Malaysia's National Artificial Intelligence Office (NAIO) released a Public Consultation Paper on 10 July 2026, seeking input on the proposed structure of a dedicated AI Governance Bill. The Bill, when enacted, will constitute Malaysia's first statutory framework specifically governing artificial intelligence systems across all economic sectors. The NAIO has stated the Bill is expected to be presented to Parliament before end-2026, following Cabinet presentation as the next procedural step.
The Consultation Paper proposes a risk-based classification model in which AI systems are assigned to risk tiers with proportionate obligations at each tier. High-risk AI applications would require mandatory AI impact assessments before deployment, incident reporting within defined timelines, and ongoing compliance with baseline operational safety standards. All AI systems regardless of risk tier would be subject to minimum ethical and safety principles. Three specific statutory provisions are proposed: deepfake offence provisions addressing AI-generated synthetic media used to cause harm; copyright attribution rules for AI-generated content and liability for AI training data use; and data sovereignty requirements restricting cross-border transfer of AI training datasets containing personal data of Malaysian persons.
The Bill, in the form proposed, will affect technology companies developing AI products for the Malaysian market, financial institutions and licensed payment service providers using AI in credit decisions and fraud detection, healthcare operators deploying AI diagnostics or triage tools, and digital platform operators running AI recommendation or content moderation systems. Foreign operators delivering AI-enabled services to Malaysian users without local establishment may fall within scope where the AI system's outputs are directed at Malaysian persons, following the extraterritorial approach in the Personal Data Protection Act 2010 and the EU AI Act.
The Consultation Paper is a pre-legislative document and the final Bill may differ materially. The NAIO has not published a deadline for consultation responses. Open questions include the precise definition of high-risk AI applications in the Malaysian context, which sector regulators will enforce the obligations in their respective domains, the treatment of open-source AI models and small-scale operators, and whether the deepfake offence provisions will require specific intent or apply on a strict liability basis.
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