Red Hat, Inc. and the Malaysian National AI Office (NAIO) have released a new study that examines how small and medium enterprises (SMEs) in Malaysia are approaching artificial intelligence (AI) adoption. The research, conducted by Ecosystm and titled “Accelerating SME AI Adoption Through Open Source in Malaysia’s Digital Future,” surveyed 133 SMEs from various industries.
The findings show that 44% of Malaysian SMEs expect AI to drive business growth without increasing costs. Despite this optimism, many businesses are still early in their AI journey; only 21% have moved beyond pilot projects to achieve measurable results, while 36% are currently piloting or experimenting with AI.
Open source technology is highlighted as a key factor for wider AI adoption among SMEs. More than half of respondents cited cost savings (54%) and flexibility (51%) as main reasons for choosing open source solutions. However, challenges remain: 60% of SMEs identified a lack of technical expertise as the top barrier to adopting AI, and 52% pointed to implementation and maintenance costs.
The report also emphasizes the importance of collaboration between government, industry, and academia to help SMEs scale their use of AI responsibly. Stronger ecosystem support—including funding, incentives, and partnerships with technology providers—is seen as essential for progress.
Albert Chai, general manager for Rest of Southeast Asia at Red Hat, said: “Red Hat is proud to help support the growth of Malaysian SMEs as they embrace open source and AI. By lowering barriers like skills gaps, infrastructure costs and vendor lock-in, open source empowers SMEs to experiment, customize, and scale AI more responsibly. Our collaboration with NAIO aligns this vision with Malaysia’s national AI strategy — providing SMEs with the tools and confidence to turn AI potential into real impact.”
Shamsul Izhan, Head of National AI Office (NAIO), added: “To ensure Malaysia realizes its ambition of becoming a regional AI leader, SMEs must be empowered to adopt AI in ways that are affordable, trustworthy, and impactful. Open source lowers the cost of entry while giving businesses greater control over their data and their future. By working with Red Hat and other partners, NAIO is committed to democratizing AI and ensuring that its benefits reach all corners of the economy.”
Sash Mukherjee, VP Industry Insights at Ecosystm stated: “For Malaysian SMEs, open source AI offers more than cost savings; it enables flexibility, transparency, and long-term control. As adoption deepens, it will become a foundation for scalable, responsible AI aligned to local needs. Open source also fuels collaboration and shared standards, helping SMEs move faster and contribute to a stronger national ecosystem. To fully leverage AI, Malaysia must not just use open technologies but help shape them.”
The study was developed by Ecosystm together with Red Hat and supported by NAIO through surveys within the Malaysia Digital Economy Corporation’s network along with interviews involving stakeholders from NAIO.
