunity to become a major player in Southeast Asia’s digital infrastructure story.

As Jeremy Deutsch, Chair of the APDCA, put it: “Data centres are the foundational infrastructure that powers and enables AI, cloud adoption, and digital transformation in sectors. The report provides compelling evidence of the sector’s tangible benefits and broad-based impact on the Malaysian economy, rakyat, and nation.”

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Huawei is quietly trying to sell small batches of its AI chips to countries in the Middle East and Southeast Asia, Bloomberg reported. The goal is to get a foot in the door in markets where Nvidia dominates — even as Huawei faces limits on how many chips it can make.

Sources familiar with the situation say Huawei has approached potential buyers in the UAE, Saudi Arabia, and Thailand to offer its older Ascend 910B processors. Both Gulf nations have already signed large, multi-year deals to buy chips from Nvidia and AMD. Thailand also relies heavily on Nvidia for its AI work.

Huawei is offering thousands of 910Bs, though exact numbers vary depending on the pitch. It’s also trying to interest buyers by giving them remote access to a more advanced AI system called CloudMatrix 384. That system runs on Huawei’s newer Ascend 910C chips, which it isn’t exporting yet due to tight supply. Those newer chips are mainly being reserved for customers in China that can’t buy US chips.

So far, no deals have been finalised. But insiders say the effort shows Huawei wants to get its AI hardware in front of foreign buyers while it works to ramp up production. Washington is paying close attention too, as US officials push for American-made tech to be the foundation of future AI systems. Huawei’s own estimates — and those from the US — suggest its Ascend chips are still at least a generation behind Nvidia.

Moving old chips before they lose value

Part of the urgency may come from Huawei’s inventory. The company reportedly stockpiled nearly 3 million Ascend 910B dies from Taiwan’s TSMC before export controls tightened. Moving this older stock now allows Huawei to recover value before the chips become outdated — and gives it a chance to gather feedback from early adopters before newer chips like the 910C and 910D are ready to scale. It also helps Huawei quietly establish itself in regions where US chipmakers have a strong grip.

In the UAE, interest has been low. People familiar with the matter say even institutions like the Mohamed bin Zayed University of AI haven’t shown much enthusiasm. Thai officials didn’t respond to questions, and the status of talks there remains unclear.

Huawei has also been in talks to supply about 3,000 chips to Malaysia, according to earlier reports. The status of that project isn’t known. In Saudi Arabia, conversations with government-linked groups like the Saudi Data & AI Authority (SDAIA) appear to be more advanced. However, a SDAIA spokesperson said they couldn’t comment because it’s not currently within their scope.

Gulf nations invest in AI infrastructure

The Middle East, especially the Gulf, is fast becoming a hotspot for AI development. Saudi Arabia is backing its AI efforts through the Public Investment Fund and SDAIA, building new infrastructure and university programs tied to its Vision 2030 goals. In the UAE, MBZUAI has launched new partnerships with international research institutions and rolled out its own large language models. The region is positioning itself as a home for sovereign AI systems, drawing interest — and competition — from both Washington and Beijing.

One former US official said Huawei can only produce about 200,000 AI chips this year, mostly for customers in China — where demand is over one million units. That number doesn’t include the 2.9 million older chips Huawei stockpiled from Taiwan’s chipmaker TSMC.

But US officials aren’t taking much comfort in those numbers. Commerce Under Secretary Jeffrey Kessler told lawmakers that China’s limited output doesn’t mean it lacks global ambitions.

Huawei declined to comment on these efforts, which are based on conversations with several sources who asked not to be named. The company previously said it hasn’t shipped Ascend chips to Malaysia. Malaysian officials have also distanced themselves from the reported deal.

The US is paying close attention to AI infrastructure deals in the Gulf and Southeast Asia, in part because of those regions’ strong relationships with China. Washington has urged countries to avoid Huawei chips and offered US alternatives, though those come with strings attached — and those conditions are still being sorted out.

That balancing act is especially visible in Southeast Asia, where countries like Malaysia and Thailand are trying to stay neutral. Malaysia is home to major chip assembly and testing operations and is now attracting investments to support AI data centres. Penang, in particular, is drawing interest from global players like Intel and Infineon. While these countries rely on the US for high-end technology, they also have long-standing trade ties with China — making them cautious about taking sides in the tech standoff.

US delays new export controls

Back in May, the Trump administration announced plans to change how export rules are handled, but disagreements inside the government have slowed that process. The Commerce Department has written a draft rule that would extend export controls to Malaysia and Thailand, but it hasn’t taken effect. It also wouldn’t fully replace the earlier rules set under President Biden.

At the same time, the Commerce Department hasn’t approved chip sales tied to Trump’s recent trip to the Gulf, which included AI deals worth billions. US export rules already require licenses for AI chip sales to the UAE, Saudi Arabia, and others since last year. Nvidia declined to comment, and AMD and the Commerce Department didn’t respond.

