Kota Kinabalu: Malaysia must move aggressively to adopt artificial intelligence (AI), digitalisation and green growth to stay competitive in the global economy, said former Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamad.
He said AI and automation are now central to competitiveness and sustainability, and Malaysia has “no choice but to move aggressively” to ensure its industries, especially small and medium enterprises (SMEs), meet global environmental, social and governance (ESG) standards.
He said that while Malaysia has made progress, there is “no choice but to move aggressively” to ensure that industries, particularly small and medium enterprises (SMEs), are able to meet global environmental, social and governance (ESG) standards.
“In every part of our lives, things are moving online and becoming increasingly automated. We have a lot of foreign labour in Malaysia and our policy is to gradually reduce dependence on it.
That is why automation and AI adoption are key,” he said when delivering a keynote titled “Policy for the Next Normal: Building a Competitive Digital & Green Economy” at the AI Summit 2025 held at Sabah International Convention Centre (SICC) here Friday.
Mustapa, who is also former International Trade and Industry Minister, highlighted that countries worldwide are now under pressure to address the climate crisis caused by decades of unchecked development that exploited natural resources without environmental consideration.
He noted that at the ongoing COP30 conference in Belém, Brazil, countries are expected to reaffirm their nationally determined contributions (NDCs) toward achieving net zero emissions by 2050 – a target Malaysia has also committed to.
“The global response to climate change began with the 2015 Paris Agreement, followed by the Sustainable Development Goals (SDGs). These frameworks are guiding nations, including Malaysia, in embedding sustainability and inclusivity in their development policies,” he said.
At the national level, he said the upcoming 13th Malaysia Plan will continue embedding sustainability and inclusiveness as key pillars, while green practices are being integrated into industrial strategies and financial regulations.
“As a major trading nation, we have no choice but to align with global best practices and standards to attract both foreign and domestic investments. Investors are going green, and so must we,” he stressed.
Mustapa said Malaysia’s government agencies, including the Environment Department, the Plantation and Natural Resources Ministry, Bank Negara and MITI, have introduced regulations to prevent environmental degradation and promote ESG adoption among industries.
He also cited various government initiatives to support digitalisation, such as the MDEC Madani SME grants and Agritech programmes, which have benefited SMEs in Sabah and Sarawak through funding and training to improve AI and automation adoption.
However, he cautioned that challenges remain, particularly in ensuring enforcement and compliance with environmental and circular economy regulations at the local level.
“In terms of enforcement, we are seriously lacking. There’s a need to strengthen it to make sure rules on waste disposal and circular economy are properly observed. Otherwise, the environment and climate will be adversely affected,” he said.
Mustapa emphasised that digitalisation and green adoption will enhance efficiency and sustainability while ensuring Malaysia’s continued relevance in international trade.
“As one of the world’s major trading nations, Malaysian companies must embrace the best global practices and comply with international standards set by the WTO and other organisations. SMEs must go green to remain part of the global supply chain,” he said.
He called for greater collaboration among government bodies, chambers of commerce, entrepreneurs, universities and other stakeholders to strengthen awareness and capacity-building across Sabah and Malaysia.
“We must ensure that the message is delivered across the whole of Sabah – that to stay relevant and competitive, we must embrace digitalisation and the green agenda,” he said.
Mustapa reminded that there is no alternative but to act now.
“Automation, AI and green development are all very important. There’s no choice. Although some global leaders may delay the green agenda, the reality is that without collective action, the planet will be destroyed and there will be no place for us to live,” he said.
