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AI Innovation Turnaround in Malaysia

Industrie Trends | November 27, 2023

Back in 2018, Microsoft commissioned the International Data Corporation to assess the take up of artificial intelligence (AI) in the Asia Pacific region.  The survey found that Indonesian businesses had the highest adoption rate in South East Asia at the time, at 24.6 percent, outstripping Thailand and Singapore, and a long way ahead of Malaysia at 8.1 percent.

The AI-Roadmap

Dial forward to 2021: Malaysia unveiled a five-year roadmap (known as “AI-RMAP 2021-2025”) for the transformation of its economy through the adoption of AI, and the fostering of an AI innovation ecosystem.  In the words of then Minister of Science, Technology and Innovation, it was “a game-changer in Malaysia’s quest to leapfrog and become a high-tech nation by 2030”.  Using data from McKinsey, AI-RMAP proposed that AI had the potential to add a further 1.2% “at the very least” on top of the nation’s baseline annual GDP growth of 4.4%.  In other words, the government’s target for 30% output increase by 2030 (a stated aim of the National Industrial Revolution 4.0 policy) could be achieved from AI-related gains alone, all other things being equal.

Has it been successful so far?

Oxford Insights’ 2022 Government AI Readiness report suggests that the Malaysia government’s bullish commitment is paying off, with Malaysia now ranked 29 globally for “AI readiness”, second only to Singapore in South East Asia (ranked global number two), and ahead of Thailand (31) and Indonesia (43), though it does comment that “Jakarta as an example of a city in the region that could soon become competitive with Singapore in its AI readiness”. 

The report scores Malaysia particularly highly with regard to one of three important pillars: “government” (i.e. a government’s commitment to, and regulation of, AI).  Scoring 77.70 in this regard, Malaysia stands only percentage point behind the Netherlands and China, both of which are ranked much higher overall because of strengths in other areas – technology, or data and infrastructure.  In other words, Malaysia’s AI policy and strategy are a real strength.

In 2021, Carsome, an innovative used-car trading platform, became Malaysia’s first technology “unicorn” as it passed the $1bn valuation mark; HSBC and KPMG have together publicly identified ten others that could soon follow suit – Boost Holdings, Exabytes, Jirnexu, Presto Mall, Mindvalley, Neurogine, Eatcosys, Says, Lapasar and PolicyStreet.  Malaysia has a great supply of technically-skilled workers, and with the government’s active nurturing of an ecosystem that encourages AI innovation and investment, it seems probable that the number of powerful, innovative, Malaysian tech companies will continue to grow.

Industrial implications

Widespread, rapid adoption of AI means far more than having new apps for consumers to use, or novelties such as Aina, “Malaysia’s first AI-powered DJ” (unveiled by Fly FM radio station in June this year).  Nor does it just change the business landscape through the advent of new companies that create and manage those apps.  It means that service sectors, supply chains and manufacturing technologies are changing more rapidly too, and adopting AI. 

This September, MyDigital Corporation and the Malaysia Centre for Fourth Industrial Revolution released “The economic impact of generative AI: The future of work in Malaysia”; in it they claim that AI has the potential to unlock over $113 billion productive capacity for Malaysia.  The report also shows a significant proportion of businesses and workers, across a wide range of sectors, who are actively embracing generative AI, and are feeling positive about doing so – focussing more on its potential, and less on any perceived threat to their jobs. 

That’s a huge turnaround in the five years since 2018, and one that Malaysia can be proud of.

Melchers in Malaysia

Melchers Malaysia has been coordinating the company’s trading activities in Malaysia since 1958 with offices located in Kuala Lumpur, Petaling Jaya, Penang, and Kota Kinabalu. By combining a strong tradition of quality with innovation and reliability, Melchers Malaysia has acquired a steadily expanding customer base.  Today, our activities in Malaysia involve sales and servicing for broad range of machinery, instrumentation, calibration and equipment, on behalf of our partners. Our business operations are coordinated in separate divisions by regional and local sales managers with specific knowledge in their respective fields.   

Established in 1806, and with more than 150 years of experience in East Asia, Melchers is trusted by many international brands and producers to be their “feet on the ground” in this region’s diverse markets, drawing on deep local networks and knowledge, and combining them with dynamic business services and trade infrastructure, to create powerful synergies that deliver results for your business.

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