Malaysia is accelerating its transformation into a regional AI hub through massive government support and private investments, simultaneously advancing green transition initiatives for AI data centers and productivity enhancement programs to build a comprehensive AI ecosystem. The country recorded RM13.29 billion (approximately USD 3.1 billion) in approved AI sector investments in the first half of 2025 alone, with potential to create 6,920 job opportunities.
Funding Scale: Massive Investment and Diverse Support Programs
Malaysia has announced RM99 billion (USD 23.4 billion) in data center investments since 2023, with an additional RM149 billion (USD 35.2 billion) planned for the near future. Under the Digital Malaysia initiative, the country achieved RM13.29 billion in approved AI sector investments in the first half of 2025. The Malaysia Productivity Corporation (MPC) launched the “AI for Productivity” program as part of the DALIA initiative, enabling 15 companies to gain hands-on experience with Google Cloud’s advanced AI technology. The Chemical Productivity Nexus (CPN) partnered with HRDCorp to provide special grants covering training fees, certification costs, and logistics expenses for 45 Safety and Health Officers under the DGSA (Dangerous Goods Safety Adviser) program.
Eligibility Criteria: Green Transition and Innovation Requirements
The government has become more selective in approving new data center projects due to water and energy constraints. Companies must demonstrate willingness to pay premiums for renewable energy transition and drive innovation in renewable energy and water recycling systems. The Corporate Renewable Energy Supply Scheme (CRESS) allows large corporate consumers to procure renewable energy directly from independent power producers. AI productivity program participants must present concrete plans for automating labor-intensive processes, accelerating digital transformation, and reducing operational costs.
Application Process: Multi-tiered Support System with Clear Procedures
The AI for Productivity program operates through collaboration between Malaysia Productivity Corporation (MPC) and PointStar, offering participating companies hands-on training with Google Cloud technology. The DGSA program utilizes the Upskill Malaysia Portal for registration, application, and monitoring processes, with the first intake of grant-supported participants scheduled for mid-September 2025. The Retail & F&B Productivity Nexus (RFBPN) runs AI productivity programs targeting franchise businesses and plans to implement 20 improvement projects and proof-of-concept (POC) initiatives. Data center investments require submission of environmental impact assessments along with ESG (Environmental, Social, and Governance) target achievement plans.
Utilization Strategy: Pursuing Sustainability and Competitiveness Simultaneously
Malaysia is navigating the US-China trade conflict by positioning itself as an intermediary, attracting investments from both nations simultaneously. However, recent allegations of a Chinese company using third parties to rent Malaysian data centers to circumvent US export controls have led to 25% tariffs imposed from August, requiring delicate balance maintenance. The government is pursuing the National Energy Transition Roadmap targeting 70% renewable energy capacity by 2050, though currently 81% of electricity comes from fossil fuels, making green transition an urgent priority. Under the goal of expanding AI’s GDP contribution from 23.5% in 2023 to 25.5% by end-2025, the focus remains on data-driven talent development and infrastructure construction.