Some Trump officials believe Huawei’s chip offers make it more urgent to approve US sales now. They say the risk is that Huawei will build relationships now and ship more chips later. Others argue there’s no need to rush — and that selling too many chips could still benefit Beijing. They believe Nvidia’s dominance gives Washington the upper hand to set strict conditions.

In their view, the fact that Huawei is only offering a few thousand older chips, and not its best ones, is a sign that the US still has time to act carefully.

In Saudi Arabia, where one government-backed AI fund has said it would drop China ties if asked by the US, Huawei has worked closely with local groups on AI. But it’s unclear whether that will lead to a chip deal — or how Washington might react if it does.

Ongoing trade restrictions still apply

Earlier this year, the Commerce Department warned that using Huawei’s Ascend chips anywhere in the world could violate US rules, since the chips rely on American tech. After pushback from Beijing, the US dropped that specific language, though it still warns that unlicensed use of Ascend 910B, 910C, or future models like the 910D could lead to penalties.

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The Trump administration is apparently preparing new AI chip export restrictions targeting Malaysia and Thailand over concerns about semiconductor smuggling to China, according to Bloomberg’s sources familiar with the matter. The proposed measures would add the two Southeast Asian nations to existing export control frameworks amid ongoing investigations into potential chip diversion schemes.

A draft rule from the Commerce Department seeks to prevent China — to which the US has effectively banned sales of Nvidia’s advanced AI processors — from obtaining those components through intermediaries in the two Southeast Asian nations, people familiar with the matter told Bloomberg. 

If proven true, the proposed AI chip export restrictions would mark the first formal step in Trump’s promised overhaul of his predecessor’s semiconductor trade policies. The timing of these potential restrictions comes as Malaysia has emerged as a critical hub for global technology investments. 

The timing of these potential restrictions comes as Malaysia has emerged as a critical hub for global technology investments. Oracle, Google, Microsoft, and Amazon have committed a combined investment of $16.9 billion through 2038 in the country’s digital infrastructure, with Oracle alone pledging $6.5 billion for its first public cloud region in the country.

Trade data also shows that chip shipments to Malaysia have surged in recent months, according to Trendforce’s report. This increase has drawn the attention of US officials who worry about the potential diversion of advanced semiconductors to China.

What ignited the concerns?

The proposed restrictions gain additional context from ongoing investigations in neighbouring Singapore. Singapore charged three men with fraud in a case domestic media have linked to the movement of Nvidia’s advanced chips from the city-state to Chinese artificial intelligence firm DeepSeek.

The servers involved in the case were supplied by Dell Technologies and Super Micro Computer to Singapore-based companies before they were sent to Malaysia, according to Singapore’s Law and Home Affairs Minister K Shanmugam. Malaysia said it will take “necessary action” against Malaysian companies if they are found to be involved in a fraud case linked to the alleged movement of Nvidia chips.

It is also worth noting that the draft measure represents a significant departure from the Biden administration’s approach. Officials plan to pair Malaysia and Thailand controls with a formal rescission of global curbs from the so-called AI diffusion rule, which had drawn objections from US allies and tech companies, including Nvidia.

Commerce Secretary Howard Lutnick has outlined the administration’s vision, stating that the US will “allow our allies to buy AI chips, provided they’re run by an approved American data centre operator, and the cloud that touches that data centre is an approved American operator”.

However, the draft measure is far from a comprehensive replacement and doesn’t answer questions about security conditions for the use of US chips in overseas data centres — a debate with particularly high stakes for the Middle East.

Mitigation Measures for Industry

Recognizing the potential disruption to legitimate business operations, the proposed AI chip export restrictions would include several measures to ease pressure on companies with significant operations in the region. 

One provision would allow firms headquartered in the US and a few dozen friendly nations to continue shipping AI chips to both countries, without seeking a licence, for a few months after the rule is published.

The licence requirements also would still include certain exemptions to prevent supply chain disruptions. Many semiconductor companies rely on Southeast Asian facilities for crucial manufacturing steps like packaging, and the process of encasing chips for use in devices.

Regional response and uncertainty

Government responses from the targeted nations have been measured. In response to earlier Bloomberg queries about curbs focused on smuggling risks, Thailand said it’s awaiting details, while Malaysia’s Ministry of Investment, trade and industry said clear and consistent policies are essential for the tech sector.

Nvidia, the dominant maker of AI chips, declined to comment, while spokespeople for the Thai and Malaysian governments didn’t respond to Bloomberg’s requests for comment. Nvidia chief executive officer Jensen Huang has previously said there’s “no evidence” of AI chip diversion, in general remarks that didn’t touch on any particular country.

Strategic implications for Southeast Asia

The proposed measures highlight the broader geopolitical tensions surrounding AI technology and export controls. Washington officials for years have debated which countries should be able to import American AI chips — and under what conditions. 

On one hand, the world wants Nvidia hardware, and US policymakers want the world to build AI systems using American technology — before China can offer a compelling alternative.

