Malaysian SMEs picking up on AI to drive growth

New Straits Times

3 days ago

KUALA LUMPUR: Malaysia's digital ambitions, as outlined in the MyDIGITAL blueprint, aim to position the country as a regional digital economy leader.
However, that vision will remain aspirational if local businesses, particularly small and medium enterprises (SMEs), do not accelerate their adoption of artificial intelligence (AI) and other digital technologies.
As neighbours such as Indonesia, Vietnam and Singapore continue to advance toward AI-enabled futures, Malaysian SMEs are uniquely positioned to seize this moment and lead a smarter, more inclusive wave of digital transformation.
A new study by Lazada, in partnership with Kantar, titled Bridging the AI Gap: Online Seller Perceptions and Adoption Trends in Southeast Asia, reveals a key challenge: Malaysian sellers recognise AI's potential but have yet to fully embrace it.
The study, which surveyed 1,214 online sellers across Malaysia, Indonesia, the Philippines, Singapore, Thailand and Vietnam, found that 69 per cent of Malaysian respondents say they are familiar with AI, but only 26 per cent have adopted AI tools, representing a significant gap between awareness and application.
This gap is not merely a technology issue. It reflects a broader set of challenges shaped by uneven access to education, infrastructure constraints, generational divides and varying levels of trust and understanding around AI.
Beyond that, the findings also reveal that businesses are not standing still. Many are also carefully evaluating AI opportunities that align with their specific capacities and business models.
Malaysian SMEs are increasingly aware of tools ranging from generative AI for content creation and marketing to chatbots and predictive analytics.
Technologies like ChatGPT have helped bring AI into mainstream business conversations. Today, it is no longer confined to niche technical circles, but has entered boardrooms, marketing meetings and daily operations.
Yet, despite growing awareness, adoption remains relatively modest. Many SMEs are in the exploratory phase, testing AI tools but not yet integrating them into core workflows. Why?
The report identifies several consistent barriers: perceived high costs, implementation complexity and a longstanding preference for tried-and-tested processes.
While 87 per cent of Malaysian sellers acknowledge AI's long-term cost-saving potential, 64 per cent still cite cost and setup hurdles. Only half of the respondents believe AI is truly useful, well below the regional average of 61 per cent.
Williams Business Consultancy Sdn Bhd director Dr Geoffrey Williams noted that SMEs tend to delay adoption because the business value of AI is not always immediately apparent.
"They focus directly on their existing business model, which is often low tech. However, there are huge possibilities for SMEs in AI adoption, and sharing platforms will likely be one of the main routes to this," he told Business Times.
Beyond perception, Malaysia also faces structural issues. The absence of a dedicated national AI governance framework places SMEs in a grey area, particularly under evolving data protection laws such as the Personal Data Protection Act 2010 (Act 709).
Universiti Kuala Lumpur Business School economic analyst Associate Professor Aimi Zulhazmi Abdul Rashid pointed out that digital adoption among SMEs was sluggish before the Covid-19 pandemic.
However, the crisis served as a catalyst, pushing many businesses into "survival mode," where hybrid models combining physical and online operations became the norm.
"Even with the digital economy now paramount to SMEs, however, the AI adoption is slower than projected. This is attributed to a lack of knowledge, financial resources and resistance to another change in the business," he said.
Add to that infrastructural gaps and talent shortages, and it becomes clearer why some SMEs hesitate to move beyond the experimentation phase.
Generational dynamics also play a role. While older business owners may be more resistant to digital disruption, younger entrepreneurs, despite being digitally savvy, often lack access to funding or the technical support needed to deploy AI meaningfully.
Still, the picture is far from discouraging. Encouragingly, the Lazada-Kantar report finds that many businesses are already on the path to AI adoption, albeit at different stages of readiness.
The study categorises sellers into three distinct groups based on their level of AI adoption across five core areas of business operations, which include logistics, product management, marketing, customer service, and workforce management.
At the forefront are the AI Adepts. These businesses have successfully integrated AI across most or all of these five core business functions, and are already reaping tangible benefits.
From enhanced operational efficiency and cost savings to smarter decision-making and improved customer engagement. They are well-positioned for sustainable growth and better equipped to scale in a competitive, digital-first market.
Behind them are the AI Aspirants, which represent a significant portion of Malaysian sellers. These businesses recognise the value of AI and are keen to adopt it, but have yet to fully embed AI tools into their operations.
Many are in early testing or partial implementation phases, and with the right support, training, and access to practical tools, they have strong potential to progress toward becoming AI Adepts.
Finally, the study identifies the AI Agnostics. These businesses have minimal or no meaningful AI adoption across the five key operational areas. They tend to rely on traditional processes and may be more cautious or constrained by barriers such as cost concerns, lack of expertise, or uncertainty about the relevance of AI to their business model.
Only 15 per cent of Malaysian sellers fall into the AI Adept category, below the regional average of 24 per cent. However, 43 per cent are identified as AI Aspirants, businesses open to AI but still in need of better tools, training, and support to move forward.
This group presents a major growth opportunity. With the right guidance and accessible platforms, Malaysia can quickly expand its base of AI-ready SMEs.
Platforms like Lazada are playing a vital role in closing the gap by offering embedded AI features that are easy to adopt and designed for day-to-day operations. Lazada is no longer just a digital marketplace; it is becoming a strategic AI partner that helps SMEs transition into the digital economy with minimal friction.
By integrating AI directly into the seller experience, Lazada offers SMEs a low-risk, high-impact opportunity to test and scale intelligent technologies without needing large budgets or advanced technical skills.
For example, Lazada IM Shop Assistant (LISA) enables sellers to provide 24/7 customer support by allowing them to program automated responses to common buyer inquiries, such as questions about delivery, returns or product details.
Lazzie, a chatbot powered by generative AI technology, serves as a personal shopping assistant for buyers by offering real-time product information, recommendations and guidance during their shopping journey.
Meanwhile, the Lazada Business Advisor dashboard helps sellers make smarter decisions by giving them real-time insights on pricing, promotions and inventory. It is like having a built-in guide to spot opportunities and fine-tune strategies as the business grows.
For SMEs, these are not just fancy tools — they are practical stepping stones that make AI part of everyday business.
Williams acknowledges this approach and stresses that AI adoption will be market-driven, and there is only a limited role for government.
"Government agencies such as Malaysia Digital Economy Corporation already provide infrastructure for platforms with significant potential for gross domestic product and employment," said Williams.
Aimi adds that while workshops and training sessions are available through government and trade associations, they often lack scale and sustained funding.
"Many SMEs are not aware of the availability of online e-commerce platforms due to limited exposure. They may know the word 'AI' but do not understand what it is or how to apply it in their business operations," added Aimi.
The stakes are real, but so is the opportunity.
While Malaysia may trail some of its neighbours in AI adoption today, the ecosystem for progress is growing. Tools, platforms and support networks are becoming more accessible, and awareness is steadily rising.
AI is no longer a futuristic ideal — it is a practical, powerful resource that businesses of any size can begin leveraging now to work smarter, grow faster and compete more effectively.
With the right mindset and continued support from platforms like Lazada, Malaysian SMEs are not just capable of catching up — they have the potential to lead.
The question is no longer whether AI will be adopted. It is how inclusively, confidently and strategically we embrace it. And for many Malaysian businesses, that journey is already well underway.