Malaysia’s digital economy is projected to reach US$48 billion (approximately RM196 billion) in gross merchandise value (GMV) in 2026, growing 20% year-on-year (YoY).
According to the latest e-Conomy SEA Report, Malaysia ties with Vietnam for the fastest-growing digital economy in Southeast Asia (SEA).
Released by Google, Temasek and Bain & Company on 28 October 2026, the report’s 11th edition, Building the Intelligent Economy, highlights double-digit growth across Malaysia’s digital sectors.
The e-Conomy SEA Report 2026 highlights strong e-commerce growth, rising AI adoption and new statutory protections for gig workers.
Southeast Asia’s digital economy is projected to grow 17% YoY to US$368 billion (approximately RM1.5 trillion) in GMV this year, with projections reaching US$1 trillion (approximately RM4 trillion) by 2035.
Meanwhile, approximately 243 million people across the SEA-6 economies use generative AI (GenAI), representing 58% of the working population.
E-Commerce and Online Travel Lead Growth
Malaysia’s e-commerce sector grew 22% YoY to US$25 billion (approximately RM102 billion) in GMV, tying with Vietnam for the fastest growth in SEA. AI-powered product discovery, video commerce and automated seller tools are creating new growth opportunities.
Online travel increased 15% YoY to US$12 billion (approximately RM49 billion) in GMV, matching Vietnam for the fastest expansion. Growth was primarily fare-led due to rising oil costs, alongside expanding domestic and international tourism and demand for premium accommodation.
Digital payments grew 17% YoY to US$261 billion in gross transaction value (GTV), keeping Malaysia the region’s second-largest market after Indonesia. Digital lending rose 22% to an US$18 billion loan book balance, supported by digital adoption and greater credit access for retail and small and medium-sized enterprises (SMEs).
Other sectors also recorded growth. Online media increased 20% YoY to US$5 billion in GMV, while mobility and food grew 18% to US$5 billion.
Malaysia Ranks Second in AI Adoption and Usage
Approximately 17 million Malaysians use GenAI, representing 68% of the working population. Malaysia ranks second in SEA for AI adoption and depth of use.
Malaysians lead the region in image generation, with one in five Gemini users requesting an image. They average 13.9 turns per AI session, second only to Singapore, with token intensity 22% above the regional average.
Enterprise workloads account for approximately 45% to 50% of AI token usage, placing Malaysia among the region’s more mature enterprise AI markets.
AI is also supporting local initiatives. At Mereka Malaysia’s OKUpreneur Celik AI workshop, entrepreneurs with visual impairment used Gemini to develop financial plans for laundry ventures. Meanwhile, Universiti Kebangsaan Malaysia (UKM) scientists use Google DeepMind’s AlphaFold to research the bacterium responsible for melioidosis.
AI Infrastructure Supports Future Growth
Malaysia’s expanding data centre ecosystem is supporting growing demand for AI and cloud services.
Across SEA, private investment in AI computing and infrastructure reached US$20 billion (approximately RM82 billion) over the past 12 months. AI-focused companies also attracted approximately 80% of private funding into digital companies over the past six months, up from around 30% in the second half of 2024.
Regional AI utilisation, measured by token volume, is projected to increase up to 60-fold by 2030. The report identifies agentic AI adoption, improved inference efficiency, expanded infrastructure and sustainable AI economics as key growth factors.
Gig Workers Gain Statutory Protections
Malaysia became the first country in SEA to establish a statutory framework for its gig economy.
The Gig Workers Act 2025 (Act 872), which came into force on 31 March 2026, extends legal safeguards to more than 1.6 million workers, including delivery riders, driver-partners and digital freelancers.
The Act mandates written service agreements and SOCSO social security contributions. It also prohibits unfair pay deductions and establishes a dedicated Gig Workers Tribunal for dispute resolution.
Industry Leaders Highlight Malaysia’s Digital Potential
Ben King, Managing Director of Google Malaysia and Singapore, said Malaysia’s 20% growth demonstrates the resilience of its digital ecosystem.
He highlighted that nearly half of AI consumption is enterprise-led, while session depth exceeds the regional benchmark by 22%. He added that businesses must integrate intelligent automation into customer journeys and core operations to remain competitive.
Google remains committed to supporting Malaysia through cloud infrastructure, commercial frameworks and digital talent.
Dhruva Murugasu, Partner at Bain & Company, said Malaysia ranks among SEA’s most advanced AI markets, reflecting policy shifts under the Digital Action Plan and AI Nation 2030 agenda.
He emphasised that success will increasingly depend on business outcomes, with companies needing to redesign workflows and organisations around AI rather than simply adopting the technology.
Malaysia’s continued digital growth, AI adoption and infrastructure investment are expected to create further opportunities for businesses and consumers as the country advances towards a more inclusive, AI-ready digital economy.