Singapore is Nvidia’s second-biggest market after the United States, accounting for 18% of its total revenue in its latest fiscal year.  Actual shipments to the Asian trading hub, however, contributed less than 2% of total revenue, as customers use it as a centre for invoicing sales to other countries.

What’s next?

The draft regulation remains subject to change, and it’s unclear whether Trump officials may ultimately regulate AI chip export restrictions to a wider swath of countries, beyond the Malaysia and Thailand additions. The Commerce Department did not respond to Bloomberg’s request for comment on the proposed measures.

The proposed restrictions underscore a fundamental tension in US technology policy: how to contain China’s AI capabilities without undermining America’s technological influence. By potentially restricting two countries that have become key destinations for US tech investment, Washington risks creating the very fragmentation it seeks to avoid – pushing regional partners toward alternative suppliers and technologies.

For Malaysia and Thailand, the challenge extends beyond compliance. These nations must now prove they can serve as trusted AI infrastructure hubs while managing the reality that their strategic location makes them attractive conduits for circumventing sanctions. 

The outcome will likely shape how other Southeast Asian countries approach their own AI development strategies.

The post Will US AI Chip export restrictions target Malaysia and Thailand amid China smuggling concerns? appeared first on TechWire Asia.

Alibaba Cloud is expanding its presence in Southeast Asia with new data centres in Malaysia and the Philippines, part of a broader push to meet rising demand for AI services in the region.

The company recently launched its third data centre in Malaysia and plans to open a second in the Philippines by October. These follow similar investments in Thailand, Mexico, and South Korea earlier this year.

Alibaba has committed to spending US$53 billion on AI infrastructure over the next three years. It’s also positioning Southeast Asia as a key market, even after shutting down data centres in Sydney and Mumbai last year, as reported by South China Morning Post.

AI hub and talent development in Singapore

As part of its 10-year anniversary in Singapore, Alibaba Cloud announced a new AI Global Competency Center (AIGCC) in the country. The centre is intended to support over 5,000 businesses and 100,000 developers, offering tools for building and deploying AI systems.

It also includes an AI Innovation Lab that will provide curated datasets, usage credits, and support services. The AIGCC is expected to work with more than 1,000 companies and startups, with plans to introduce over 10 AI agents for industries like healthcare, logistics, and finance.

To build a larger talent pool, Alibaba Cloud says it will partner with over 120 institutions to train 100,000 AI professionals annually.

New AI tools and system upgrades

Alibaba Cloud also rolled out upgrades to its AI infrastructure and software tools.

Its real-time data service, Data Transmission Service (DTS), now supports an “One Channel for AI” feature that can convert various types of data—text, images, audio, video—into formats that can be used for AI training and Retrieval-Augmented Generation (RAG) applications. The goal is to reduce technical complexity and speed up deployment.

On the AI inference side, Alibaba’s Platform for AI (PAI) introduced updates to support large models and complex architectures like Mixture of Experts. A new Model Weights Service is also available to cut cold start times and improve scaling, with test results showing up to 90% faster performance in some cases.

The company’s ninth-generation Intel-based Elastic Compute Service (ECS) instance is also expanding to more markets, including Japan, the UAE, and the UK. Since its April launch, nearly 10,000 businesses have adopted the new instance, which offers better computing efficiency and faster networking for AI, HPC, and database workloads.

Green AI research and challenges

A new study released during Alibaba Cloud’s global summit looked at how businesses are approaching “green AI”—AI systems designed to reduce environmental impact. Conducted by Forrester and commissioned by Alibaba, the study surveyed more than 460 IT and business leaders globally.

While most respondents agreed that green AI is important, many said they’re still in early stages. Some of the top challenges include sourcing sustainable hardware (80%) and improving data centre energy efficiency (73%).

Capability gaps were also common. Around three-quarters of respondents said their organisations lack the knowledge or skills to build and operate green AI systems. The study recommended several steps to close the gap, including using renewable energy in data centres, building smaller models, and improving collaboration on standards and open-source tools.

AI in practice: Customer examples

Alibaba Cloud’s AI offerings are being used by a growing number of customers across Asia and beyond.

Indonesia’s GoTo Group migrated its core business intelligence data platform to Alibaba Cloud’s MaxCompute. The company says the migration, which moved tens of petabytes of data over six months, helped improve cost efficiency and system performance with no downtime. GoTo Financial has also moved its lending systems to Alibaba Cloud, using PolarDB and Tair to support over 500 microservices with low latency.

VisionTech, a generative AI startup in Singapore, uses Alibaba Cloud infrastructure to scale its multilingual AI bots across Southeast Asia. The company says it cut infrastructure costs by more than 25% and now uses Alibaba’s Qwen model to manage real-time translation across English, Chinese, Malay, and Japanese.

Japanese tech provider FLUX is also working with Alibaba Cloud to bring the Qwen model to local businesses. FLUX plans to build its own LLM product using Alibaba’s tools and apply it to core operations for clients across industries.

