Driven by rapid digital adoption and increasing foreign investments, Asean is one of the world’s fastest-growing technology markets. The World Economic Forum projects that the region’s digital economy will grow from US$300 billion to an estimated US$1 trillion over the next decade.
Malaysia boasts one of the highest mobile phone and internet adoption rates of the Association of Southeast Asian Nations’ major economies, with the digital economy contributing to nearly a quarter of the country’s GDP. Those strong foundations, as well as its strategic location and skilled multicultural workforce, have helped the country become a magnet for foreign direct investment (FDI).
Notably, supportive initiatives such as the Malaysia Digital Economy Blueprint, which aims to position Malaysia as a regional leader in the digital economy by 2030, have placed technology and innovation at the core of the nation’s socio-economic transformation.
In 2023, tech giants Microsoft and Amazon announced multibillion-dollar investments to advance their cloud services infrastructure. Separately, Alibaba Cloud has supported digitalisation across Malaysia’s logistics, automotive and financial services industries, while Huawei has emerged as a potential partner for building Malaysia’s second 5G network.
With its digital transformation, Malaysia is well placed to navigate economic and geopolitical uncertainties. Indeed, the nation’s priorities include Asean economic integration, trade diversification and the alignment of digital policy as a means of maximising regional opportunity and increasing economic resilience against tariff threats or supply chain issues.
China’s increasing interest in outbound investment may also prove to be a stabilising force in the face of macroeconomic uncertainty.
Speaking at the SCMP China Conference: Southeast Asia 2025 last month, David Liao, HSBC’s co-CEO of Asia and Middle East, said Chinese capital flows in Asean are expected to vastly increase in the coming years. “In the past 15 years, Asean has seen Chinese investment triple. Given China’s outward direct investment still accounts for only 16 per cent of GDP, far below the global average of 34 per cent, we expect these investments will continue to grow.”
As it stands, China is in the midst of a transformative period driven by economic policy shifts and fiscal stimulus, with an estimated US$9 trillion worth of demand deposits waiting to be unleashed. This comes at a time when US capital markets are faced with an unusual combination of high interest rates and stock market valuations, and a strong dollar. With these factors in mind, investors are looking to diversify their portfolios in Asean, taking advantage of the region’s collaborative efforts for digital and economic transformation.
“This is where [sizeable regional stock markets] like Hong Kong and Malaysia can provide significant opportunities,” Liao said, adding that banks such as HSBC – which has supported Malaysia’s economic growth for more than 140 years – can help businesses to find the most appropriate investors, liquidity and markets.
At the same time, Malaysia is also expected to build on its already well-developed Islamic finance sector – with assets valued at around US$260 billion at year-end 2024 – to facilitate investments between Asia and the Middle East.
Similarly, driven by the growth of artificial intelligence (AI), Malaysia has taken a proactive approach with the launch of its National Artificial Intelligence Office. The initiative is set to develop an AI code of ethics and regulatory framework that, along with Asean’s guiding principles for the development of AI, provides much-needed clarity for companies operating in the space.
The nation is the fastest-growing data centre hub in the region, attracting billions of dollars in investment from companies including Google and Nvidia. Malaysia has positioned itself as a critical player in the global digital ecosystem by offering reasonable operational costs and affordable energy infrastructure.
Similarly, Malaysia is set to capitalise on the rising demand for semiconductors, with global sales expected to reach US$1 trillion in 2030. The nation currently accounts for 13 per cent of the global market for semiconductor packaging, assembly and testing, and is looking to strengthen its foothold with the National Semiconductor Strategy – a US$5.3 billion plan to attract advanced chip manufacturers and tech giants while further developing its domestic capabilities. In line with this fiscal support, banks are tailoring various types of financing to support the sector’s development. HSBC, for example, has established a US$1 billion Asean Growth Fund to support the growth of new-economy businesses in the region.
At the China-Asean conference, Malaysian Prime Minister Anwar Ibrahim said Asean member states can fully harness the benefits of technological advancements, but they must establish common standards for data protection, facilitate seamless cross-border digital trade and invest in capacity-building initiatives that bridge the digital divide.
“By fostering a secure, innovative and inclusive digital ecosystem, Asean can position itself at the forefront of the global digital economy, driving sustainable growth and shared prosperity for the region,” he said.
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