Experts: Time to build, own and export our own systems so as not to be left behind
PETALING JAYA: Malaysia must urgently develop its sovereign AI systems or risk becoming digitally advanced but economically dependent – and ultimately face long-term economic decline, experts say.
They said as Malaysia races ahead with its digital transformation, much of that progress remains powered by imported artificial intelligence tools, thus raising concerns about economic dependency.
AI Society president Dr Azree Shahrel Ahmad Nazri said Malaysia must urgently develop and own its AI systems or risk falling further behind economically, despite the country’s rapid digital transformation.
“Without local AI ownership, we cannot export, licence or embed these technologies into regional products that generate income or foreign exchange,” he said when contacted.
He warned that countries like Malaysia, which rely heavily on foreign-developed AI, face growing risks to GDP growth, productivity and national competitiveness.
Citing emerging macroeconomic trends, he explained how AI-driven productivity gains, if limited to non-tradable sectors like education, health or governance, can distort real growth indicators.
In Malaysia’s case, he said the impact could be severe.
Despite being online, automated and connected, he said the country risks building a digital economy that “exports little, owns less and pays more”, driven by rising licensing fees, AI subscriptions and reliance on foreign cloud infrastructure.
Azree said such imported productivity could also distort Malaysia’s exchange rate, making the ringgit appear stronger than it really is and hurt traditional export sectors.
He called for urgent investment in sovereign AI capacity and policy-driven infrastructure.
“We must build, own and eventually export our own AI. Otherwise, we risk being tenants in our own digital economy,” he said.
Universiti Malaysia Sarawak senior lecturer Dr Chuah Kee Man said Malaysia’s dependence on foreign AI tools may bring short-term efficiency, but it risks long-term loss of control and competitiveness.
“To become an AI exporter, Malaysia must move beyond short-term grants and build a genuine innovation ecosystem,” he said.
This includes regulatory sandboxes, stronger intellectual property protection and targeted investment in areas like halal logistics, Islamic finance, smart cities and multilingual natural language processing.
Chuah explained that Malaysia’s current progress is uneven across sectors.
While the country has talent and early-stage initiatives, he said sovereign AI development demands sustained investment in infrastructure, skills and computing power.
In terms of cost, he said developing a medium-sized foundational model would require serious commitment.
“If we take current industry standards for medium-sized foundational models, it could be about RM50mil and take about two years to build if there is a consolidated effort on it.
“For a sovereign AI model, it could easily go up to RM500mil. It can take up to five years or longer if the infrastructure is not sufficiently powerful,” he said.
Because of the scale involved, Chuah suggested a collaborative approach.
“Heavy investment – that is why a partnership model may be more feasible since we are technically playing catch-up,” he said.
Echoing the need for strategic investment, cybersecurity specialist Fong Choong Fook said Malaysia should establish a National AI Sovereignty Fund to finance homegrown AI development.
Fong said the sovereignty fund can be backed by capital from public and government-linked companies.
“This fund would directly support the development of models like PutraGPT, prioritising Bahasa Melayu/Nusantara, Islamic jurisprudence and regional languages,” he said.
Fong said developing the nation’s own AI system would also pave the way for a Malaysian Large Language Model (LLM) consortium, open data-driven AI innovation and export-ready frameworks.
“The LLM could bring together universities, MNCs, GLCs and start-ups to train sovereign models using ethically-sourced local datasets.
“Government agencies should anonymise and release datasets (health, law, commerce) to stimulate trustworthy AI development when adopting open data for AI innovation.
“We can also develop export frameworks and certifications – such as halal certification standards – so that AI models are certifiable for compliance, ethics and privacy, especially to build trust in Islamic and Asean markets,” he added.
When developing AI, Fong said the government must consider investing in three strategic pillars: talent, infrastructure and IP ownership.
He said Malaysia needs a strong pipeline of AI engineers, data scientists and computational linguists, supported through focused education, public-private partnerships and incentives to retain talent locally.
He added that Malaysia must also establish national AI compute infrastructure, including sovereign cloud services, GPUs and secure data centres to support large-scale model training and experimentation.
“IP ownership is essential to shift policies to prioritise ownership of algorithms, datasets and models – especially for sectors like finance, halal trade, cybersecurity and Bahasa Melayu/Nusantara applications where we have domain edge and regional relevance.”
“If we can develop AI that is context-aware for Asean or Islamic financial systems, Malaysia can lead in culturally and linguistically aligned AI exports, rather than competing head-on with Silicon Valley,” he said.
With partnerships like MyEG-BeiTou, where Malaysia contributes data and policy access while the core technology remains foreign-owned, Fong said the country must remain cautious when relying on foreign-based AI systems.
“While it may represent short-term digital progress by enabling adoption and government integration, it also sets a precedent: data flows out, while value flows into others. This is digital dependence masked as digital development.
“True progress means co-developing and co-owning the intellectual property. If Malaysians provide the data, the insights and the use case validation, then Malaysians must also hold equity in the resulting tech,” he added.