In the Middle East, Alibaba Cloud signed an agreement with Al-Futtaim, a diversified business group based in Dubai, to support AI development across its business units. The deal includes access to Alibaba’s cloud and AI infrastructure, as well as open-source frameworks and training support.

The post Alibaba Cloud expands AI infrastructure in Southeast Asia appeared first on TechWire Asia.

As US and Chinese companies intensify their battle for global robotaxi leadership, Baidu’s Apollo Go robotaxi expansion into Southeast Asia appears to be gaining momentum, with the Chinese tech giant reportedly eyeing regional deployment as early as late 2025.

According to a recent Wall Street Journal report, Baidu’s robotaxi unit is planning to expand into Southeast Asia as soon as the end of this year, with Singapore and Malaysia identified as primary target markets in the region. A person familiar with the matter told the publication that these markets align with the company’s broader international strategy.

The potential robotaxi expansion comes as Chinese autonomous driving companies adopt what industry observers describe as a “dual-pronged approach” to achieve profitability and navigate geopolitical tensions.

As noted by Nikkei Asia in a recent report examining how “Baidu, Waymo and others eye overseas markets as political tensions run high,” uncertainty surrounding US-China relations has made the Middle East, Southeast Asia, and Europe increasingly attractive alternative markets for Chinese firms.

The market leadership battle intensifies

Baidu’s Apollo Go recently announced its service has completed more than 11 million rides, surpassing Waymo’s reported 10 million, marking a milestone in the global robotaxi competition.

The Chinese company operates the largest fleet of the Chinese robotaxi companies, with more than 1,000 cars in operation globally, according to a WSJ report. Chinese robotaxi rides cost about 35 cents per mile compared with $2 in the US, according to a 2025 report [PDF] by US-based investment firm ARK.

The cost advantage stems from government subsidies, comprehensive supply chains, and lower labour costs, giving Chinese firms an edge in price-sensitive markets. While China remains Apollo Go’s main market, the company has already announced expansion plans in the Middle East.

Baidu outlined plans in March to deploy “dozens” of robotaxis in partnership with UAE-based Autogo in Abu Dhabi with a goal of starting commercial operations by 2026, according to Reuters.

Goldman Sachs sees massive growth potential

Investment bank Goldman Sachs forecasts significant growth in the global autonomous vehicle market, projecting that a global fleet of several million commercial autonomous vehicles used for ride-sharing could be operational by 2030. Currently, China’s robotaxi fleet – the world’s biggest – stands at about 1,700 vehicles.

The research firm estimates the Chinese robotaxi market could grow to $47 billion in value by 2035 from an estimated $54 million this year. The growth trajectory is expected to be driven by cheaper hardware and algorithm development, as well as declining operating costs for fleet owners.

Goldman Sachs analysts believe Apollo Go, Pony AI, and WeRide will likely remain among the major players due to high technological barriers to entry and their leading advantages in algorithms, data, and mapping capabilities.

Regional competition heats up

The Southeast Asian robotaxi expansion strategy reflects broader competitive dynamics in the autonomous driving space. WeRide said it has begun “public operation” of its robotaxi GXR minivan in several Chinese cities as well as Zurich and Abu Dhabi, while also partnering with Uber to expand into 15 cities over the next five years.

Meanwhile, US companies are focusing on domestic scaling. The Alphabet-owned Waymo, which launched the world’s first fully driverless service in Phoenix in 2020, remains the largest operator in the US. However, American firms have faced challenges, with General Motors halting investment in Cruise after spending $10 billion, citing high scaling costs.

Technology race continues

As the industry moves toward commercial viability, Chinese companies appear to have gained operational experience advantages. Baidu’s Zhang said the company was confident it could do well abroad, citing its claim that its vehicles had completed 10 million trips in China as of March without a serious traffic accident.

The company has been running its Apollo Go robotaxi services commercially in several Chinese cities since 2022, with vehicles operating at Level 4 autonomy – meaning they are driverless but restricted to certain approved areas.

However, challenges remain for all players in the space. Even at the current level of automation – where vehicles can operate in driverless modes only in certain government-approved areas – robotaxis would commercially scale only by 2030, according to a McKinsey report.

The post Baidu’s Apollo Go to launch robotaxi expansion in Southeast Asia appeared first on TechWire Asia.

US tariffs on Chinese goods are forcing Malaysian manufacturers to rethink how they manage their supply chains. With more restrictions on trade, companies in Malaysia are seeing both new chances and new problems. Some are getting a boost from foreign investment, while others are struggling with higher costs and parts that are harder to get, especially when their supply chains are linked to China.

In an interview, Ben Lim, Senior Country Manager for Malaysia at Epicor, said, “Malaysia is in a unique position. Our manufacturers are definitely feeling the ripple effects of these trade barriers.”

