Building tomorrow, today
30 Dec 2024
Malaysia is doubling down on technology to drive economic growth and establish itself as a regional tech hub. Through strategic investments in digital infrastructure and forward-looking policies, the government aims to enhance digital capabilities and secure the nation’s position in the competitive global economy.
A key initiative is the RM50 million allocation in Budget 2025 to expand artificial intelligence (AI) education across research universities, underscoring the government’s commitment to fostering innovation. Industry experts highlight the importance of a coordinated, cross-sectoral approach to overcoming uncertainties and harnessing the full potential of advancements in AI, advanced computing and connected technologies.
Future readiness relies on improving current technologies while paving the way for emerging innovations such as autonomous vehicles and advanced computing, says Rosihan Zain, CEO of Futurise Sdn Bhd. This requires strategic planning to build an ecosystem equipped to harness these advancements, including developing infrastructure and implementing strong regulatory frameworks. Futurise, a subsidiary of MOF Inc-owned Cyberview Sdn Bhd, has been tasked with driving regulatory reform, deploying technological innovations, and fostering new ecosystems through the National Regulatory Sandbox.
“The country needs to elevate itself and be on par according to innovative practices that are prevalent in the world. If [the country] prepares for emerging technologies and has the right frameworks and established ecosystems to receive it, it’s akin to preparing the house before the residents move in,” says Rosihan.
Achieving this will need streamlined coordination among government agencies to ensure their efforts are distinct yet complementary, he says. There has to be a clear and ambitious vision to guide these agencies to establish a technological and innovation footprint.
More importantly, this vision must move beyond aspirations, grounded in a clear understanding of strengths and the challenges that need to be addressed, says Prashant Kumar, a leading AI, customer and brand expert, as well as an independent director on Astro’s board of directors. A well-crafted approach should focus on identifying and prioritising areas where there is a distinct competitive advantage.
“I would say a vision is easy but a smart vision is difficult. To truly [identify] the country’s strength, capabilities and unique characteristics [while] understanding the evolving global technology ecosystem and where the gaps are to be the best in class globally in certain clusters, takes a lot of strategic thinking. That is the crux of a great vision for the country,” he says.
Countries such as South Korea serve as inspiration, having successfully exported their technology, innovation, and culture, says Rosihan. Embracing a similar mindset with a focus on a long-term vision is crucial for achieving success in the journey toward becoming a technology and innovation hub. “Before leading to the grand vision for innovation, we need to understand why we’re doing it and what we are trying to achieve.”
Building on existing strengths
Malaysia’s unique advantages position it to become a key player in the global technology landscape, says Prashant. The focus should be on areas where it can lead, rather than spreading resources across multiple emerging technologies.
“I think being precision-focused on our competitive advantages is the [priority] … We are lucky because we already have a chip industry with deep strengths in consumer electronics and semiconductors. If you look at the biggest beneficiaries of the AI wave, they are the [countries that have] chip and cloud [industries]. We have a competitive advantage in both,” says Prashant.
“It is not the strongest or most intelligent of the species who survive; it’s the one that is most adaptable to change. Those who adapt will be winners; those who don’t will be losers. This applies to countries, individuals and companies.”
With strengths in oil and gas, biotechnology and semiconductors, how can Malaysia leverage these advantages?
“To be a global leader, we need to find areas where we can be a disruptor or a market leader. We have very established industries in terms of palm oil, oil and gas, semiconductors and other commodities. All these [industries] are actually ripe for advancement and innovations that can be offered, not just within our country, but throughout the region and abroad,” says Norman Matthieu Vanhaecke, group CEO of Cradle Fund Sdn Bhd.
“We have to [move] with the pack or even be ahead of the pack. [When] I hear of developments of new tech areas, I think Malaysia can be really early to the scene, or even lead these kinds of things. [For example], there has been a lot of talk about setting up a space launching platform. Imagine if [we] can start developing a space tech industry.”
Malaysia is already leveraging its abundant resources to establish itself as a major data centre hub. In fact, RM99 billion in data centre investments have been announced in the last two years, with another RM147 billion in the pipeline, according to data from Malaysia Digital Economy Corporation.
The government has also launched the National Semiconductor Strategy, which aims to position the country as a global leader in semiconductor research and development (R&D) and manufacturing. The three-phase plan targets RM500 billion in investments, the development of 10 leading local semiconductor companies and the cultivation of 60,000 skilled engineers by 2030.
As global competition in the semiconductor industry continues to intensify, the challenge is to go beyond maintaining relevance and becoming a leader in the space, says Jaffri Ibrahim, CEO of Collaborative Research in Engineering, Science and Technology (CREST). This means the country needs to develop an environment that allows it to effectively replicate global innovations while enhancing existing technologies and pioneering novel products and solutions.
