by Tan Aik Keong (AK)
As AI becomes the global economy's "new oil," the countries that master the technology hold the future. Budget 2026 makes clear that Malaysia is stepping into an unprecedented leap toward becoming a genuine "intelligent nation." Built around three pillars — AI, semiconductors and digital infrastructure — the government is laying out a new tech-economy landscape of its own.
National AI strategy: strengthening education through to ecosystem
AI has been formally designated a national priority area.
The National AI Office (NAIO) receives close to RM20 million, to cultivate highly skilled talent and strengthen digital infrastructure and the AI ecosystem. At the same time, the country's first Faculty of Artificial Intelligence has been established at Universiti Teknologi Malaysia (UTM), with further expansion planned for 2026 — a sign AI education is moving from pilot programme to genuine institutionalisation.
Multiple universities are deepening AI research in parallel: USM is focused on semiconductor-driven smart manufacturing; UM on medical AI and life sciences; UPM on cryptology; and MMU on AI ethics and multimedia applications.
More significantly, Universiti Malaya (UM) has partnered with YTL AI Labs to launch the country's first national AI language model, ILMU (Intelek Luhur Malaysia Untukmu), placing Malaysia among the countries developing their own AI models.
Sovereign AI cloud and global tech investment
AI's future depends on compute and data sovereignty.
The Malaysian Communications and Multimedia Commission (MCMC/SKMM) will build a national Sovereign AI Cloud, with investment reaching RM2 billion, letting government and businesses run AI and big-data analytics in a secure local environment.
An AI Transformation Centre will also be jointly established by MCMC, MMU and the Centre of Excellence for Ethics in Emerging Technologies, advancing AI research that's culturally and ethically aware.
On the international front, tech giants are placing major bets: Microsoft is investing USD 2.2 billion to build a "Malaysia West Cloud Region," training 800,000 people and setting up a national AI innovation centre; Google is investing USD 2 billion in a data centre and Google Cloud region in Selangor; and AWS is helping SMEs adopt machine learning and big-data analytics.
These three investments bring more than technology and jobs — they position Malaysia as a new regional hub for data and AI compute.
From research to industry: innovation and commercialisation together
The budget's underlying spirit is clear: research has to leave the lab and become a market force.
Malaysia already has roughly 450 university spin-off companies, but the commercialisation rate sits at only around 5%. To address that, the government is setting up a National Spin-off Company Fund (Dana Nasional Syarikat Terbitan) with RM10 million in seed capital, and will let university lecturer-founders take a research sabbatical to focus on commercialising their work — aiming to attract at least RM30 million in private investment, a threefold leverage effect.
Separately, the Malaysia Digital Acceleration Grant (Geran Pecutan Digital Malaysia) provides RM53 million to support AI, blockchain and quantum computing development, while MIMOS is tasked with developing blockchain and deepfake-detection technology, keeping technological progress and public trust moving together.
Building talent: AI reaching every industry
The core of the AI revolution is people.
Budget 2026 commits an unprecedented level of investment in education and skills training: TVET receives RM7.9 billion, including an additional RM45 million for the National TVET Council to bring AI and digital curricula to 10,000 students at religious schools and traditional institutions (tahfiz and pondok); HRD Corp allocates RM3 billion to train 3 million people, with a focus on AI, technology and the energy transition; and PTPK provides RM650 million in loans benefiting 25,000 trainees, focused on AI, EVs and semiconductors.
Together, these build what amounts to a nationwide AI-skills chain, giving workers, students and even farmers a new role to play in the digital economy.
Toward 2030: the vision of an AI nation
The government has set a clear target: "Malaysia sebagai Negara AI menjelang 2030" — Malaysia as an AI nation by 2030. It's a national-level commitment spanning education, industry and ethical frameworks.
With the AI faculty expanding, the ILMU model now live, and the sovereign AI cloud under construction, Malaysia is shifting from a country that uses technology to one that creates it.
"Made by Malaysia" is set to become more than a slogan — it's shaping up as the next wave of tech export branding, from AI-assisted medical diagnosis to smart agriculture, from intelligent manufacturing to sustainable energy, with AI rewriting the rules across every industry.
Making the budget personal
A tech budget isn't just policy and data — it's about your daily life too, whatever you do: student, business owner, employee, civil servant, retiree, gig worker, farmer or homemaker. Everyone has a stake in what AI and digital transformation can offer.
Visit budget2026.agmoai.com to try a personalised budget podcast, powered by Agmo AI, generated around your own role, walking you through the policies and opportunities most relevant to you — understanding the national budget by ear, making tech policy something you can actually hear, use and feel.
Closing
While the world talks about AI, Malaysia has chosen to act. From UTM's new AI faculty to UM's ILMU model, from Microsoft and Google's cloud investment to HRD Corp's nationwide skills training, Malaysia's AI push is already quietly under way. Over the next decade, AI won't just change our economy — it'll redefine what "Made in Malaysia" is worth.
Part of the AK AI Corner column. Originally published in Oriental Daily (东方日报) on Oct 11, 2025.