Category: Featured in the Media

The emergence of the DeepSeek R1 large language model (LLM) in January this year was a watershed for generative artificial intelligence (Gen AI) technology, marking an important milestone from a technological, commercial and political perspective. DeepSeek demonstrated that advanced LLMs could be trained at just a fraction of the cost previously thought and that this could be done outside of Silicon Valley.

While notable in light of the ongoing US-China technology rivalry and abruptly ending the data centre rally of the Malaysian stock market, the emergence of DeepSeek has far more profound implications for Malaysia’s AI landscape.

The first important point to note is that DeepSeek’s LLMs are largely based on open-source technology and that models like DeepSeek R1 are either open-source or open-weight, allowing them to be downloaded and modified freely.

Being open source has significant implications for both the technological and commercial trajectory of LLMs.

Chinese technology companies such as Baidu, Alibaba and Tencent have been active in developing open-source AI models for many years. Their strategy, supported by Chinese universities and the government, can be seen as an “open innovation” model aimed at accelerating research and development and leapfrogging past the US.

However, Chinese companies are not the only ones investing in open-source AI. Meta and Google have also released open-weight LLMs for competitive reasons.

A common strategy in technology businesses is to try and “commoditise the complement”. If a business is a large user of a product such as Gen AI, rather than using a proprietary model such as ChatGPT, it can be smart to invest in open-source alternatives. Even if the business still uses proprietary LLMs, the availability of a good open-source model erodes the pricing power of a key supplier, such as OpenAI.

A similar strategy was followed by Oracle, which produces servers and networking equipment. Oracle supported the open-source Linux operating system as a way to reduce the pricing power of Microsoft’s Windows operating system.

Regardless of the underlying motivations, the fact that high-quality open-weight LLMs are now available means that Malaysia can access them at far lower cost than before.

For the government, this means that it can now run its own LLMs without having to transfer sensitive data to commercial third parties or foreign countries, giving it greater data autonomy.

For companies, open-weight LLMs have levelled the commercial playing field, with start-ups in Malaysia now having access to the same core LLMs as start-ups in China and the US.

Yet, the emergence of Chinese AI has also highlighted a different problem, one that is cultural. Chinese LLMs are known to be trained to repeat the Chinese Communist Party (CCP)’s version of history and its political views, thus conforming to the censorship system in mainland China.

Even if LLMs are not purposely censored, they contain the biases of the texts with which they have been trained. If the texts are primarily in English, then models carry Western cultural viewpoints and biases.

Fortunately, it appears that LLMs can be retrained with relative ease. Just as Chinese LLMs are given guardrails to make them loyal CCP members, another open-source project has already shown that DeepSeek R1 can be post-trained to remove these perceived biases.

For countries like Malaysia, this experience highlights the importance of developing sufficient domestic capacity to localise, train and post-train LLMs for local conditions. Models that do not incorporate Malaysia’s racial and religious sensitivities, social hierarchies or slang might not only underperform but also create potentially harmful content.

Some of the capacity to develop LLMs already appears to be present in Malaysia, as in January, local start-up Mesolitica published the open-source MaLLaM LLM, which has a deeper understanding of the subtleties of Bahasa Malaysia than mainstream LLMs like ChatGPT.

However, it is unclear if Malaysian policymakers are fully aware of both the potential of open-source AI and the importance of developing LLMs locally.

Although the National AI Roadmap makes little mention of open source, which is understandable given that it was drafted “long ago” (in 2021), neither do documents from the new National AI Office (NAIO).

While it is difficult to predict the next phase in AI’s development, the open-source nature of the current generation of LLMs means that Malaysia has a golden opportunity to catch up with the technology leaders.

To seize this opportunity, Malaysia should update its policies to accommodate the new reality of much smaller and cheaper LLMs. Aside from allowing these models to be adopted more easily, it also makes Gen AI more accessible to small and medium enterprises, as well as for local deployment — for example, in rural areas without reliable internet access.

Malaysia should also expand its capacity to develop LLMs, making them more useful for local languages and more sensitive to local culture. Investments in LLM training could be seen as a public good and anchored at local universities, thus nurturing local talent and advancing local R&D.

Finally, Malaysia should host its own models to ensure national data autonomy. LLMs can be used to collect large amounts of valuable information which, instead of being used by foreign firms, should be stored and used by local organisations.