One big issue is visibility. Many manufacturers don’t have a clear picture of where their parts come from or how exposed they are to tariffs. Lim said, “It’s hard for them to trace where components come from or understand how exposed they are to new tariffs.” This is especially true for companies using old systems that can’t handle fast changes. “Legacy systems don’t offer the flexibility to simulate tariff impacts or help businesses adjust quickly,” he added.

Costs are also rising. When tariffs hit materials at the start of the supply chain, those extra charges flow through production and hurt profit margins. At the same time, manufacturers are being asked to meet stricter rules. They need to keep more records and track things like carbon emissions across the entire supply chain. This adds even more work and requires better systems.

Trying to beat future tariffs, some companies are rushing orders, which is clogging up logistics and delaying shipments. Lim said regional trade deals like RCEP and CPTPP may help businesses cut down their reliance on a single country. These deals can open up access to other markets and give more options when routes get blocked.

He also pointed out that new tools can help manufacturers stay ahead. Supply chain systems and ERP platforms with real-time features let companies plan around problems and keep things moving. Government tax breaks and grants are also available, but Lim said many businesses don’t make full use of them.

Not all the changes happening are short term. While some of the moves are just reactions to new tariffs, others are part of a longer shift. “If you take a broader or bird’s-eye view, I believe this moment is actually transformative for many Malaysian manufacturers,” Lim said. Companies are rethinking where they build and how they ship, and Malaysia is starting to show up more often in those long-term plans. Its central location in Southeast Asia and skilled labor base are part of the reason.

Lim also said the government has set a goal to grow manufacturing’s role in the economy. One estimate puts GDP growth from this sector at 61% by 2030. “There is real momentum, but it’s also exposing a lack of transparency and slow reaction times,” he said.

When demand jumps, so do the problems. Manufacturers can’t just increase output overnight. Lim said, “We’re seeing bottlenecks in logistics, compliance overload, and shortages of skilled workers.” He pointed to past examples during COVID, when similar issues popped up. Now they’re back, and this time the rules are even tighter.

“We’re seeing more rules around ESG, sustainability, documentation, and certifications. These come on top of customs paperwork and other local laws,” he said. Many manufacturers don’t have the people or the systems in place to manage all of it.

He also warned about how companies are using data. Many still work with disconnected systems. Different departments might track things in their own Excel sheets, which causes delays and mistakes. “When data isn’t current, it doesn’t help you make good decisions. It just creates more problems,” Lim said.

One way out of this is to use cloud-based systems. These allow businesses to share real-time updates, work across countries, and stay secure. Cloud platforms also shift costs from upfront spending to regular payments, which is easier to manage. Lim gave the example of a customer using Epicor ERP in both Malaysia and the US. The two teams operate in different time zones but share the same system. This makes better use of resources.

Cloud platforms can also roll out updates faster. Security tools and new features reach users sooner, which matters when threats and rules change fast. “Cybersecurity is a growing concern,” Lim said. “It’s not just about having a good system. You need one that protects your data and keeps your operations going when something hits.”

Another growing challenge is sustainability. Lim said this isn’t just a trend—it’s becoming a requirement. European customers, for example, want proof of how much carbon was used to make a product. One Malaysian firm that makes plastic stretch film is tracking carbon data from start to finish. “Every roll they produce is made to order. They track carbon emissions from the raw materials all the way to shipment. That data is printed on a QR code attached to the product,” Lim said. This helps meet customer and legal demands.

Lim added that working in the cloud helps with sustainability reporting too. The systems can store and sort the data in one place, which makes it easier to prepare reports when needed.

The conversation also turned to the Johor-Singapore Special Economic Zone. Lim said manufacturers should think about how to benefit from it, not just be included in it. Johor could be used for high-volume production, while Singapore could host R&D or regional HQ functions. That mix makes the most of both locations.

“Companies should also look at the tax incentives,” he said. Malaysia offers a corporate tax rate as low as 5% for up to 15 years for high-value manufacturing. But again, many businesses overlook these benefits.

Training is another key area. Johor plans to create 20,000 skilled jobs and attract 50 major projects in the next five years. Local programs from groups like the Johor Talent Development Council are already running. “Upskilling is not just nice to have anymore. It’s necessary,” Lim said.

He summed it up by saying manufacturers that align their operations with new policies, invest in useful tech, and focus on building skills are more likely to benefit in the long run. “Change is constant,” Lim said. “It’s tariffs today, but something else could come tomorrow. Being prepared is what matters.”

For manufacturers in Malaysia, staying competitive now means planning for what’s next, not just fixing what’s urgent.

The post How Malaysia manufacturers are adapting to US tariffs appeared first on TechWire Asia.

Malaysia now has another initiative focused on artificial intelligence. Launched last Friday, AI Malaysia (AIM) is described as a platform to help businesses adopt AI and connect with others in the region. The initiative comes from ASEAN-BAC Malaysia and is part of a broader effort to encourage innovation and responsible tech use.

