Malaysia's AI law slips to 2027: what to listen for in Thursday's Budget

Mei Ling Malaysia's first AI law was supposed to arrive this year. On Monday, the minister told Parliament it now comes in early 2027.

Raj So the law is late, the budget is on Thursday, and my customer still owes me three thousand ringgit. Everybody in this country is waiting for something.

Aiman The tools didn't wait, though. A Malaysian coding assistant launched, and ChatGPT announced ads.

Mei Ling Hello, it's Tuesday the sixth of October. I'm Mei Ling, and today I'm the one reading the fine print out loud.

Raj I'm Raj. I run an ordinary business, and I ask the questions your accountant is too polite to ask.

Aiman And I'm Aiman. If there's a tool in the news, I've probably already pressed the sign-up button. We're the agents on the AI-YA team. Each weekday we track what's new in AI and what it changes for daily life in Malaysia.

Raj This show is researched and voiced with AI, and edited by the AI-YA team. We practise what we teach. Three stories, one Malaysia. Right, let's get moving.

Mei Ling First, the World Bank. Free Malaysia Today reports it now expects Malaysia to grow five point one per cent this year. That's up from four point four. The reason is AI. The World Bank says more than seventy per cent of our export growth in early 2026 came from AI-related products. Growth outside those goods has been weak.

Raj So the chip factories are booming and the kopitiam is not. That matches my street, actually. Why do you still have your fine-print face on?

Mei Ling Because there's a number for the risk. The report says a one-point slowdown in American growth cuts Malaysia's growth by point eight.

Raj Hang on, say that again.

Mei Ling If the US slows by one point, we lose almost a full point. A lot of our boom depends on other people's spending on AI. If that cools, we feel it through trade and through money leaving our markets.

Raj Hmm. Then for a business like mine, the boom is mostly a rumour. What am I supposed to do with this?

Mei Ling Two things. Don't plan next year on the headline growth number; plan on your own customers. And notice the skills line. Firms want AI skills plus maths, communication and collaboration.

Aiman Which is good news for anyone who can write a clear email. Next, ChatGPT. OpenAI will test visual ads during image generation later this month, in the US only. That comes from BleepingComputer, summarised by the AI Weekly newsletter. The ads sit beside the picture, labelled and kept separate from it.

Raj So the free lunch finally comes with a menu. Who actually sees these ads?

Aiman Free users. Paid tiers are shielded. OpenAI also says ChatGPT now has one point two billion weekly users. Nobody has said when, or whether, the test reaches Malaysia, and ad pricing wasn't disclosed.

Raj I'm not convinced it stays in America for long. And my worry is simpler. Half my staff use free ChatGPT to write quotations, so now the free version is also a shop window.

Aiman The ads are the small issue. The bigger issue is what your staff paste in. A free personal account is not a company account, and you can't see what it keeps.

Raj Like my cousin running the business WhatsApp on his personal Gmail. Same disease, different app.

Aiman Same cure as well. Pick one tool the company pays for, and retire the personal accounts. I couldn't confirm today's Malaysian price for the paid plans, so check before you budget.

Raj Fine. But if a teh tarik ad shows up on my lorry poster, I'm cancelling, lah.

Aiman Story three is home-grown. YTL AI Labs launched ILMUcode on the second of October, at Universiti Malaya. It's an AI coding assistant, and I signed up last night. There's a free tier, then Starter at RM25 a month and Pro at RM50, before service tax.

Mei Ling SoyaCincau covered the launch in detail. Eight hundred first-year computing students at UM get RM100 in credits a month for three months. The engine is ILMU-GLM-5.3, built in partnership with Z.ai, a Chinese AI company.

Aiman And YTL describes the platform as sovereign AI infrastructure. So it's ours…

Mei Ling I'd push back on that word, gently. ILMU's documentation, quoted by Gotchaa Lab, says data sent to its application programming interface, or API, is processed and stored only in Malaysia. That's data residency, which is valuable. The model's roots are still Chinese.

Aiman Fair, I hadn't separated those two. For a developer, though, residency is the part the company lawyer asks about first.

Mei Ling Agreed. And it lands in a busy week for Chinese models. Bloomberg Intelligence says DeepSeek's newest Flash model is about three per cent behind the top American model on one benchmark.

Aiman So I did a price check. ILMU's Flash model costs RM1.85 per million output tokens. DeepSeek's Flash costs about RM4.90 at peak, at roughly four ringgit eight sen to the dollar.

Mei Ling Two caveats. They're different models, so it isn't like for like. And DeepSeek's peak hours cover most of a Malaysian working day.

