Amazon Web Services (AWS), an Amazon.com company, today released new research revealing that artificial intelligence (AI) adoption continues to accelerate in Malaysia, with 2.4 million, or 27 per cent of Malaysia’s businesses, already adopting AI. However, most Malaysia businesses (73 per cent) remain focused on basic uses of AI. Only 31 per cent of startups and 15 per cent of large enterprises that have adopted AI are building entirely new AI-driven products with AI. This presents an opportunity for Malaysia to unlock greater economic potential of AI by combining the agility and innovation of startups with the scale and resources of large enterprises to accelerate and deepen Malaysia’s AI adoption.
In 2024, 630,000 businesses in Malaysia adopted AI — over one every minute. AI adoption in Malaysia is gaining momentum, at a year-on-year growth rate of 35 per cent, from 20 per cent in 2024 to 27 per cent this year. AI adoption is the strongest in the technology and professional services sector (49 per cent), followed by financial services (42 per cent), and manufacturing (39 per cent). The productivity and economic potential of AI adoption are promising. 65 per cent of Malaysia’s businesses that have adopted AI reported an increase in revenue, at an average increase of 19 per cent, while 72 per cent report significant productivity improvements. 67 per cent of businesses also expect an average of 15 per cent in cost savings.
To better understand the scope of AI and where companies of different scales might be headed, AWS collaborated with Strand Partners to conduct the AI adoption survey in Malaysia. The “Unlocking Malaysia’s AI Potential” study surveyed 1,000 business leaders and 1,000 nationally representative members of the public in Malaysia.
Widespread But Basic Adoption of AI across Malaysia’s Businesses
While AI adoption is increasingly widespread in Malaysia, most businesses are not yet harnessing its most advanced uses, underscoring the need to deepen AI adoption to unlock Malaysia’s full AI potential. 73 per cent of Malaysia’s businesses that have adopted AI remain focused primarily on basic use cases, like driving efficiencies and streamlining processes using AI – rather than innovation like developing new products or disrupting industries. Just 17 per cent of Malaysia’s AI-adopting businesses have advanced to the intermediate stage of AI adoption, and only 10 per cent have reached the most transformative stage of AI integration, where AI is no longer just a tool but a core part of product development, decision-making, and business models.
Startups, in particular, are enthusiastic and innovative in their use of AI in Malaysia, adopting AI’s most advanced uses far more rapidly than more established companies. 48 per cent of startups in Malaysia are using AI in some way, of which 31 per cent are building entirely new AI-driven products with AI, leveraging the technology to its full potential. In contrast, 44 per cent of large enterprises are using AI, but only 15 per cent of these are delivering a new AI-driven product or service, and only 12 per cent have a comprehensive AI strategy. This gap in AI innovation uncovers a deeper finding that could shape Malaysia’s economic future.
“It is an interesting phenomenon we are seeing with AI adoption coming out of the study results in Malaysia. While 27 per cent of businesses reported they have adopted AI, most of the deployments remain basic despite the rapid adoption of the technology over the past year,” said Nick Bonstow, Director at Strand Partners. “The differences in the pace and depth of AI innovation between startups and large enterprises also point to an emerging ‘two-tier’ AI economy that could have lasting implications on a country’s future economic development. Celebrating AI adoption numbers alone masks the deeper challenges many businesses face across Malaysia.”
The Path Forward for AI Innovation
A lack of skilled personnel is the leading reason that 52 per cent of businesses in Malaysia say is preventing them from adopting or expanding their use of AI. Many of the businesses reported having the technology and the vision but are unable to find the people to bring it to life. This puts Malaysia’s global competitiveness at risk and restricts economic potential, as AI literacy is expected to be required in 54 per cent of jobs in the next three years, and only 29 per cent of businesses feel prepared with their current workforce’s skillset.
The report uncovered three priority actions for Malaysia to unlock the full potential of AI and avoid the emergence of a ‘two-tier’ AI economy: Firstly, invest in and build industry-specific digital skills programs to develop a digitally-skilled workforce to drive AI-led innovation and growth. Although 68 per cent of businesses see digital skills as crucial, only 29 per cent feel prepared. Secondly, establish a clear picture of Malaysia’s pro-growth regulation that is predictable and innovation-friendly, to help drive deeper AI adoption across all businesses. Lastly, with 71 per cent of businesses saying they are more likely to adopt AI if the government leads, it will be critical to accelerate digital transformation in the public sector, especially in healthcare and education, and use public procurement to drive innovation.
With Amazon Bedrock now generally available today in Malaysia, businesses can access foundation models from leading AI companies including Anthropic, Cohere, Meta, Mistral AI, Stability AI, and Amazon’s own family of models, Amazon Nova, through a single service. This democratization of AI tools helps address part of the implementation challenge by providing businesses with ready-to-customize AI models.
“Malaysia’s AI ecosystem is developing a natural specialisation that creates a powerful innovation cycle. Startups build new AI products and business models, enterprises prove these solutions can scale, and the public sector acts as a ‘trust multiplier’ that encourages wider adoption. This feedback loop creates market demand that fuels further innovation,” said Hussein Mohd. Ali, Country Manager, AWS Malaysia. “For this cycle to reach its full potential, we must address the skills gap, only then can we accelerate the entire country’s digital economy.”
Source: Amazon Web Services (Press Release)