Budget 2025 sets the course for a digital future

 

From Jamil A Ghani

Malaysia’s 2025 budget lays the foundation for efforts to boost digital competitiveness and strengthening workforce readiness for an AI-driven future, thereby enhancing its role as Asean Chair next year.

With initiatives such as the National Artificial Intelligence Office (NAIO) and InvestMalaysia portal, Putrajaya has signalled its commitment to digital transformation.

Yet, in a rapidly evolving world, one can’t help but ask: can these measures help Malaysia lead Asean into the digital future, or will they fall short?

Laying the groundwork

Budget 2025 introduces initiatives to strengthen digital infrastructure and encourage broader adoption of technology.

The NAIO, with a RM10 million allocation, will coordinate AI policy across sectors.

In tandem with that, the RM50 million Digital PMKS Madani and Digital Penjaja Madani grants under Bank Simpanan Nasional are designed to empower local entrepreneurs by providing them the necessary digital tools.

These incentives are strategic investments in competitiveness.

For instance, Singapore’s National AI Strategy has positioned the city-state as a leader by funding projects in education and smart cities.

Similarly, Putrajaya’s allocation of RM1 billion under the Strategic Investment Fund can support high-value digital businesses and local tech entrepreneurs.

With data centres relocating from Singapore to Malaysia due to cost advantages and regulatory incentives, the country can position itself as Southeast Asia’s tech infrastructure hub.

The InvestMalaysia portal will further support this goal as a one-stop platform for attracting investors.

Combined with a planned US$16.9 billion investment up to 2038 from giants Amazon, Microsoft, Google and Oracle, these initiatives will elevate Malaysia’s standing in the global tech ecosystem.

Preparing a workforce for the future

To prepare the workforce for an AI-driven economy, Budget 2025 allocates RM7.5 billion for TVET programmes, with collaborations involving government-linked companies like TNB and Sime Darby to meet automation and energy transition needs.

These are focused on expanding digital skills to equip the workforce with AI-ready competencies for a future-proof economy.

An additional RM100 million under the Skills Development Fund targets sectors like maintenance, repair and operations (MRO) as well as EV, aerospace and AI to prepare over 20,000 trainees for technical roles in AI-adjacent tasks.

However, as global demand for such skills grows, it’s important to retain and attract top talent.

France’s AI strategy report provides a model for addressing this dual challenge with initiatives like the French Tech Visa.

A similar approach could help Malaysia secure its workforce.

Beyond talent retention, fostering an environment where AI expertise thrives is crucial.

Germany’s interdisciplinary AI institutes, like the German Research Center for Artificial Intelligence (DFKI), facilitate collaboration between academia and industry to promote applied research.

They have driven advancements in Germany’s automotive and manufacturing sectors, positioning it as a European leader in applied AI.

Creating similar local institutes or converting existing ones could support collaborative research in sectors emphasised in the budget, such as logistics and healthcare.

The objective of the multi-tiered levy mechanism in Budget 2025 is to reduce reliance on foreign labour by redirecting levy funds toward automation.

This is part of Putrajaya’s move to nurture a digital workforce, encouraging industries to integrate AI and advanced technologies and helping Malaysians to adapt to future job requirements.

Asean chairmanship and digital leadership

As the incoming Asean Chair, Malaysia can champion digital initiatives and set standards through regional programmes that reflect the 2025 chairmanship motto of “Inclusivity and Sustainability”.

The Asean AI Safety Network, with an allocation of RM3 million, will mobilise AI expertise and security across the region, supporting the Responsible AI Roadmap (2025-2030).

Meanwhile, the 5G Use Case Pilot Project, funded with a RM20 million allocation, will showcase 40 use cases for private 5G networks across various sectors, enhancing enterprise operations, boosting productivity and attracting investments through improved connectivity in industrial parks, underscoring Malaysia’s efforts in digital advancement.

Achieving these goals will require strong partnerships. For example, China’s Asean-China Partnership on Digital Economy and Belt and Road digital economy initiatives emphasise regional collaboration to enhance collective AI capabilities.

Similarly, France’s active role in shaping the European Union’s AI Act and its participation in the Global Partnership on Artificial Intelligence enable it to share best practices and strengthen collaborative networks for AI governance.

Asean could benefit from similar efforts that leverage resource-sharing and expertise to strengthen the region’s collective digital capabilities.

Commit to a long-term vision

While this budget shows a commitment to digital infrastructure and workforce readiness, long-term competitiveness requires sustained investment and strategic autonomy.

China’s focus on technological sovereignty, reducing reliance on foreign technology through domestic R&D, has driven advancements in AI and 5G.

Malaysia can build similar resilience by fostering local innovation. Singapore’s Model AI Governance Framework, which emphasises data privacy and ethical AI standards, sets an example for responsible AI use.

Launched in 2019, it fosters public trust and attracts partnerships. Establishing similar standards through the NAIO could bolster Malaysia’s reputation.

Conclusion

Budget 2025 lays a solid foundation for digital transformation, but a steadfast commitment to infrastructure, workforce readiness and governance is essential for long-term success.

By also adopting best practices from global digital leaders, Malaysia can build a resilient and forward-looking economy.

As Asean Chair, the country can help shape a meaningful digital future not just for Malaysians, but for the wider Southeast Asian region as well. - FMT

Jamil A Ghani is a PhD candidate at the S Rajaratnam School of International Studies, Nanyang Technological University, Singapore and an FMT reader.

The views expressed are those of the writer and do not necessarily reflect those of  MMKtT.