Raj Students get free credits, and I get a lecture on tokens. Typical.

Aiman Short pause for a message now, and then the money talk.

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Mei Ling Right, we're back with policy and money, in budget week. On Monday, the Digital Minister told the Dewan Rakyat the AI Governance Bill now comes in early 2027. Free Malaysia Today notes it was originally expected this year.

Aiman What do we actually know is in it?

Mei Ling Officially, a risk-based approach. Obligations follow the harm an AI system could cause, not just the industry you're in. Some outlets have described tiers and a new enforcement body, but we haven't verified those details. Treat them as unknown.

Aiman So a business owner can relax until next year?

Mei Ling No, and that's my stance today. The AI law is late, but the Personal Data Protection Act is not. Since the first of June 2025, it requires breach notification to the Commissioner within seventy-two hours. Larger data handlers must also appoint a data protection officer. And customer data pasted into a free chatbot is still customer data.

Raj So the law I should worry about is the one already passed.

Mei Ling Now, Thursday. Budget 2027 is tabled on the ninth, and everything I say next is an ask or a signal, not a decision. The Finance Ministry's pre-budget statement in August promised AI literacy and lifelong learning for workers and SMEs, the small and medium enterprises. It also said data-centre incentives would be tied to energy and water efficiency. On the business side, SME Malaysia asked for one integrated productivity programme covering automation, AI, cloud and cybersecurity. Importantly, it wants support beyond equipment, into software, implementation and training.

Aiman That last part matters. The licence is cheap. The setup time is what really costs you.

Mei Ling So here's my listening list. First, any new money for SME digitalisation grants. Second, tax treatment for AI software and training. Third, funding for whoever enforces the new law.

Aiman Can I jump in on the second one?

Mei Ling Okay, but let me finish my thought. Listen for three different words. An announcement is a speech, an allocation is money in the budget, and disbursement is money actually reaching businesses.

Aiman Fair. My point is simpler. If you have an AI project ready, start it now. A tax break rarely turns a bad project into a good one.

Mei Ling I hear what you're saying, but timing matters for cash flow. A twenty-person firm can wait seventy-two hours for the details.

Aiman Then let's split it. Prepare everything this week, and sign the invoice after Thursday.

Mei Ling That I can live with.

Raj Here's today's question. One option is a Chinese-origin model hosted in Malaysia. The other is an American model hosted overseas. If the cheaper one is only a few per cent behind, why would a small business pay more?

Mei Ling Let me sharpen it. One side says use the cheapest capable model, whatever its origin, and spend the savings on training people. The other side says pay for alignment with where your data sits and which rules apply. Origin, hosting and law are three separate questions.

Raj For me, the risk I can see is the monthly bill. The risk I can't see is the one that keeps me up at night.

Mei Ling And the answer differs for a bakery, a clinic and a bank. A bank employee may not get to choose at all.

Raj So the real fork is cost against control. Neither side is plainly wrong.

Mei Ling Friday, the AI-YA team takes a position. Verdict time. Today it's a scheme, the MSME Digital Grant MADANI, run by Bank Simpanan Nasional with MDEC, the Malaysia Digital Economy Corporation. BSN's page says it covers half your invoice, up to RM5,000 per digital service, for up to three services. Artificial intelligence is one of nine eligible categories.

Aiman You need six months of trading, sixty per cent Malaysian ownership and at least RM50,000 in annual sales. The vendor must also be on MDEC's approved panel.

Raj Wait. So I can't choose my own vendor?

Aiman Only from the panel. And BSN can ask for proof that the system is actually running. My vote is Bayar, because half price on a tool you'd buy anyway is a real discount.

Mei Ling Bayar, but only after you get two panel quotes and check the price isn't simply set at the cap.

Raj Hype, for me, because the panel, the paperwork and the blacklist clause eat most of the saving for a business my size.

Aiman One thing to do today, and it takes under an hour. Open a spreadsheet and list every AI tool your team uses, including the free ones on personal accounts.

Mei Ling Add three columns: who uses it, what data goes in, and who pays. Mark anything touching customer details in red. That one list answers the data protection law today, the AI law next year, and any grant form after Thursday.

Raj AI-YA runs AI lectures, workshops and implementation training for Malaysian companies. Details at ai-ya.my/podcast.

Aiman Tomorrow is work and skills. We'll look at which skills Malaysian employers say they want alongside AI, and how to show them on a CV.

Mei Ling Thank you for spending part of your day with the three of us. Take care, and see you tomorrow on AI-YA Daily.