“The question for Malaysia is, how do we keep ourselves relevant and at the forefront of the semiconductor space. When you master two fronts, which is semiconductors and software, the world is [our] oyster,” he adds.
Essentially, the electrical & electronics (E&E) industry needs to move up the value chain, shifting from outsourced semiconductor assembly and testing to higher-value activities like integrated circuit design.
Nevertheless, the country’s strong presence in semiconductors positions it well to ride the AI wave, notes Prashant.
Going beyond comfort zone
Malaysia, traditionally a consumer of external technologies, must pivot toward developing home-grown innovations, asserts Jaffri. Building intellectual property (IP) and investing in R&D should be central to this shift. Government support is essential to provide local companies with the tools and infrastructure needed to compete on a global scale.
“In the past, we [didn’t] own our own IPs or our own technologies; we were more subservient to other people’s IPs and technologies. We’re a consumer society. We are basically waiting for someone to create something before we make it in manufacturing and then utilise it. R&D allows us to be able to have control over creating our own products and services. In my view, that will be the name of the game for any society to progress to the next stage,” he says.
Creating original technologies and building on existing strengths in industries such as semiconductors and biotechnology will drive economic growth and create job opportunities, adds Prashant.
But our collective aversion to risk across sectors is a significant roadblock, says Rosihan. Currently, the country tends to focus on adopting and consuming foreign technologies rather than creating its own. A shift in mindset needs to happen to develop technologies that can go on to make an impact globally.
“When we think about innovation and technology, [we have to understand that it comes with] challenges and [part of the process] is planning for it but [knowing that] sometimes even the best plans fail. If there is a willingness to continue and not retreat, something will happen in a big way,” adds Rosihan.
Developing and commercialising new technologies take time, he acknowledges. While foundational technologies may not be developed immediately, an ecosystem must be in place to adapt to and capitalise on emerging innovations.
Strategic acquisitions of promising foreign technologies can bridge this gap, providing access to cutting-edge solutions and expertise for effective implementation. These proven systems offer a foundation to build on.
To stay competitive, gaps in acquired technologies must be identified and addressed. Investments in commercialisation infrastructure, access to funding and partnerships among industry, academia and the government are essential to drive long-term innovation.
“When you acquire technology that’s already out there, you’re also acquiring the skill sets, talent, company, networking and market share. You’re actually shortcutting the process. But, there must be a follow-up to quickly capitalise on that acquired knowledge before it becomes outdated,” says Rosihan.
Public-private partnerships are also key to driving innovation, says Jaffri. These partnerships can accelerate the development and commercialisation of technologies by jointly funding R&D initiatives while sharing the risks.
“When we attract new investments, not only do we want them to come in and set up in Malaysia, but we also want them to come in and open up the technologies to Malaysian companies and universities,” he adds.
For this to happen, companies should collaborate with local businesses and academic institutions to foster technology and knowledge transfer, benefiting both foreign investors and local stakeholders. These partnerships will enhance domestic capabilities, supporting industries while positioning the country as a hub for innovation and advanced technology.
Emulating India’s success with global capability centres (GCCs) could be another strategy, says Prashant. GCCs, offshore units of multinational corporations, can evolve from outsourcing hubs into innovation centres, driving original designs and breakthroughs in areas such as semiconductors and AI. Leveraging global talent and technological advancements, GCCs develop scalable solutions for global markets.
Apart from that, encouraging and incentivising local companies to participate in large-scale national projects is essential, says John Lim Ji Xiong, group chief digital officer at Gamuda Bhd. This approach enables corporations to invest in R&D and generate greater value.
National-scale projects, which are supported by local talent and companies, provide a platform to demonstrate Malaysia’s capabilities to the world. For example, the autonomous tunnel boring machine (A-TBM) is a Malaysian engineered innovation that is now exported worldwide.
In 2019, Gamuda introduced the world’s first A-TBM, powered by proprietary AI algorithms. This innovation enables precise navigation through geological formations with minimal human input, and was first deployed for the MRT Putrajaya Line.
“The government and national-scale projects create a catalyst for local participation and skills building in partnership with global tech giants. Together with the private sector, Malaysia can ride the growth of the AI wave, underpinned by long term opportunities producing a strong local talent pool. Bold moves in building a strong digital ecosystem through adoption of secure AI and cloud [technology] will propel the nation forward in our pursuit of becoming a high income nation,” says Lim.
Meanwhile, universities require support in terms of funding for research, structured partnerships with industries and talent development programmes, says Erma Rahayu, head of the Department of AI at the University of Malaya. This is because universities are pivotal to producing industry-ready talent and conducting research.
For instance, the department is collaborating with Alto AI and Zhipu AI to develop a Malay large language model. The department also aims to advance healthcare with AI-driven solutions.
