Malaysia is strengthening its governance on artificial intelligence, or AI, and cloud technology as it vies to become a key technology hub, but analysts warned such policies need to consider the impact of emerging technologies on people and the planet.

Some of the biggest tech companies, including Google, Nvidia, and Microsoft, have pledged to invest in Southeast Asia's third-biggest economy, boosting Malaysia's popularity as a cloud and AI data center hub.

Malaysian Prime Minister Anwar Ibrahim has said the government plans to create a national cloud policy and introduce regulations on the ethical use of AI. Deputy Minister of Economy Hanifah Hajar Taib said expanding the AI ecosystem is part of the 13th Malaysia Plan, or 13MP, the national development program for 2026-30.

Elina Noor, a senior fellow in the Asia Program at the US-based Carnegie Endowment for International Peace, said a national AI and cloud technology policy will determine resource allocation over a certain time frame to realize a certain vision.

However, she said the bigger question is whether such a policy "sufficiently takes into account the actual costs of technology investment or operations in the longer term to the people and the environment".

Elina said that discussions on AI governance in Malaysia usually focus on growth, development, and investment priorities. She said this is "an outdated approach" given the fluctuating geopolitical situation and climate change.

She said if Malaysia wants greater agency in how technology shapes its future, it should consider being more proactive in shaping the governance frameworks and mechanisms of how technology operates.

"AI governance conversations in Malaysia and the Southeast Asian region should be more grounded and holistic, taking into account technology's impact on people and the planet rather than being overly tech-optimistic," she said.

Elina said stakeholders need to answer questions about the people who annotate the data needed to train AI, how much they are paid, and if there are social safety nets for them if they have to sift through and label traumatizing content.

Chin Yew Sin, president of Malaysia Strategy Research Centre, said Malaysia's success in becoming a regional hub for cloud and AI centers includes its strategic location with 600 industrial estates with good connectivity, strong digital infrastructure, and abundant land, power, and water supply.

He said the Malaysian government's "proactive and supportive role" in drafting an AI policy will attract more investors.

Chin said that under 13MP, Malaysia will continue AI development. "The aim is to pivot Malaysia as a world leader in AI technology via strategic investments and stronger collaborations," he said.

Malaysia's Ministry of Science, Technology, and Innovation launched the Artificial Intelligence Governance and Ethics, or AIGE, guidelines on Sept 20 to promote the responsible and ethical use of AI, manage risks from deploying AI technology, and maximize AI benefits.

Julia Roknifard, an international relations expert, said the AIGE and the presence of such policies like the National Artificial Intelligence Roadmap 2021-2025 demonstrate to potential investors that Malaysia is taking AI development seriously and is embarking on long-term plans in these industries.

"That, in turn, will mean continued favorable policies such as tax incentives, land for facilities, and other essential components," she said.