But Malaysia already has several ongoing efforts in AI, including the National AI Office (NAIO), which was set up in late 2024. The arrival of AIM raises a question: What gap is it meant to fill?

A new player in Malaysia’s AI plans

AI Malaysia, or AIM, was launched as a way to help companies better understand and use AI. According to its backers, AIM wants to create links between government, businesses, and researchers. It aims to encourage responsible development while helping firms stay competitive.

AIM also places importance on Malaysia’s place in ASEAN. Part of its mission is to support cross-border collaboration and to take part in regional discussions about AI safety, fairness, and trust.

This is not the country’s first attempt at organising its AI efforts. The Malaysian government created NAIO with a clear public role: to build national policy, oversee long-term strategy, and guide public sector adoption. AIM, by contrast, appears to focus more on business users and cross-industry collaboration.

What AIM wants to do

Early details imply that AIM will act as a connector rather than a regulator. The initiative is expected to help companies understand how artificial intelligence can enhance operations, reduce costs, and open new market opportunities. It also plans to create events, partnerships, and working groups to support these goals.

Still, there’s limited public information about how AIM’s work will be structured or measured. Its launch comes at a time when many in Malaysia are already trying to make sense of the country’s broader digital strategies. This includes the MyDIGITAL initiative, the National AI Roadmap, and separate industry-based programs.

Overlap with existing national plans

NAIO is the country’s main agency for AI policy and planning. Since its launch, it has announced plans for an AI Technology Action Plan (2026–2030), a national AI Code of Ethics, and a regulatory framework to support responsible adoption. It also plays a role in driving public sector AI projects and shaping Malaysia’s position in global AI forums.

With AIM now added to the mix, it’s unclear how the two efforts will work together. Both aim to support adoption, encourage responsible use, and strengthen Malaysia’s role in ASEAN’s digital economy. Without clear boundaries, there is a chance of overlap—or confusion—between their roles.

AIM’s timing and regional context

Across Southeast Asia, countries are setting up national AI centres and publishing ethical AI guidelines. Indonesia, Singapore, and Vietnam have each released AI roadmaps and are investing in cloud and data infrastructure.

Malaysia is already part of ASEAN’s push for regional AI governance. In this context, AIM may serve as the country’s private-sector link to regional conversations. Its focus on cross-border collaboration could help Malaysian businesses find AI use cases that work across sectors and borders.

Bridging the public-private gap

One possible benefit of AIM is its closer link to business needs. While NAIO sets policy, AIM could help companies test ideas, run pilots, and find technical partners. This could include universities, AI startups, or cloud service providers.

This approach might help Malaysia address some of the known challenges in Malaysia’s AI plans. Companies have previously reported trouble accessing skilled talent, finding funding for AI research, and getting regulatory support for pilot programs. AIM may be able to help fill those gaps if its structure supports collaboration rather than competition.

The talent gap remains a shared concern

Malaysia still faces a shortage of AI talent, both in terms of technical skill and practical experience. To address this, the government has rolled out the AI Talent Roadmap (2024-2030) and school-level programs like Cikgu Juara Digital, which teaches kids and teachers about AI, coding, and robotics.

AIM’s role in talent development is not yet clear. While its launch announcement mentioned a focus on innovation and education, it did not outline any new programs. If AIM plans to support training or help match workers with AI-related jobs, it could complement the existing government strategies.

International support builds momentum

Malaysia’s push into AI has drawn interest from international tech companies. Microsoft recently committed $2.2 billion to support cloud and AI infrastructure in the country. This investment includes the planned National AI Innovation Center, training programs, and partnerships with local organisations.

This support could benefit both AIM and NAIO, as both seek to encourage responsible adoption and stronger digital foundations. At the same time, it points out the need for coordination. If too many initiatives are created without clear roles, they risk competing for the same partners, resources, and attention.

Avoiding fragmentation

When governments and industry bodies launch multiple programs with similar goals, the risk is confusion rather than progress. Malaysia has made clear that AI is a national priority. To keep on track, it will need to ensure that AIM, NAIO, and other programs support one another rather than overlap.

So far, AIM appears to position itself as a complement to NAIO, not a replacement. Whether that balance holds will depend on how clearly each group defines its tasks and how well they coordinate over time.

AI Malaysia is still in its early days. There are few details available about its structure, funding, or programs. Its website and public statements suggest it wants to be a meeting point for AI innovation and policy, but success will depend on how well it works alongside existing efforts.

For AIM to matter, it will need to show how it adds value—not just duplicate work already being done by the National AI Office or other agencies. That might mean helping businesses run pilots, linking developers with users, or giving feedback to policymakers about on-the-ground challenges.

If AIM can stay focused and fill those gaps, it could help speed up AI use in Malaysia. If not, it may risk becoming one more name on a long list of well-meaning plans.

The post Malaysia adds another AI initiative—How AIM fits into the bigger picture appeared first on TechWire Asia.

