02/08/2025

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SATURDAY | AUG 2, 2025

Defining moment for M’sia’s AI, digital centre ambitions

reiterated that commitment.” Malaysia presented the US with a comprehensive tariff proposal covering 98% of all tariff lines, Tengku Zafrul said. “In other words, we offered a broad and inclusive package encompassing nearly all tariff categories.” Out of 11,260 tariff lines requested by the US, Malaysia agreed to set 6,911 lines – about 61% – at zero duty. “We believe certain industries are still not ready for full liberalisation, so we have taken a measured approach,” he added. The negotiations also addressed non-tariff barriers as part of Malaysia’s broader effort to position itself as a trade- and investment friendly economy. “We’ve implemented several progressive enhancements to facilitate trade and invest ment, benefiting both local and international stakeholders,”Tengku Zafrul said. He confirmed that exports of Malaysian semiconductor and pharmaceutical products to the US would remain exempt from the new tariffs. “At this stage, exports of semiconductors and pharmaceuticals will continue to enjoy zero tariff,” he said. A joint statement on the final tariff arrangement between Malaysia and the US is expected to be issued this weekend. The new 19% tariff on certain Malaysian goods is scheduled to take effect on Aug 8. GDP growth, fiscal deficit targets under 13MP attainable: CGS KUALA LUMPUR: CGS International Securities Malaysia Sdn Bhd believes the average gross domestic product (GDP) growth target of 4.5–5.5% under the 13thMalaysia Plan (13MP), along with the fiscal deficit target of 3% of GDP by 2030, is attainable. This is considering Malaysia’s average GDP growth of 4.6% post-global financial crisis (2010–2024), or 5.3% when excluding the pandemic year of 2020, said CGS in a note yesterday. It noted that the fiscal deficit target aligns with the medium-term goals stipulated in the Public Finance and Fiscal Responsibility Act. “Although the pace of fiscal deficit consolidation under the 13MP appears more gradual compared to recent years (2021-2024: -6.4% to -4.1%), we feel this is reasonable, given the need to also support economic growth amid tariff related headwinds. “We are of the view that recent measures, such as the expanded sales and service tax scope and subsidy rationalisation on diesel (and eventually RON95), could help offset the fiscal deficit pressures amid softer economic growth – underscoring the importance of the Madani government’s reform agenda,” it added. In a separate note, CGS said the 13MP strikes the right balance between the priorities of various economic players while providing sufficient clarity for investors to assess Malaysia’s medium term prospects. It said the 13MP paves the way for a new direction for upcoming federal budgets, and it expects Budget 2026 to be tabled in October, to reflect elements of the plan. “Overall, we maintain our 2025 GDP growth forecast of 4.2% year-on-year,” it added. – Bernama

Ű BY DEEPALAKSHMI MANICKAM sunbiz@thesundaily.com

o Global trade and supply chain disruptions, rising energy costs could either stall or accelerate agenda: Industry leaders

PETALING JAYA: As US-led semiconductor chip restrictions tighten and regional energy costs rise, Malaysia faces a defining moment in its artificial intelligence (AI) and data centre ambitions. Industry leaders say these global disruptions could either stall the nation’s progress or become the very trigger that accelerates its push for AI self-reliance and digital sovereignty. National Tech Association of Malaysia research committee chairman Woon Tai Hai said the recent US export curbs on high-end AI chips, such as Nvidia’s H100 and A100, are already impacting AI-focused startups, research institutions and data centre operators in Malaysia. “These chips are crucial for training large AI models and powering generative AI appli cations. Without them, we’re seeing delays in deployment and increased costs for local developers,” he told SunBiz . While some companies are pivoting to older graphic processing unit (GPU) models or exploring Chinese-made alternatives, such as Huawei’s Ascend chips, the transition is not seamless. Compatibility issues, software support gaps and geopolitical uncertainty make it a complex adjustment. Meanwhile, electricity and cooling costs have surged, especially with Malaysia’s high ambient temperatures pushing the limits of energy efficiency in data centres. Coupled with US tariffs on Malaysian exports and the weakening ringgit, Woon said, the environment is increasingly hostile for small players. “This triple hit of chip shortages, energy inflation and trade pressure could force some AI projects to downscale or pause altogether.” However, Woon believes this challenge KUALA LUMPUR: Malaysia has declined requests from the United States to eliminate excise duties on automobiles, tobacco and alcohol, as well as to waive import licensing requirements and fully liberalise equity owner ship in strategic sectors during recent tariff negotiations. Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said the outcome of the negotiations did not cross any of Malaysia’s“red lines”or compromise its sovereign interests. “In ensuring our domestic industries are protected and given sufficient space and opportunity to grow, we stood firm. We did not compromise,”he said at a media briefing yesterday. Among the key demands from the US, he said, was the removal of excise duties. “Excise duties in Malaysia apply to three main categories: automobiles, tobacco, and alcohol,” he explained. “These duties are part of our domestic protection policy, particularly for the automotive sector, which we view as a strategic industry vital to our economy. In this context, maintaining these duties is a matter of national interest.” While acknowledging that the US similarly considers the automotive industry significant, Ű BY HAYATUN RAZAK sunbiz@thesundaily.com

