Malaysia’s micro, small and medium enterprises are adopting artificial intelligence at a rapid pace, with new research from Xero showing strong confidence in the technology’s long-term value. The survey of 1,033 MSMEs found that 81 percent have already introduced some form of AI into their operations, reflecting early momentum behind the country’s ambition to become an AI-driven economy by 2030.
Most respondents see AI as essential for future competitiveness. Three quarters believe AI will benefit their business, while 77 percent expect it to become a standard part of running a company by 2030. Their optimism centres on practical gains, including improved efficiency, cost savings and higher employee productivity. These expectations align with the government’s broader digitalisation agenda, which aims to strengthen MSME contribution to national growth.
This upbeat sentiment is translating into action. Nearly half of the surveyed businesses intend to expand their use of AI within the next year, signalling a shift from experimentation to wider integration into daily operations.
Confidence lagging behind adoption
Despite the strong take-up, the survey reveals a significant gap between adoption and confidence. Although many MSMEs are already using AI tools, 82 percent say they need more education before they can apply the technology effectively. Only 56 percent feel familiar with the range of AI use cases available to businesses, indicating that implementation so far has been largely tactical rather than strategic.
Concerns about risk and governance further highlight this lack of confidence. Data privacy and security issues were cited by 59 percent of respondents, making them the most common concern. Ethical risks, including plagiarism, were noted by 38 percent, while more than half worry about becoming overly dependent on AI systems. This uncertainty is contributing to a wider push for oversight, with 68 percent of MSMEs saying the government should strongly regulate AI in business.
The findings also show that policy and governance structures within organisations remain uneven. Of the businesses already using AI, 30 percent have no guidelines at all for its deployment. This gap suggests that many companies have moved ahead with adoption without establishing clear frameworks to guide responsible and secure use.
A shift in support needs
The research indicates that MSMEs are seeking a different kind of assistance as they deepen their use of AI. Training and education emerged as the most requested form of support, selected by 61 percent of respondents. Advisory and consulting services followed closely at 50 percent, while access to technology was cited by 52 percent.
Financial aid, often considered a common barrier to digital adoption, ranked lower than expected, with only 37 percent of MSMEs identifying it as a priority. This shift suggests that businesses view knowledge, guidance and practical frameworks as more critical enablers than direct funding.
According to Xero, these findings highlight a clear opportunity for industry bodies, technology partners and the public sector to work more closely with MSMEs. Koren Wines, Managing Director of Xero Asia, said businesses are eager to embrace AI but require “confidence, guidance and guardrails” to ensure they can use it effectively and responsibly. Datuk William Ng, National President of SAMENTA, noted that MSMEs need accessible training and success stories to strengthen their ability to adopt AI in meaningful ways.
As Malaysia accelerates its journey towards becoming an AI-powered economy, the coming years will require a coordinated effort to build literacy, improve governance and ensure that AI tools are deployed in ways that support sustainable growth.
