Malaysia AI adoption rises to 38% as AWS flags gaps

Amazon Web Services has released research showing that 3.4 million Malaysian businesses now use at least one artificial intelligence tool. Adoption rose to 38% from 27% a year earlier.

That equates to nearly one million additional businesses adopting AI over the past year, according to research by Strand Partners. The findings suggest uptake is widening quickly, although many companies are still using basic tools rather than applying AI across multiple parts of their operations.

Among AI adopters, 67% remain focused on applications such as public chatbots for routine tasks or ready-made tools that improve existing processes. Only 19% said they had a formal strategy for scaling AI across multiple functions.

The research identified three factors that could shape the next phase of adoption in Malaysia: local software providers, stronger governance, and greater public-sector use of AI. It found that 57% of businesses mainly access AI through external providers, consultants, or software vendors, while 69% said locally based software providers and AI solution developers are important to their adoption.

Among companies that work with outside providers, 43% use them to develop an AI strategy, 40% for systems integration and maintenance, and 31% for workforce training. This suggests vendors and consultants are shaping both planning and day-to-day implementation.

Sector split

Financial services and manufacturing are ahead of the wider market in adoption, although the two sectors are at different stages of maturity. The study found that 53% of financial services businesses and 50% of manufacturers have adopted AI, compared with the national average of 38%.

In financial services, 64% of businesses have moved beyond experimentation and 42% have a scaling strategy. The sector also leads on governance, with 39% reporting a formal AI governance framework, compared with 24% across all businesses.

Manufacturers showed strong interest in AI, with 80% expecting it to transform the industry, but many remain in the early stages. Some 57% said they were still exploring or experimenting, compared with 34% of financial services businesses.

Manufacturing businesses also reported several barriers. Technical or data issues were cited by 44%, workforce capability by 41%, and limited resources by 37%.

Only 15% of manufacturers said they had a formal AI strategy, and 13% felt fully prepared for next-generation AI. The contrast with financial services suggests that sector-specific guidance and operating models may play a significant role in moving businesses from trials to wider deployment.

Governance gap

Across the wider economy, governance remains uneven. Just 30% of businesses said they had clearly defined accountability for AI initiatives, 27% carried out regular monitoring or audits, and 18% had documented escalation processes.

Almost half, or 47%, said they wanted practical frameworks or templates. The findings indicate that many businesses are looking for operational guidance rather than new rules.

Public-sector use of AI also appears to influence business confidence. Some 72% of businesses said greater AI adoption in the public sector would make their own organisation more likely to increase its use of the technology, while 74% said government leadership would be important in accelerating adoption more broadly.

The survey was based on responses from 1,000 business leaders in Malaysia and 1,000 members of the public. Business respondents included founders, Chief Executive Officers, and other C-suite executives, and companies were counted as adopters if they consistently used at least one AI tool.

Malaysia's business base includes a large number of smaller firms, making external providers an important route to wider deployment. For many companies, buying software or seeking outside support is likely to be more practical than building systems in-house.

That may explain why local software developers feature prominently in the findings. Businesses appear to value providers that understand domestic sectors and can fit AI tools into existing workflows, rather than requiring companies to rebuild operations around new systems.

AWS said the findings show that software partners, governance structures, and public-sector leadership will determine whether Malaysia's rapid rise in AI use leads to broader organisational change. Hussein Mohd Ali, Country Manager, Malaysia at AWS, said the country had reached a point where adoption is no longer the only issue.

"Software providers are the scaling engine Malaysia needs. Sector-focused providers that embed AI into the tools businesses already use are the fastest way to move an entire economy from experimentation to real capability. Governance and public-sector leadership aren't separate conversations; they're what turn that momentum into something durable. AWS is building for exactly this: investing in local partners, training the workforce to support them, and delivering the technology foundations that let software providers bring AI to every industry and businesses in Malaysia," said Ali.