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PRIME MINISTER Datuk Seri Anwar Ibrahim has cautioned the Malaysian civil service to be wary of the “AI Productivity Paradox” as the government advances its national digital transformation and artificial intelligence (AI) initiatives.
Delivering his monthly address to staff of the Prime Minister’s Department on Monday, Anwar described the paradox as a situation where significant investments in AI and digitalisation fail to deliver proportional gains in productivity or economic output.
“I hope this is given particular attention by the Ministry of Digital, the Ministry of Communications, and department heads. We do not want to fall into the so-called ‘trough of disillusionment’, where massive funding leads to underwhelming outcomes,” Bernama cited him saying, referring to the common trajectory in the adoption of emerging technologies where early hype gives way to disappointment before eventual maturity.
He noted that Malaysia is preparing to invest tens of billions of ringgit into digital and AI programmes over the next five years and stressed that outcomes must be rigorously assessed, especially in terms of governance, data integration, and IT infrastructure.
“I am asking the Chief Secretary to the Government and all department heads to reflect on this issue and provide an initial response within two weeks to a month. Let us not repeat the mistakes made by major corporations that have poured billions into AI with little return,” he said.
Citing studies by the United Nations University in Tokyo, McKinsey, and JP Morgan, Anwar said only three to seven percent of increased AI usage has led to measurable improvements in productivity or worker income.
He warned that if not carefully managed, the adoption of AI might fail to meet public expectations, particularly regarding transparency, anti-corruption efforts, and bureaucratic efficiency.
“Billions are spent with the promise of improved productivity, transparency, and less bureaucracy, supposedly enabled by AI. But the results may still fall short,” he said.
Anwar also advised caution when using generative AI tools such as ChatGPT, especially on religious matters. He cited an incident involving a well-known Islamic organisation in London that used ChatGPT to produce text resembling Quranic verses, which he said could mislead the public.
“Any reference to Quranic verses must be accurate, including the surah, the hadith source, and the narrator. ChatGPT is being wrongly seen by many as an authoritative source alongside Sahih Bukhari and Sahih Muslim. That’s dangerous,” he warned.
While reaffirming the government’s commitment to digital transformation and the mainstreaming of AI across public services, Anwar called for vigilance in managing expectations and implementation.
Quoting renowned management thinker Peter Drucker, Anwar said that efficient public-sector governance often outperforms privatisation, particularly when transparency and open tender processes are lacking.
“There have been privatisation cases that ended up exploiting the public. The companies profited billions, only to hand their operations back to the government, as with Plus Highways and Indah Water. The golden rule is still good governance,” he said.
Also present at the monthly assembly were Deputy Prime Minister and Minister of Energy Transition and Water Transformation Datuk Seri Fadillah Yusof, Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said, Chief Secretary to the Government Tan Sri Shamsul Azri Abu Bakar, and Public Service Department Director-General Tan Sri Wan Ahmad Dahlan Abdul Aziz. - August 18, 2025
