Malaysia AI Governance Framework
Malaysia is close to enacting its first Artificial Intelligence (AI) Governance Bill, creating new opportunities for U.S. technology companies offering AI, cloud, cybersecurity, and data governance solutions. The bill is designed to promote responsible AI use while aligning with international best practices, giving U.S. firms greater regulatory clarity and confidence to expand in Malaysia and the broader ASEAN market.
The Ministry of Digital is developing the legislation through the National Artificial Intelligence Office (NAIO). NAIO will use a risk-based approach to address AI-related harm, incident reporting, and ethical AI principles, while supporting innovation and nationwide AI adoption. The complete AI legislative framework is expected to be submitted to the Cabinet in June 2026.
Malaysia is also strengthening its digital ecosystem through updates to data protection, cybersecurity, online safety, and cybercrime laws. These reforms aim to create a secure, trusted digital environment that supports advanced technologies and foreign investment.
Once implemented, the new AI framework is expected to increase demand for AI governance, compliance, risk management tools, and secure cloud infrastructure—areas where U.S. companies have strong capabilities and solutions. U.S. firms can pursue opportunities through partnerships with local companies and engagement with government and enterprise customers preparing for AI regulation.
ITA notes that Malaysia’s AI guidelines appear to be substantially aligned with many goals outlined in the White House’s AI Action Plan. Specifically, Malaysia places a strong emphasis on interoperability and the development of secure, trusted AI systems across borders, as well as alignment with international standards and already existing regulations. In the guidance, Malaysia notes that overly stringent regulations can hinder innovation and reduce global competitiveness. Similar to the United States, Malaysia articulates the goal to support SME adoption of AI by reducing compliance costs and regulatory uncertainty and protecting intellectual property. Additionally, Malaysia committed to promoting international technical standards, promoting interoperability, ensuring safety benchmark and countering authoritarian misuse of AI. These are positive signals for the overall Malaysian regulatory environment for U.S. businesses considering the market.
If you represent a U.S. company interested in exploring opportunities in Malaysia, please contact Commercial Specialist Kisok Kumar at office.kualalumpur@trade.gov