Microsoft has opened its first cloud regions in Malaysia and Indonesia, giving the countries local access to data storage, AI tools, and cloud services. The move supports public and private sector efforts to improve infrastructure, strengthen security, and build digital skills.

Malaysia West, based in Greater Kuala Lumpur, and Indonesia Central, located in Jakarta, each include three availability zones, with zones offering separate power, cooling, and networking to reduce service disruptions. Both regions are now live and available to customers.

The two launches are part of larger investment plans. In Malaysia, Microsoft committed US$2.2 billion between 2024 and 2028 to support cloud and AI growth. In Indonesia, the company is investing US$1.7 billion over the same period. The funds are going toward infrastructure, training programs, and partnerships.

Meeting local rules and performance needs

Each region offers data residency, allowing organisations to keep their data inside national borders. This helps with compliance and privacy concerns, and reduces latency for users.

The cloud regions are built with the same security measures as Microsoft’s global network. These include physical safeguards, encryption, and access controls. Microsoft also reports that the centres are intended to meet environmental goals like reducing carbon emissions and improving water use.

For example, the Indonesia Central region was developed in line with Microsoft’s environmental targets which include becoming carbon negative by 2030, water positive by 2030, and reaching zero waste in the same decade. The facility is connected to Microsoft’s global wide area network, giving users in Indonesia access to high-bandwidth, low-latency connections in other regions.

Economic projections and job growth

Research from IDC suggests that these regions could create new economic value for both countries. In Malaysia, the new cloud region is projected to help generate US$10.9 billion in revenue and more than 37,000 jobs by 2028. In Indonesia, the estimate is US$15.2 billion in value and more than 106,000 jobs in the same time period.

The jobs are expected to cover both tech and non-tech roles, like cloud operations, software development, support services, and training. Many of the positions will require AI and digital skills, which ties into local workforce development efforts.

Working with local groups and businesses

Several organisations are already using the new cloud infrastructure. In Malaysia, early users include PETRONAS, TNG Digital, and SCICOM Berhad. In Indonesia, the list includes BCA, Pertamina, Telkom Indonesia, Astra, and Binus University.

Public agencies are also involved. In Indonesia, the Ministry of Communications and Digital Affairs said the cloud region shows trust in the country’s digital direction. The ministry said cloud and AI could play a role in both national development and regulation.

In Malaysia, the government sees the launch of a cloud region as part of its effort to improve digital services and support job creation. Officials believe the new infrastructure will assist firms in updating existing systems and exploring more efficient ways of working.

Focus on training and AI skills

To support these changes, Microsoft is running several skills programmes. In Malaysia, AIForMYFuture aims to train 800,000 people by the end of 2025. So far, 400,000 people have taken part. The programme includes public servants, students, and people from underserved groups.

In Indonesia, elevAIte was launched with help from the Ministry of Communications and Digital Affairs. The target is to train a million people by 2025. More than 20 organisations are involved, including schools, businesses, and local groups.

Microsoft also started a vocational programme called the Nusantara Data Centre Academy. It trains students for roles in data centre operations. Some students are already doing on-the-job training with others in classroom sessions.

In addition, a Community Empowerment Fund is helping schools near data centres improve their digital tools. Funds are used to buy equipment and run training programmes for teachers and students.

As of mid-2025, the Fund has supported over 3,200 students and teachers in Indonesia. Schools in areas like Cikarang and Karawang have received hardware and software tools to support digital learning.

AI projects and local solutions

Both countries are working to use AI to solve local problems. In Malaysia, Microsoft is part of discussions around a National AI Innovation Centre. The goal is to build tools that can support national goals and public services.

A plan for an AI Centre of Excellence in Indonesia was announced during Microsoft’s AI Tour Jakarta. The idea is to bring together stakeholders from government, education, and business to collaborate on real-world AI solutions.

Some groups have already put AI into use. Astra in Indonesia has developed a dealer management system using AI and Microsoft tools, helping with planning, inventory, and service tracking.

The Ministry of Finance in Indonesia is also assessing how to use cloud services for institutional needs. Officials said that reliable and compliant cloud infrastructure could help lower latency and improve efficiency in public sector operations.

A long-term bet on digital growth

The cloud regions are part of Microsoft’s long-term involvement in Southeast Asia. Demand for secure, local digital tools continues to rise, and governments and businesses are exploring cloud adoption as part of their digital plans.

Microsoft’s cloud regions are now one of several factors shaping how Southeast Asia uses technology. While more firms may enter this space, the current focus remains on building infrastructure that can support both long-term national strategies and daily operational needs in sectors like education, healthcare, energy, and finance.

The post Microsoft opens cloud regions in Malaysia and Indonesia appeared first on TechWire Asia.

As Malaysia accelerates its push toward Industry 5.0, the country’s manufacturing sector – valued at over RM1.2 trillion – faces a growing and complex set of cybersecurity threats. From legacy operational technology (OT) systems to expanding digital ecosystems, manufacturers are navigating a risk landscape that’s changing as fast as the technology they adopt.