“We need to have greater collaboration between academia, industry and government, which is critical in terms of aligning our research with real-world challenges and to ensure innovation is impactful and scalable. We need the government to support us by increasing investment in AI labs, advanced computational tools and funding in multidisciplinary projects. We also need to have more structured partnerships with industries to ensure our research addresses real-world needs,” she says.
Ultimately, adoption is crucial for technology to drive innovation, says Afnizanfaizal Abdullah, head of innovation commercialisation at Malaysian Research Accelerator for Technology & Innovation (MRANTI). It creates a feedback loop where data, experience and refinement enhance tools and methods, which is particularly evident in AI and data analytics, he adds.
“While technology adoption promises immense benefits, businesses here face several key challenges, [which are] often rooted in cost, infrastructure and a shortage of digital skills. One of the most significant barriers is the financial investments required,” says Afnizanfaizal.
Organisations that adopt these technologies early and strategically integrate them find themselves with competitive advantages, as they can operate more efficiently, capture more insights and pivot faster in response to market demands, he adds. Yet, many small and medium enterprises (SMEs) lack the resources and technical knowledge to adopt technologies.
“Initiatives like the Domestic Investment Coordination Platform (DICP), which connects SMEs to essential funding and resources, and collaborations with MRANTI, which offers start-ups access to innovation sandboxes and mentorship, are central to this mission. These programmes are turning big ideas into tangible realities, positioning Malaysia as a global hub for technological excellence,” says Malaysian Investment Development Authority CEO Datuk Sikh Shamsul Ibrahim Sikh Abdul Majid.
There is also a need to support early-stage start-ups to ensure long-term value creation, says Victor Chua, managing partner at Vynn Capital, a Southeast Asia-focused early-stage venture capital firm. Early-stage start-ups are crucial for Malaysia’s digital future as they provide a foundation for nurturing the next generation of entrepreneurs, fostering innovation and establishing a digital ecosystem.
Start-ups that differentiate themselves by identifying and addressing real-world challenges are more likely to be successful. However, they require funding to develop their products, hire talents and scale operations. Gaining market validation is also crucial.
Toward this end, MRANTI aims to accelerate the growth of start-ups through programmes and initiatives such as the National Technology and Innovation Sandbox, Global Market Fit Programme and the AI Sandbox Pilot Programme.
Talent: The beating heart for innovation
The country must begin to adopt a culture that supports local innovations by encouraging risk-taking and embracing failure as a part of the process, says Jaffri. There needs to be a cultural shift to giving greater recognition to inventors and innovators.
To do this, talent development must be a top priority, says Matt Van Leeuwen, chief innovation officer of Sunway Group. Additionally, the workforce must be empowered with digital skills through initiatives like coding academies and industry-focused training programmes.
This is why Sunway iLabs has committed to fostering a strong foundation in digital skills and critical competencies such as data literacy. The innovation arm of Sunway Group also focuses on developing soft skills such as problem solving and leadership.
An example of Sunway iLab’s initiatives to nurture digital talent is the 42 Malaysia coding school, which was established through a collaboration between Sunway Education Group, Khazanah’s Dana Impak, MDEC and the 42 network of coding schools.
“This tuition-free, peer-to-peer coding school offers a unique learning experience, focusing on project-based learning with no traditional teachers or classes. By providing students with the flexibility to learn at their own pace, 42 Malaysia [coding school] encourages them to develop critical thinking, resilience and the ability to adapt skills that are vital for thriving in an AI-driven world. This school is part of our broader effort to close the digital skills gap in Malaysia and prepare future innovators for the demands of the Fourth Industrial Revolution,” says Van Leeuwen.
Gamuda is future-proofing the workforce through initiatives like the Gamuda AI Academy, which trains 50 students per batch in full-stack AI. Open to individuals aged 21 to 30 with Python and JavaScript proficiency, the programme focuses on back-end and front-end development. Additionally, Gamuda’s Data Hero Programme equips employees across disciplines with skills in digitalisation and data management.
“The Gamuda AI Academy was created as a way to solve problems for ourselves, but [we decided] to do it for the country as well. [This is] in partnership with Google Cloud. The Gamuda AI Academy is open to all, and Gamuda pays all the fees. [It’s a way to make sure that we] as a corporation [are doing our part in building] engineering talent for the country,” says Lim.
Moving forward, it is essential to invest in digital infrastructure to bridge the connectivity gap between urban and rural areas to ensure equitable access to technology, says Van Leeuwen. This is because a well-connected population can unlock broader participation in digital transformation efforts.
“While Malaysia has made significant strides in improving connectivity, mainly through initiatives like the National Digital Network Plan, there are still gaps in rural and underserved areas. Limited internet access restricts the adoption of digital solutions in these regions, impacting businesses’ growth potential. Furthermore, adopting advanced technologies such as AI or IoT (Internet of Things) requires robust infrastructure, which smaller enterprises may lack,” says Afnizanfaizal.
Source: The Edge Malaysia
