Malaysia’s digital economy bets on owning its own stories

As artificial intelligence (AI) democratises how fast and who can produce content, the competitive advantage no longer hinges on making things faster or cheaper, but on owning them. 

Making this distinction while talking about Malaysia’s digital creative industry, the country’s Digital Economy Corporation (MDEC)’s CEO, Anuar Fariz Fadzil, said: “We cannot compete on costs anymore." 

He was speaking at a panel session at the Borneo Animation and Games Festival (BAGFEST) 2026, held from August 19 to 23 in Kuching, Sarawak. 

That belief was backed by targets set in MDEC’s Digital Economy Framework 2030, which aimed to lift the digital economy’s contribution to the national gross domestic product (GDP) from the present 25 per cent to 30 per cent by 2030. 

The strategy involved national policy as much as individual practice since ownership was something that Malaysia’s creative industries and talents can no longer afford to skip, said Anuar.  

For the past three decades, Malaysia’s creative and digital industries built their reputation on being the affordable outsourcing option, but that model has run its course, he noted, adding that the time was not wasted but spent to build skills. 

Since Malaysia cannot just compete on costs anymore, identity and ownership of stories and intellectual property (IP) should be the new differentiator, added Anuar. 

BAGFEST 2026 was organised by MDEC in partnership with Sarawak Digital Economy Corporation (SDEC) and the Sarawak Government, and the event was one of the highlights as MDEC celebrates its 30th anniversary. 

What it means to be an IP powerhouse  

At the panel session “Building a Sustainable Ecosystem for the Digital Content Revolution”, panellists discussed how Malaysia’s digital creative industry could evolve from outsourcing hub to a global IP powerhouse. 

Enfiniti Group’s founder, actress and producer, Tiara Jacquelina, said that Malaysia has a strong pool of ideas and talent, but the gap was between creation and ownership. 

“We fund a film, an animation, a game… and we celebrate when the project is completed. But completion is not necessarily success,” she said, adding that the harder question comes after the project is completed. 

“Who funds development before production? Who funds marketing and audience building? Who helps with international distribution? Who thinks about licensing, merchandise, publishing, and who's thinking of the life of the IP five or 10 years from now?” 

Her test for any new idea was whether the story could “continue beyond the first product”, which MDEC’s Anuar echoed from his perspective. 

“It’s a whole world building that happens in the [creative industries]. We have the output, like a theatre production or movie at the end of the day, but this is not just a show.  

"It is the work behind every production, it is accountants, producers, systems, and financing teams,” Anuar said. 

Sarawak as a protagonist  

Sarawak was highlighted in the panel as a working example at state level.  

SDEC’s CEO Sudarnoto Osman noted that Kuching had the potential of becoming a hub for the creative industry through an ecosystem that kept IP and the people who build it in the state. 

He said that production houses came to Kuching “because they know that there’s IPs to be developed… to be invested,” not to cut costs.  

Lower living costs in the state also gave studio founders room to fail and try again, without the financial pressure of other cities like Kuala Lumpur, he argued. 

Sudarnoto added that Sarawak set its own 2030 targets: creative industries contributing 20 per cent of state GDP, and studio numbers growing from roughly ten to 40 and more.  

Beyond the numbers, the important part was to have a national ownership strategy that worked at state level, he added.  

AI as an enabler 

When discussing the impact of artificial intelligence (AI) in the creative industry, Anuar argued that there are more positives than negatives. 

“I don’t think your job will be lost to AI. I think your job will be lost to the person who knows how to use AI,” he said. 

His focus lay in access: if only some companies can afford the tools, AI becomes another cost gap.  

That’s why MDEC began plans to subsidise AI tokens for businesses and individuals, he said to GovInsider.  

The aim was to ensure everyone has access to these tools and use them as enabler for better and more efficient work, “but do not outsource your thinking,” he added. 

It was the same caution he highlighted about Malaysia's outsourcing years: not time wasted, but training done so the country would eventually know enough to own the work outright rather than rent out the labour.  

“Don't just use the tools. Know what you're doing with them,” he concluded.