stockpiles and investment in alternative chip architectures, such as RISC-V, Graphcore and Tenstorrent, to diversify away from US-made GPUs. “Waiting for supply to return to normal is naive. This is structural, not cyclical,” he warned. Akmal also urged the government to champion a sovereign compute initiative, a state-supported push to establish Malaysia’s own high-performance computing infrastructure. “This is no longer a luxury. We need our own compute backbone to support AI research, secure data hosting and digital services that cannot be outsourced,” he said. While some pilot efforts exist, Akmal noted that they remain fragmented and underfunded. What’s missing, he said, is a unified national AI policy that aligns research, compute infrastructure, industry application and talent development under one coordinated strategy. “Right now, we have isolated efforts by Mimos, Mosti, universities and agencies like MRANTI, but they aren’t talking to each other. We need a central AI authority or framework to synchronise this,” he said. Akmal also cautioned that Malaysia’s delay in building domestic capacity will ultimately result in higher costs. “We are not just competing for tech, we’re competing for independence. The AI race is about who owns the tools of the future, and right now we’re still borrowing them,” he said. Akmal believes that Malaysia still has the talent, infrastructure and investor interest to build a competitive, ethical and independent AI eco-system, but only if it takes bold steps now.

presents a rare opportunity for Malaysia to reposition itself. “We are still an attractive alternative to Singapore for hyperscalers, especially with land and energy constraints over there,” he said, pointing to recent investments such as Google’s RM9.4 billion data centre in Selangor. He added that Malaysia could leverage this disruption to double down on home-grown capabilities, forge new global partnerships beyond the US-China binary and evolve from being just a digital consumer to a true AI contributor. “This is not just a supply chain issue; it’s a wake-up call. If we want to lead in AI, we can’t import our way to success,” Woon stressed. Universiti Malaysia Kelantan Institute for Artificial Intelligence and Big Data director Dr Muhammad Akmal Remli warned that Malaysia’s long-standing dependency on foreign hardware, cloud platforms and proprietary models has become a strategic liability. “The AI ecosystem doesn’t just rely on talent and data. It runs on compute power and right now, Malaysia doesn’t own its compute destiny,” he said. Akmal called for a comprehensive localisation strategy, beginning with substantial investment in foundational AI research and development through universities, public research agencies and long-term national programmes. “We can’t just be training people to use ChatGPT. We need to train them to build the next generation of language models,” he said. Beyond research and development, Akmal proposed the creation of strategic hardware

Malaysia holds firm in tariff talks with US, no red lines crossed

Tengku Zafrul speaking at the media briefing yesterday on Malaysia’s tariff negotiations with the US. – BERNAMAPIC

Other sensitive areas highlighted included the imposition of export duties and blanket exemptions from import licensing for US goods. “These were among the core issues related to our national economic and security priorities,”he noted. On commercial cooperation, Tengku Zafrul reaffirmed Malaysia’s earlier commitments, including the planned purchase of Boeing aircraft. “We’ve committed to acquiring 30 Boeing aircraft in the first phase, and an additional 30 in the second phase. We’ve

Tengku Zafrul underscored that Malaysia would not accede to calls for greater market openness at the expense of its strategic sectors. “That was a red line for us,” he said. Malaysia also chose to maintain its require ment for import permits on US products. “We stood our ground and will continue to require import permits,”Tengku Zafrul affirmed. He added that Malaysia also rejected proposals for full liberalisation of equity ownership in key strategic sectors. “We did not proceed with that,” he said.