Malaysia’s digital economy is entering a pivotal stage of growth, marked by record investments and accelerating technological adoption across sectors. By mid-2025, Malaysia’s digital investments reached RM 42.6 billion under the Malaysia Digital initiative, marking a 125% quarter-on-quarter growth and signalling stronger investor confidence in the country’s tech ecosystem. The government remains on track to achieve its goal of a 25.5% GDP contribution from the digital economy by the end of 2025. Despite this momentum, Malaysia continues to grapple with structural challenges, such as evolving from a technology user to technology producer, managing the rise of informality, bridging digital divide and addressing emerging risks that are increasingly cyber-enabled and cyber-dependent.
Against this backdrop, the Tech for Good Institute (TFGI) and Institute of Strategic & International Studies (ISIS) Malaysia hosted a roundtable discussion in the afternoon of 5 November 2025. The discussion was a closed-door session with approximately 25 key thought-leaders from the Malaysian government, private companies, think-tanks, universities and civil societies who are passionate about the intersection of technology, policy and society. The discussion unpacked the urgent issues, challenges and prospects shaping Malaysia’s digital economy, along with the government’s new strategic framework and technology priorities as the country approaches 2026 and beyond.
Moderators
- Arifah Sharifuddin, Institute Director, Tech For Good Institute (TFGI)
- Farlina Said, Director, Cyber and Technology Policy, Institute of Strategic and International Studies (ISIS) Malaysia
Discussants
- Adilah Junid, Director, Legal and Government Affairs, Microsoft
- Dr Ai Ni Teoh, Research Associate, Khazanah Research Institute (KRI)
- Alfatanah Ibrahim, Deputy Manager, Policy and Strategy, Employees Provident Fund (EPF)
- Arumugam G Sithamparam, Senior Economist, Asia Pacific University (APU)
- Bryan Yeoh, Senior Manager, Thought Leadership and Strategic Partnership, MyDIGITAL Corporation
- Calvin Woo, Director of Malaysia Centre4IR, MyDIGITAL Corporation
- Dr Elsadig Musa Ahmad, Professor of Economics and Technology Management, Faculty of Business, Multimedia University
- Farah Nabilah, Analyst, Cyber and Technology Policy, ISIS Malaysia
- Hanson Chong, Researcher, Economics, Trade, and Regional Integration, ISIS Malaysia
- Muhammad Farhan Hizami Said, Senior Manager, Malaysia Digital Economy Corporation (MDEC)
- Muhammad Syahimi Abd Jamil, Executive, Policy and Strategy, Employees Provident Fund (EPF)
- Rashaad Ali, Managing Director, Social and Economic Research Initiative (SERI)
Key Takeaways
1. Malaysia must strengthen talent development across all levels of the economy
Malaysia’s digital transformation ambitions, including becoming an AI Nation by 2030, hinges on the country’s ability to cultivate high-quality and future-ready talent. Challenges remain despite strong policy guidance, including talent scarcity and inconsistent digital literacy, particularly among SMEs, the informal sectors, and the older population. Without a strong talent base, Malaysia risks slow adoption, uneven productivity gains and widening inequality across sectors and demographics. The public sector, education system and industry must develop a more coordinated approach to talent, ensuring students, teachers and workers have the skills to use technology meaningfully. This involves moving away from an overemphasis on tools and certifications and focusing instead on cognitive skills, adaptability and professional ethics. These core competencies help individuals analyse information, make sound decisions and adapt to technological change.Even with access to advanced AI tools, young Malaysians and workers might struggle to use them responsibly or effectively without strong foundational and critical thinking skills. Malaysia must prioritise deeper talent investments across the pipeline such as improving curriculum quality, empowering teachers with digital confidence, embedding responsible AI literacy and strengthening adult learning for mid-career workers.
2. Closing digital inclusion gaps among MSMEs, informal sectors, and older populations must be central to Malaysia’s digital agenda.
Malaysians are benefitting from the improvements in connectivity, access to digital devices, and better infrastructure, yet many remain digitally vulnerable. MSMEs, hawkers, informal workers and older Malaysians often engage with digital tools at a very basic level such as using QR payments or simple messaging without transitioning into higher-value digitalisation such as online business expansion, digital marketing, inventory management, or leveraging data for decision-making. Moreover, digital inclusion today requires far more than internet access as we aim for digital equity. Safety, financial resilience and consumer protection are now central components of inclusion and equity. Scams, misinformation, online fraud and predatory financial products disproportionately affect the elderly, low-income groups and those who lack digital literacy. These risks will intensify as Malaysia moves into an aged nation, where many older individuals have limited familiarity with online systems but are increasingly asked to transact digitally. Social protection design and delivery becomes highly important as digitalisation changes the market landscape. To ensure no one is left behind, Malaysia needs to integrate community-based training, user-friendly digital public services, harmonised digital public infrastructure— such as secure digital ID and interoperable data platforms, and targeted social protections. A safer digital ecosystem will be essential to enabling vulnerable groups to participate confidently and securely.
3. Public sector leadership are crucial to unlocking systemwide transformation
A digitally capable public sector remains one of the strongest enablers of nationwide transformation. However, fragmentation across agencies, unclear ownership of key systems and limited interoperability continue to be a challenge. Many services remain partially digital, relying on manual processes that leads to inefficiency and low uptake. As we move forward, seamless and clearer governance structure, stronger inter-agency coordination and more user-centric design of digital public services remain crucial. These challenges are not purely technical as they also stem from governance gaps that require better institutional alignment and long-term accountability for system maintenance and data management. In this context, responsible use of technology becomes increasingly important. As AI, automation and algorithmic decision-making are adopted across public and private sectors, it is essential to ensure the safety, trustworthiness and fairness of these systems from the start. Crucially, the burden of digital safety and responsible AI should not fall predominantly on users, as users may not have the expertise to evaluate whether a technology is safe, unbiased or transparent. Safety-by-design principle is of utmost importance and there needs to be a shift towards stronger corporate accountability, clearer industry standards, and greater oversight.
4. Malaysia should build future-ready and adaptive governance to support a dynamic digital economy
Malaysia has developed comprehensive plans and strategies for the digital economy, and continuous efforts are needed to enhance implementation consistency. While policy ambition is often high, some implementation-level challenges that hamper the momentum include regulatory fragmentation, overlapping mandates and varying levels of digital maturity across institutions. This complexity creates friction for businesses trying to innovate in areas such as platform work, creative digital industries, fintech and e-commerce. To encourage innovation while protecting users, Malaysia must strengthen cross-ministry coordination, reduce duplication and modernise its regulatory frameworks. Approaches such as regulatory sandboxes, agile governance models, clearer accountability structures and more open consultative processes as ways to accelerate policymaking must be further refined and strengthened. Regulatory clarity is especially crucial for emerging sectors where gaps in consumer protection, labour standards and market competition continue to leave both workers and businesses exposed to various risks. Ultimately, effective governance from both institutional and human welfare will determine Malaysia’s ability to move from continuous planning to impactful delivery. A more coherent regulatory environment will give businesses the confidence to innovate and help ensure that digital transformation benefits people across all segments of society.
Note: This event highlight was contributed by Farah Nabilah, Public Policy Researcher of the Institute of Strategic & International Studies (ISIS), Malaysia
