KUALA LUMPUR – The RM2 billion investment to develop the Sovereign AI Cloud under Budget 2026 will enable Malaysia to reap economic benefits by retaining the value created through artificial intelligence (AI) — including revenues, jobs, and intellectual property — within its national borders, said IT expert S. Sarkunarajah.
He said the Sovereign AI Cloud would ensure all data handling complies with local jurisdiction and that data remains within Malaysia’s borders.
Sarkunarajah added that, beyond economic gains, the initiative would create opportunities for the growing number of local AI players, including small and medium enterprises (SMEs) involved in digital operations.
“While it is not unique to Malaysia, many governments require data generated within their borders to stay there,” said the Erobern Consultancy founder, responding to Prime Minister Datuk Seri Anwar Ibrahim’s announcement last Friday that the Malaysian Communications and Multimedia Commission (MCMC) would develop the Sovereign AI Cloud.
During the tabling of Budget 2026, Anwar said the future of Malaysia’s digital economy depends on data sovereignty and AI, as part of efforts to position the country as a regional cloud and digital hub by 2030 under the government’s MyDigital Blueprint.
Sarkunarajah, who has over 20 years of experience in the IT industry with a focus on operational excellence, explained that the Sovereign AI Cloud refers to “cloud computing infrastructure specifically designed for AI workloads, where the Malaysian government maintains complete control over our AI capabilities, data, and infrastructure within our own legal jurisdiction.”
“While we will have to depend on external parties like American chipmaker NVIDIA and others, building our own Sovereign AI Cloud will allow us to ensure all data handling complies with local laws and that data stays within Malaysia’s borders.
“We are seeing a growing number of local AI players in Malaysia, and creating something like this will generate more opportunities for them,” he said.
In the process, he added, it would foster an ecosystem of local companies focused on research and development, commercialisation, and innovation within the AI and cloud infrastructure space.
Despite the clear advantages, Sarkunarajah said Malaysia must overcome several challenges — foremost among them, the shortage of AI talent, which requires sustained attention.
“Funding for start-ups is another key area to help SMEs scale, and as a nation, we must also increase AI literacy across the workforce and general population.
“They must use AI to increase productivity while remaining aware of cybersecurity risks, especially from malicious actors such as hackers and scammers,” he cautioned.
An ecosystem of AI players, especially in the SME sector, not only supports national efforts to build the Sovereign AI Cloud but also helps address some of the challenges Malaysia faces in achieving its AI vision, he added. October 14, 2025