Pieter E Stek is a senior lecturer at the Asia School of Business

The European Union Deforestation Regulation (EUDR) and its implications for Malaysian palm oil have sparked significant debate. Rather than taking sides on the issue, it is more productive to examine it through the lens of standard-setting. Malaysia has a long history of developing its own sustainability standards for palm oil, and incorporating some of these innovative approaches into the EUDR could pave the way for a collaborative and mutually beneficial implementation strategy.

Standard-setting rarely captures public attention, yet its implications are far-reaching. Standards reduce transaction costs, foster trust among buyers, and level the playing field for producers. They drive technological innovation and disseminate best practices. Think of the HACCP standards ensuring food safety, Euro 5 emissions standards regulating car pollution in Malaysia, or ISO certifications that set benchmarks across industries. Though not perfect, standards generally promote efficiency and economic growth.

However, the creation and implementation of standards are rarely as objective as they seem. The process often involves a small group of technical experts whose decisions may reflect groupthink or political considerations. While grounded in science, standards are also shaped by power dynamics as countries advocate for standards that benefit their own industries. Unintended consequences, particularly for marginalised groups, often arise from seemingly well-intentioned standards.

The EUDR offers a pertinent example. This relatively straightforward regulation aims to combat climate change by banning imports of goods linked to deforestation. The intent is commendable: Addressing the economic drivers of deforestation. Yet, the execution risks sidelining Malaysia’s smallholder farmers, who play a significant role in the country’s palm oil supply chain.

Malaysia’s palm oil sector comprises around 250,000 independent small farmers. Their supply chain operates through layers of middlemen who collect and aggregate fruit from various farmers to supply mills. This system, while dynamic, widespread and largely informal, is often opaque. Middlemen prioritise commercial confidentiality, complicating traceability. While large plantations can demonstrate compliance with the EUDR relatively easily, smallholders face significant hurdles, despite not being inherently linked to deforestation.

Research shows that most smallholders are not expanding into recently deforested areas and that they often manage land with greater biodiversity than large-scale plantations. However, these farmers struggle with record-keeping and reporting, particularly in remote regions with limited access to technology and education. The unintended consequence of the EUDR is clear: Smallholders risk exclusion from the supply chain due to systemic barriers, not environmental non-compliance.

Recognising the need for inclusive sustainability, Malaysia introduced the Malaysian Sustainable Palm Oil (MSPO) certification in 2015. Unlike the more demanding Roundtable on Sustainable Palm Oil standard, the MSPO was designed to be attainable for local producers, particularly smallholders.

One of the MSPO’s key innovations is its territorial approach to certification, organising the country into 162 Sustainable Palm Oil Clusters (SPOCs). Each cluster has an internal control system to monitor and support the smallholders within the cluster. It is managed by a group manager who is also a Tunjuk Ajar Nasihat Sawit officer, supporting farmers in adopting sustainable practices. This model shifts the focus from sustainability compliance to capacity-building. In principle, the SPOC system could also be used to monitor deforestation and thus form a pathway towards compliance under the EUDR.

The SPOC system provides an inclusive framework, prioritising education and gradual improvement over exclusion. It recognises that sustainability is a journey, and not a binary status. For smallholders, this approach offers a simpler path to certification without undermining their livelihoods.

Malaysia should advocate for a territorial approach, similar to SPOCs, when negotiating about the implementation of the EUDR. By adopting a territorial approach for low-risk regions with minimal deforestation, small farmers could automatically be deemed compliant.

This territorial approach is viable due to the spatial structure of palm oil cultivation. The intake of palm oil mills is limited by their transportation radius, as palm fruit typically needs to be processed within 24 hours. For practical and economic reasons, transportation beyond 50km to 100km is usually not viable, depending also on the quality of infrastructure. This means that mills located some distance away from deforested areas are unlikely to receive fruit from unsustainable sources. Additional electronic monitoring of key roads could further prevent such spillovers.

For areas with higher deforestation risks, or for large producers, a hybrid model could be implemented. Additional scrutiny and record-keeping would apply where necessary, with the threat of area-wide sanctions acting as a deterrent against illegal deforestation. This localised approach balances the EUDR’s environmental goals with the economic realities of small farmers.

A territorial approach also creates opportunities for collaboration. By allowing for renegotiation and co-regulation, the EUDR could incorporate local expertise and address on-the-ground challenges. Malaysia’s SPOC system already offers a scalable framework for monitoring deforestation and facilitating traceability. By leveraging this existing infrastructure, the EU can ensure compliance without disproportionately penalising smallholders.

Critics may argue that a territorial approach dilutes accountability, potentially creating market distortions. However, such concerns can be mitigated through a phased strategy. Over time, the system could transition to more granular, farm-level traceability as technology and farmer capacity improve. This hybrid model ensures immediate action while building a foundation for long-term sustainability.

