Year in review: Artificial Intelligence Law in Malaysia

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Year in review

The Malaysian government has increasingly sought to both adopt AI solutions in various sectors and use AI for job creation. The launch of a National AI Office Lab by the digital minister lays the foundation to accelerate AI innovation and embrace the vision of transforming Malaysia into a global AI hub for developers to collaborate, experiment and innovate. Collaborations between the National AI Office and Global AI Village have also seen the creation of highly skilled artificial intelligence engineering jobs. This initiative is expected to be achieved within the next five years.⁵

Moving to other sectors, the Malaysian Health Ministry is actively exploring AI applications through research initiatives and has rolled out pilot projects at hospitals to expand AI-based technologies.⁶ With an aim to create an ecosystem for AI-driven healthcare advancements, the Malaysian government is looking at fostering collaboration between the public and private sectors to spur AI innovation. Meanwhile, Malaysia’s anti-graft agency is turning to blockchain and AI to fight corruption and fraud.⁷

To date, there is no regulatory framework that specifically governs AI in Malaysia. Nevertheless, the National AI Office aims to draft an AI adoption regulatory framework and an AI Code of Ethics in 2025. These drafts have not been published for public feedback.

Due to a combination of the low cost of AI and high Internet penetration across the population, AI adoption has proliferated in Malaysia over the past few years. From everyday use to the workplace, knowledge workers in Malaysia have embraced AI at a faster rate than the global average.⁸

We highlight a few key use cases below.

The Central Bank of Malaysia has reacted positively to the adoption of AI to improve financial services. More than 80 per cent of financial institutions in Malaysia have now adopted AI, with common use cases including customer analytics, fraud detection and electronic know-your-customer (e-KYC). Some of these projects have demonstrated improved anti-money laundering analysis, carried out climate-related data extraction, enhanced risk management approaches and facilitated fully digital account opening services by improving e-KYC solutions.⁹

Rakan Tani, the first AI project launched under the National AI Office Lab, streamlines farming operations to secure higher incomes for farmers while reducing market volatility at the same time. The digital platform connects farmers with buyers at an earlier point in the crop cycle, ensuring that the farmers can lock in the best prices for their harvest. Order matching is driven by AI to ensure that farmers receive competitive pricing based on their projected yields.¹⁰

AirAsia, Malaysia’s largest low-cost airline, has enhanced the artificial intelligence and machine learning capabilities of its chatbot. It now includes features such as live updates on flight status, flight changes, and boarding information, and is available in more languages. The bot now automatically sends notifications on last-minute changes and baggage information.¹¹

YTL AI Labs released Ilmu 0.1, a large language model built entirely by Malaysians. Ilmu 0.1 demonstrates a deeper understanding of Malaysian culture and context, outperforming other global large language models in Malay.¹²

In October 2025, LexisNexis launched Lexis+ AI with Protégé Malaysia, a personalised AI assistant designed specifically for the Malaysian legal system. The launch follows growing concerns over the risks associated with the use of AI in legal practice, particularly where fictitious legal authorities are cited in court. Protégé stands out for its foundation in trusted local legal sources, including the Malayan Law Journal, as well as its security framework, which encrypts all chats and purges data upon log-out to safeguard client confidentiality. The system can handle a range of legal tasks, including document analysis, intelligent drafting and the generation of visual timelines from case materials.¹³