DOI: 10.1080/19761597.2025.2585918">
 

Technology upgrading or path dependence? Malaysia's AI infrastructure strategy in regional perspective

Document Type

Article

Publication Date

2026

Department/School

Marketing

Publication Title

Asian Journal of Technology Innovation

Abstract

As Southeast Asia emerges as a global AI hub, middle-income countries face critical choices about technology upgrading strategies that will determine their role in regional innovation ecosystems. This study evaluates Malaysia's AI infrastructure boom within the context of Singapore's emergence as the world's third-ranked AI nation, generating $$2.7 billion quarterly in NVIDIA revenue despite having only 5.9 million people (Crosley, B. (2025, August 7). Singapore's $$27B AI revolution powers Southeast Asia 2025. Intro l). Through comparative analysis with Singapore's integrated innovation model, Vietnam's manufacturing-focused absorption strategy, and Thailand's structured clustering approach, we examine whether Malaysia's $$30 + billion AI infrastructure investments represent genuine technology upgrading or path-dependent repetition of earlier development patterns.

Despite impressive infrastructure deployment – including Southeast Asia's largest data centre expansion and cross-border integration through the Johor-Singapore Special Economic Zone – Malaysia exhibits persistent constraints: 88.6% foreign-dominated patent applications (World Intellectual Property Organization. (2023). Malaysia country profile: Innovation and IP statistics. WIPO ), accelerating brain drain affecting 35.9% of skilled diaspora (TalentCorp Malaysia. (2021). Talent mobility and skills migration patterns: Malaysian diaspora study. TalentCorp ), and fragmented coordination across multiple agencies. While Singapore commits 2.76% of government expenditure to AI initiatives, Malaysia allocates only 0.15% (MyDIGITAL. (2025). Budget 2025 accelerates Malaysia's transformation in AI. Government of Malaysia ), revealing a credibility gap between policy rhetoric and resource commitment. The analysis demonstrates that infrastructure-led approaches without systematic technology transfer requirements perpetuate dependency patterns rather than building indigenous innovation capacity.

However, Singapore's capacity constraints create unprecedented spillover opportunities for Malaysia through cross-border integration that could transform the country from peripheral location to integral component of a world-leading AI ecosystem. The findings suggest that sustainable technology upgrading in Asia requires institutional innovations emphasising cross-border collaboration, performance-based technology transfer, and regional integration strategies that transcend traditional competitive approaches to foreign investment attraction.

Comments

M. H. Sauber is a faculty member in EMU's Department of Marketing

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DOI: 10.1080/19761597.2025.2585918

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