Importantly, territorial compliance recognises the shared responsibility of regulators and producers. It aligns with principles of inclusivity and equity, ensuring that marginalised groups are not unfairly burdened by standards designed in distant bureaucratic corridors.

The EUDR’s anti-deforestation goal is laudable, but its implementation must be adaptable to diverse local contexts. Malaysia’s existing SPOC system under the MSPO offers a realistic regulatory framework. By embracing a Malaysianised approach to the EUDR, the EU can effectively balance its environmental goals with practical considerations, ensuring small farmers remain within sustainable global supply chains. Ultimately, a locally-informed approach does not merely create fairer standards; it fosters genuine collaboration, drives meaningful compliance and supports long-term sustainability.

This approach exemplifies how standard-setting can transcend technical expertise and power politics to create genuinely fair and effective solutions. In an interconnected world, sustainability must be a shared endeavour — one that respects local realities while striving for global impact.

The Malaysianisation of the EUDR is not just a call for better regulation; it is a call for a more inclusive and equitable approach to sustainability.

Dr Pieter E Stek is a Senior Lecturer at the Asia School of Business 

Dr Asad Ata is Associate Professor II of Operations and Supply Chain Management and Director of the Centre for Sustainable Small-owners at Asia School of Business 

Payments Network Malaysia Sdn Bhd (PayNet), the national payments network and a central driver of Malaysia’s digital economy, has launched what it claims is the country’s first fintech-focused community and accelerator: the PayNet Fintech Hub. In a statement, the company said this platform will accelerate fintech growth in Malaysia by providing startups with direct access to capital, key industry connections, financial incentives, and opportunities to learn from and collaborate with global leaders.

Farhan Ahmad, group CEO of PayNet, said: “A thriving fintech industry is key to delivering future-ready and inclusive financial services that can advance Malaysia’s growth and innovation goals. Successful fintech innovation is one of the best ways to ensure that Malaysia keeps pace with the fast-evolving nature of financial services, particularly due to the rapid growth of AI.”

He added that the PayNet Fintech Hub marks a decisive step forward in enabling this vision.

The Hub is a highly selective programme built around two key pillars: community and catalyst. Fintechs selected for the community will gain access to:

• A network of like-minded founders and ecosystem players for idea exchange and peer learning
• Over 450 hours of hands-on mentorship from successful founders and domain experts
• Major corporate players from banking, payments and tech for partnership opportunities
• A pool of fintech investors offering mentorship, evaluation, and potential investment

All community members will also receive exclusive financial support, including:

• More than US$238,000 (RM1 million) in PayNet value-added credits
• Over US$141,000 (RM600,000) in sponsored advisory services across legal, finance, HR and market research
• Up to US$706,000 (RM3 million) in cloud credits and support from major providers
• Access to a fully sponsored co-working space

These curated benefits are designed to help founders manage costs, overcome challenges, refine business models, sharpen go-to-market strategies, raise funds, and define clear paths to successful exits.

In addition, the most promising startups from the community will be handpicked for the exclusive Catalyst programme.

This track, developed in partnership with leading global institutions, offers top Malaysian fintechs international exposure, resources and mentorship. Participants will take part in a fully sponsored ten-week accelerator hosted by Imperial College London, one of the world’s leading startup accelerators.

The programme includes a week-long trip to London to engage with Imperial faculty, European and American startups, and culminates in a demo day that offers exposure to venture capitalists and potential corporate partners. This bespoke accelerator, designed for Malaysian fintechs, is fully funded by PayNet.

The firm also announced an expanded Fintech Hub partnership with AWS, providing Catalyst participants with credits to access AWS cloud services through the newly launched AWS Asia Pacific (Malaysia) Region. Participants will also gain entry into the upcoming Fintech Innovation Sandbox, enabling secure and scalable growth.

“The PayNet Fintech Hub is a unique and transformative initiative dedicated to scaling startups beyond the foundational stage. It directly addresses the key challenges faced by fintechs in Malaysia and is expected to significantly accelerate industry growth,” Farhan added. “The Hub is our response to the global call for smarter collaboration and accelerated innovation—uniting a fragmented ecosystem to create real, scalable outcomes. We’re very excited about its potential.”

By offering direct access to essential resources, the PayNet Fintech Hub aims to fuel innovation, foster high-impact partnerships, and position Malaysia as a leading fintech destination in the region.

For more information or to apply as a fintech startup, visit https://fintechhub.paynet.my