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On the infrastructure front, Malaysia is rapidly emerging as a regional hub for digital investment. According to the Malaysia Digital Economy Corporation( MDEC), total investments under the Malaysia Digital( MD) initiative surged to RM29.47 billion( US $ 7 billion) in the second quarter( Q2) of 2025.
The surge was mainly attributed to increased capital inflows into data centres and cloud infrastructure.
Malaysia has also been intensifying its efforts to expand and support its local innovation. Launched in Aug 2025, the nation’ s first fully AI-powered banking service, Ryt Bank, marks a significant step.
The service uses a homegrown largelanguage model( LLM) named ILMU to process conversations in Bahasa Malaysia, English, and Manglish. It helps make digital banking more userfriendly and relevant.
Nonetheless, Singapore still leads the region with an innovation score of 87. On the other hand, Malaysia’ s score, which falls below 45, reveals a clear need for stronger support for local innovators.
Alongside technological advances, strong regulatory frameworks are essential. Malaysia has advanced significantly in data governance, introducing comprehensive Guidelines on Cross-Border Personal Data Transfer in April 2025.
These guidelines ensure that data transfers outside the country comply with Section 129 of the Personal Data Protection Act 2010. They require data controllers to conduct Transfer Impact Assessments( TIA).
Otherwise, data controllers are required to implement safeguards such as Standard Contractual Clauses( SCCs) and Binding Corporate Rules( BCRs). Not to mention, keeping detailed records that evidences compliance.
In terms of security, Malaysia is taking a proactive approach through the enactment of the Cyber Security Act 2024. This is timely and necessary, especially as cyberattacks in Malaysia rose by 14 per cent in 2024.
The legislation provides a framework for detecting, managing, and responding to cyber threats. Moreover, with the establishment of the National Cyber Security Committee, oversight of Malaysia’ s cybersecurity measures is streamlined under a single authority.
STRATEGIC PRIORITIES
While progress in Malaysia highlights potential, gaps across ASEAN challenge digital unity. To fully realise the potential of digitalisation across the bloc, three key strategic measures are crucial: bridging the infrastructure gap, accelerating regional policy harmonisation, and leveraging international cooperation mechanisms.
Bridging digital infrastructure gaps hinges on securing adequate investment. That said, Malaysia is offering a
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Overview of ASEAN member States ' digital readiness scores.
100 per cent Investment Tax Allowance on capital expenditure for up to 10 years to attract data centre developers.
At the same time, the government is investing RM1.65 billion in submarine cable networks to boost national and regional connectivity. These incentives are further supported by streamlined power supply approvals and the Data Centre Framework, effective October 2025.
On the other hand, initiatives such as the Johor – Singapore Special Economic Zone are designed to enhance Malaysia’ s appeal with customised tax incentives and dual-market access.
Collectively, these initiatives are laying the foundation for a robust digital infrastructure. Thereby, advancing ASEAN’ s digitalisation agenda.
ASEAN’ s diverse economic and regulatory environments often lead to digital fragmentation. This creates unnecessary friction for businesses, particularly MSMEs. This calls for harmonised digital policies that enhance connectivity, cross-border trade, and innovation.
Aligning data governance frameworks is vital for building trust. For instance, working toward interoperability with the General Data Protection Regulation( GDPR) can facilitate secure, cross-border data sharing.
Furthermore, establishing unified cybersecurity standards, consistent e-commerce regulations, and regional AI governance principles will further enhance collective resilience. These measures will mechanically boost investor confidence and strengthen competitiveness.
ASEAN member States are actively forging partnerships with global technology leaders. International cooperation
Partnerships with technologically
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Approximately 141,000 business owners across Laos Indonesia Thailand,
and Vietnam benefited from digital skills training through the programme.
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ASEAN member States ' performance across each pillar of the Digital Nations Index.
advanced countries such as China, Japan, South Korea, and the European Union( EU) provide access to advanced technologies, expertise, and best practices.
For instance, initiatives like the Korea – ASEAN Digital Academy and the Korea – ASEAN Digital Innovation Flagship Project.
Digitalisation across ASEAN can also be accelerated by forming cooperation agreements among member States. The Brunei-Indonesia-Malaysia- Philippines East ASEAN Growth Area, for instance, exemplifies how collective projects can improve ASEAN’ s overall digital capabilities.
Digitalisation is central to ASE- AN’ s vision for 2045. Therefore, enhancing digital readiness must be a top priority for all ASEAN member States.
Closing infrastructure gaps, standardising regulations, and fostering strategic collaborations will enable ASEAN to develop a digitally connected community. One that is prepared to harness the opportunities of the digital era. @ ND
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