According to Allen Chin, Senior Manager, Technical Solutions at Palo Alto Networks, the industry’s increasing reliance on interconnected devices and systems opens up vulnerabilities that cyber attackers may exploit quickly. This includes risks from internal exploits, layered attack methods, and the convergence of IT and OT environments.

“One of the key issues is that many legacy OT systems weren’t designed with security in mind,” Chin explains. “As they get integrated into broader digital environments, organisations are left with gaps in visibility and control.”

In 2024 alone, CyberSecurity Malaysia recorded more than 1,200 incidents, with intrusion attempts and ransomware among the most common threats. According to PIKOM’s 2024 cybersecurity report [PDF], manufacturing remains one of the hardest-hit sectors, emphasising the importance of Malaysian industry in this regard.

Multiple entry points and the rise of AI-powered threats

The complexity of today’s threat landscape is not just about a single point of entry. Chin states that the 2025 Global Incident Response Report by Palo Alto Networks found that 70% of cyber incidents experienced at least three attack vectors. These include endpoints, cloud systems, and employee-targeted social engineering tactics.

Compounding the challenge is the growing use of AI by threat actors. “Attackers are now using AI to automate phishing, scan for vulnerabilities, and avoid detection. The makes it easier for them to launch fast, multi-stage intrusions,” Chin says. In many cases, attackers are able to move laterally through networks, pivoting into OT environments that were previously isolated. The assumption that these systems are protected by “air gaps” no longer holds up, particularly as more manufacturers connect them to IT systems for remote monitoring and data analysis.

Ageing vulnerabilities still in play

A recent whitepaper by Palo Alto Networks and Siemens sheds light on another concerning trend: the persistent exploitation of old vulnerabilities. The report found that nearly 62% of exploit attempts in OT environments targeted CVEs that were six to ten years old – most of which had already been patched.

“When we cross-reference this with our Unit 42 Incident Response Report, the pattern is clear,” says Chin. “In OT-related cases, almost 75% of attacks exploited known vulnerabilities. That’s not just a visibility issue – it’s a patching issue, an awareness issue, and often a resource issue.”

The research also revealed that manufacturing firms were frequent targets of internal exploit attempts. About 80% of malware detected in OT networks was referred to as “Unknown,” showing the growing sophistication of attacks and the limitations of traditional threat detection methods.

Why SCADA and OT systems are now a bigger target

Supervisory control and data acquisition (SCADA) systems and other OT platforms were once largely immune to cyberattacks due to their physical isolation. But that’s no longer the case. As digital transformation brings cloud platforms, 5G networks, and smart technologies into the factory environment, these systems are becoming more exposed – and more appealing – to cybercriminals.

“The exposure often isn’t intentional,” Chin says. “Devices installed for convenience or remote access sometimes end up accessible from the internet without the right protections in place.”

There’s also a financial incentive. Manufacturing disruptions have a domino effect on supply chains and productivity, making them ideal ransomware targets. With Malaysia’s manufacturing sector being such a major contributor to the economy, the potential damage extends far beyond lost data – it could result in halted production, regulatory fines, and reputational harm.

Building security into innovation

As factories integrate more automation, robotics, and IoT into their operations, Chin urges a proactive mindset: “The question shouldn’t be whether to prioritise digital transformation or cybersecurity. It’s about how to do both from the beginning.” Security, he adds, should be embedded in every stage – from procurement to deployment.

A Zero Trust approach is one way to achieve this, where no user or device is automatically trusted, even in the network. Each access attempt is verified and monitored. “Too often, security is bolted on after systems are operational,” Chin says. “That’s much harder and more expensive than designing with security in mind from day one.”

What the Cyber Security Act 2024 means for manufacturers

With the implementation of Malaysia’s Cyber Security Act 2024, manufacturers now have a legal framework to follow – but Chin stresses that compliance should be viewed as a baseline, not an endpoint. The law outlines requirements like doing frequent risk assessments, reporting incidents, and adhering to specific security protocols.

However, Chin believes that true resilience comes from treating cybersecurity as a strategic priority rather than a regulatory obligation. “Security needs to be part of digital transformation conversations right at the planning stage,” he says. “And that includes everything from supply chain visibility to how remote access is managed.”

He also emphasises the importance of collaboration between the public and private sectors, where shared intelligence and coordinated responses can benefit the broader cybersecurity ecosystem in Malaysia.

A secure future for high-tech manufacturing

As Malaysia works to establish itself as a high-tech manufacturing hub in Southeast Asia, protecting its digital infrastructure will be important for long-term success. From AI to robotics, the country’s industrial base is rapidly modernising – but that progress is vulnerable without the right security foundations.

Chin emphasises that building cyber resilience in OT environments isn’t just a technical requirement – it’s essential for national competitiveness and economic stability. “Strengthening OT security helps ensure that the benefits of innovation are realised safely and sustainably,” he says. “It’s about enabling long-term growth in a connected, digital world.”

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