Making AI Work for Sarawak’s SMEs

BY Dayang Arfahiza Abang Junaidi

Artificial intelligence (AI) is becoming more accessible to businesses, but adopting technology does not automatically lead to stronger profits, better productivity or a larger market share. 

For small and medium-sized enterprises (SMEs) in Sarawak, the challenge is not simply whether to adopt AI, but how to use it to solve business problems, innovate and generate measurable returns.

Budget 2027 provides an opportunity to accelerate this process. The government has announced a RM30 million fund through the Malaysia Digital Economy Corporation (MDEC) to help 4,000 micro, small and medium enterprises (MSMEs) adopt AI and automate their operations. 

The initiative will also train and certify 5,000 AI professionals. Separately, RM6 billion has been allocated across ministries to strengthen research, development and commercialisation. 

These measures create opportunities for businesses to explore AI, provided the support matches their needs.

Sarawak’s opportunity is to turn AI investment into business capability

Sarawak is strengthening its digital foundations. The Sarawak Sovereign AI Infrastructure Platform was officially launched in August 2026, while work on the Sarawak AI Blueprint is progressing through engagement with government agencies, industry and other stakeholders. 

These developments signal growing attention to AI infrastructure and capability within the state.

However, SMEs across Sarawak may begin their AI adoption journeys from different levels of digital readiness. Businesses in smaller towns and rural areas may face additional constraints involving connectivity, digital skills, access to technology support and implementation costs. 

Support initiatives should recognise these differences and help businesses develop capabilities appropriate to their circumstances.

The economic significance is substantial. According to the Department of Statistics Malaysia, MSMEs contributed 39.7 per cent of Malaysia’s gross domestic product in 2025 and accounted for 48.7 per cent of total employment. 

Their value added reached RM689.8 billion, while exports increased by 10.5 per cent to RM214.5 billion. 

These figures demonstrate why strengthening SME productivity and competitiveness matters, although AI adoption alone does not guarantee business growth.

Start with a business problem, not the technology

SMEs do not need to introduce AI across their entire organisation. They should start with a recurring problem that consumes time, increases costs or limits customer service. 

Retailers could improve demand forecasting and inventory management, while tourism operators could automate routine enquiries. 

Manufacturers might streamline quotations and order processing.

For businesses relying on manual records or fragmented systems, basic digitalisation may need to come first. 

Reliable data, clear workflows and suitable staff skills provide the foundation for assessing AI’s value.

Consider a Sarawak tourism operator handling numerous online enquiries about packages, availability and bookings. 

It could pilot an AI-assisted tool using approved service information, with staff reviewing complex requests.

Before implementation, the operator should record enquiry volumes, response times, staff hours spent on routine enquiries and conversion rates. 

After a six- to eight-week pilot, these measures can be compared with the baseline.

If response times improve but bookings do not, management should examine pricing, package design and enquiry quality. 

If administrative time falls without compromising service, the operator can assess whether the savings justify the full cost.

The principle is straightforward: test a clearly defined business problem, measure the results and evaluate the evidence before committing to a wider rollout.

Treat funding as an opportunity, not a business strategy

The RM30 million MDEC initiative could help eligible businesses overcome barriers to AI adoption. 

However, SMEs should verify eligibility criteria, application procedures and covered expenses through official programme guidance.

Businesses should document the problem they aim to solve, existing costs, proposed solutions and measurable outcomes. 

They should also calculate the full cost of adoption, including subscriptions, integration, training, data preparation, cybersecurity and ongoing support.

This preparation helps management assess whether available assistance meets its needs, rather than adopting technology simply because funding is available. 

Partnerships with technology providers, industry associations and training organisations can also help SMEs develop the expertise needed to manage AI effectively.

People, data and trust determine whether AI works

Successful AI adoption requires effective leadership and workforce readiness alongside technology. 

Managers should identify suitable applications, explain changes and support employees as work practices evolve. 

Early staff involvement can build trust and encourage responsible use.

Employees must learn to operate AI tools, verify outputs and recognise when human judgement is needed. 

Businesses should maintain accurate data, protect confidential information and assign responsibility for monitoring AI use.

Inaccurate outputs or data breaches can undermine customer trust. Access controls and staff training are essential safeguards.

Businesses should also consider simpler, more affordable alternatives, such as clearer procedures, spreadsheets or basic digital systems.

Turning AI Adoption into Meaningful Business Innovation

Adopting AI does not automatically mean a business is innovating. Innovation occurs when SMEs use technology to redesign processes, introduce services or create greater customer value. 

For example, tourism operators could offer personalised travel recommendations, while retailers could use demand insights to improve inventory and marketing decisions.

SMEs should assess AI investments against measurable outcomes, including time saved, operating costs, error rates, customer satisfaction and revenue, while considering ongoing costs and service quality. 

Applications that fail to deliver sufficient value should be modified or discontinued.

As competitors may access the same AI tools, lasting advantages will depend on combining technology with reliable data, skilled employees, operational knowledge and strong customer relationships. 

These capabilities could also help Sarawak businesses meet larger buyers’ requirements, strengthen supply-chain participation and reach customers beyond the state.

Budget 2027 and Sarawak’s digital development initiatives offer opportunities for SMEs to strengthen their capabilities and explore innovation. 

However, success depends on identifying suitable applications, preparing employees and translating technology investments into measurable improvements.

For Sarawak’s SMEs, competitive advantage will come not simply from adopting AI, but from using it to improve processes, create customer value and develop capabilities that competitors cannot easily replicate. 

Government support can facilitate this transition, but sustained results require business readiness, sound management and continuous evaluation.

Ultimately, Sarawak’s AI transformation should be measured not by the number of businesses adopting the technology, but by whether it delivers lasting improvements in productivity, innovation and competitiveness.

Helping Sarawak SMEs Make the Most of AI

For Sarawakian SMEs, effective AI adoption requires a practical, gradual approach. 

Businesses should identify operational challenges, ensure reliable data and digital processes, and select tools suited to their needs and budgets.

Employee training, staff involvement, data security and responsible AI use are equally important. 

Government support and industry partnerships can help address capability gaps, while expansion should be guided by measurable improvements in productivity, customer satisfaction and business performance.

Ultimately, AI should be viewed not as an end in itself, but as a means of driving innovation, creating customer value and building sustainable competitive advantage in Sarawak’s evolving business environment.

● Dayang Arfahiza Abang Junaidi, Postgraduate Student, School of Business, Faculty of Business, Design and Arts, winburne University of Technology Sarawak Campus

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DISCLAIMER:

The views expressed here are those of the writer and do not necessarily represent the views of Sarawak Tribune. The writer can be reached at [email protected].