Malaysia must expand AI strategy beyond data centres, says MBSB

KUALA LUMPUR — Malaysia's approach to artificial intelligence development should extend significantly beyond data centre construction, according to analysis from MBSB Investment Bank ahead of Budget 2027 deliberations.

While data centre investments have formed a cornerstone of the nation's AI infrastructure push, the investment bank argues that policymakers must look to complementary measures that unlock the technology's broader economic potential. This includes developing local talent, fostering innovation ecosystems, and ensuring Malaysian businesses can effectively adopt AI applications.

The bank's assessment suggests that without a more comprehensive strategy, Malaysia risks establishing expensive infrastructure that fails to generate proportionate returns or competitive advantages. Supporting downstream industries and building workforce capabilities would help translate data centre investments into sustained productivity gains and new revenue streams.

MBSB's recommendations come as the government prepares its 2027 budget framework. Industry observers expect the fiscal plan to address growing competition in the regional tech sector, where countries across Southeast Asia are racing to position themselves as AI hubs. Malaysia's strategic positioning will likely depend on how effectively policymakers can coordinate infrastructure spending with skills development and regulatory frameworks that encourage local adoption.