Malaysia’s digital economy hits US$48bn as AI adoption deepens

Malaysia’s digital economy is projected to grow 20% to US$48 billion (RM196 billion) in gross merchandise value (GMV) this year, matching Vietnam as Southeast Asia’s fastest-growing digital market, according to the 11th annual e-Conomy SEA report by Google, Temasek and Bain & Company.

The report, titled "Building the intelligent economy", attributed the growth to double-digit expansion across digital sectors, including eCommerce, online travel, online media, and mobility and food services.

eCommerce remains Malaysia's largest digital economy sector, with GMV projected to rise 22% year-on-year to US$25 billion in 2026, according to the report.

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Speaking at a local media briefing, Ben King, managing director of Google Malaysia and Singapore, said the growth reflects the resilience of the country’s digital ecosystem, reported Bernama.

King added that nearly half of AI usage in Malaysia is driven by enterprise workloads, while users engage with AI tools more deeply than the regional average.

Malaysia emerges as a mature AI market

Malaysia ranks second in Southeast Asia for AI adoption and depth of usage, alongside Singapore, according to the report.

Approximately 17 million Malaysians use generative AI, equivalent to 68% of the country’s working population. The report also found that one in five users of Google’s Gemini AI assistant in Malaysia requested image generation, the highest rate of visual generation usage in Southeast Asia.

These findings point to AI moving beyond early experimentation towards more routine use in personal and professional workflows.

Enterprise workloads account for between 45% and 60% of AI usage in Malaysia and Singapore, compared with a greater emphasis on consumer usage in markets such as Indonesia, the Philippines and Vietnam.

AI is also becoming part of the consumer shopping journey across Southeast Asia. The report found that 93% of consumers trust AI as a shopping assistant, although more than 90% continue researching products or reading reviews after receiving a recommendation.

Standalone AI applications account for 19% of online shopping journeys, compared with about 25% each for social media and search engines.

The shift could have implications for how brands build visibility and reach consumers as product discovery extends beyond traditional search and social platforms.

A separate study by AI-native consultancy Entermind, reported by A+M, found that 43% of surveyed Malaysian AI users turned to AI assistants before search engines, while 41% had made a purchase or financial decision primarily based on AI-generated information or recommendations.

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