KUALA LUMPUR: The 2027 Budget reinforces Malaysia's commitment to strengthening its digital economy through investments in connectivity, artificial intelligence (AI) and cybersecurity, the Malaysian Communications and Multimedia Commission (MCMC) and analysts say.
The initiatives aim to expand digital access, improve public services and boost economic competitiveness. However, analysts say effective implementation, domestic technology development and private sector participation will be crucial to achieving these goals.
Among the key initiatives are RM5 billion for the National Digital Network Plan (JENDELA), RM1 billion for the national digital healthcare ecosystem and RM142 million to strengthen National Information Dissemination Centres (NADI).
The JENDELA allocation will expand high-quality Internet coverage in rural and remote areas, including Orang Asli villages. It will also improve connectivity along 7,000km of roads and highways, and 1,700km of rail routes nationwide.
The National Digital Healthcare Ecosystem and Connectivity Initiative (PERSADA) will improve digital infrastructure and connectivity in the healthcare sector. It will support the expansion of Electronic Medical Records, telehealth services and drone deliveries of medicines to improve access to healthcare in rural and remote areas.
The NADI allocation will strengthen its role as a digital community hub by providing training in digital skills and AI, while supporting local economic development and entrepreneurship.
The Madani Submarine Cable System (SALAM) will increase network capacity and resilience between Peninsular Malaysia, Sabah and Sarawak. WiFi at public higher education institutions and a Sovereign AI Cloud are also expected to improve connectivity and strengthen data sovereignty.
MCMC will intensify its Safe Internet Campaign in schools nationwide and continue efforts to combat digital fraud. These include blocking more than 5.7 billion scam-related calls and short message service messages.
MCMC said the initiatives would help ensure digital investments deliver tangible benefits to the people, industry and country.
Nusantara Academy for Strategic Research senior fellow Prof Azmi Hassan said the government's commitment was clearer when allocations across ministries and digital infrastructure projects were considered together, rather than focusing solely on the Digital Ministry's RM1.36 billion allocation.
"The government has shown its commitment through the combined allocations for ministries, education, infrastructure and AI to ensure Malaysia does not fall too far behind in the digital economy," he told Business Times.
Azmi welcomed the additional 100,000 free AI subscriptions, saying these could widen access to technology and improve young people's employability.
He said the RM142 million allocation for NADI could help small and medium enterprises explore new opportunities through its online business platform.
However, he said the initiatives' success should be measured by the number of jobs created and the foreign direct investment attracted to AI and other digital industries.
Institute of Strategic and International Studies Malaysia chairman Datuk Prof Dr Mohd Faiz Abdullah said the next challenge was ensuring businesses translated access to digital technology into productivity gains.
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He said Malaysia needed to develop homegrown solutions that could compete internationally, with stronger support for domestically developed software and AI, start-ups, research and development, and talent development.
Faiz said AI adoption varied across sectors. Financial services were moving towards scaling up their strategies, while manufacturers remained largely at the experimentation stage.
Malaysia's ambition to establish 3,000 smart factories by 2030 remained a significant challenge, with only 93 having completed their transformation.
"Unless there is a massive acceleration in the build-up rate, this will set Malaysia back from the vision of realising dark factories which can function 24/7 without explicit human supervision," he said.
Faiz said Malaysia could build on its existing strengths in data centre construction, cooling systems and telecommunications, developing expertise that could be exported to other countries.
Other opportunities included advanced semiconductor packaging and AI applications in healthcare and agriculture.
He said connectivity investments would be more effective if rural communities had reliable electricity and fast Internet access.
He cited Sabah as an example of how energy constraints, slow Internet and limited economic opportunities could hinder digital transformation.
Faiz proposed state-by-state assessments of innovation, research and development, productivity and exports to identify bottlenecks and ensure digital initiatives addressed local needs.
National Cyber Security Agency (NACSA) chief executive Dr Megat Zuhairy Megat Tajuddin said the 2027 vsupported efforts to strengthen Malaysia's technological sovereignty and prepare critical systems for emerging cyber threats.
"Ultimately, resilience requires more than adopting technologies developed elsewhere. We must harness our domestic talents, researchers and industry players to develop, test and deploy solutions that address national security needs," he said.
He said the collaboration between NACSA and MCMC would support the development of home-grown data protection technologies against quantum threats, alongside efforts to strengthen CSCDC Bhd.
Malaysia's National Post-Quantum Cryptography Migration Plan 2025–2030 and AI Systems Cyber Security Framework would help prepare critical systems for emerging risks.
Megat Zuhairy said cybersecurity progress should be measured through stronger protection of critical infrastructure and personal information, faster incident responses and more reliable digital services.
An AI-powered scam-checking application could prevent financial losses, he said. However, it would need to be backed by intelligence-sharing, coordinated investigations and cross-border enforcement cooperation.
International Islamic University Malaysia professor of Asean studies and political science Dr Phar Kim Beng said Malaysia's digital transformation required effective execution and greater private-sector participation, given its limited fiscal room.
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"Malaysia has a small budget to make any digital quantum leap," he said, stressing the need for public-private partnerships and safeguards against corruption and leakages.
Phar said Malaysia should strengthen its position in regional submarine cable infrastructure, with Selangor potentially becoming a hub supported by bunkering services for cable-laying vessels.
He called for stronger regional cooperation involving China, Japan, South Korea and Asean nations to combat cross-border online scams.
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