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MD Status

Malaysia Digital Status for AI Companies

What MDEC counts as an AI activity, and the neighbouring areas AI companies can use.


Quick answer: Artificial intelligence is a named Malaysia Digital (MD) activity area. MDEC's guidelines describe AI as machines performing human-like tasks such as reasoning, learning, problem-solving, perception and decision-making, covering machine learning, natural language processing, computer vision, generative AI and agentic AI. Related areas include big data analytics and autonomous technologies. An AI company still has to meet the entry tests and the 12-month hiring and spending conditions.

Key takeaways

  • AI is a named MD activity area.
  • MDEC's description covers machine learning, NLP, computer vision, generative AI and agentic AI.
  • Big data analytics and autonomous technologies are related named areas.
  • Reselling AI software or only consulting on AI is excluded.
  • Two knowledge workers at RM5,000 average base salary and RM50,000 annual spend still apply.

What MDEC Counts as AI

AI area Examples named by MDEC
Machine learning Systems that learn from data
Natural language processing Language understanding and generation
Computer vision Perception from images and video
Generative AI Systems that generate content
Agentic AI Systems that pursue goals with limited human input

Area When it fits
Big data analytics Your product analyses very large, varied datasets
Autonomous technologies Systems that make decisions with minimal human input, including robotic process automation
Cybersecurity AI used to protect systems and data
Fintech AI embedded in financial products

What AI Companies Must Still Do

Condition Requirement
Entry tests Companies Act 2016 incorporation, residence, RM1,000 capital
Knowledge workers At least two full-time, average RM5,000 base salary
Spend At least RM50,000 a year on the MD activities
Perform the work No outsourcing of the core activities

Typical Roles

AI applications usually involve roles such as data scientists, machine learning engineers and product engineers. MDEC can ask for job scopes of key positions, so show how each role relates to the AI activity.


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Mistakes

⚠️

Reselling AI tools

Reselling software is excluded.

⚠️

AI consulting only

Consultancy is excluded.

⚠️

Weak job scopes

MDEC may ask how roles relate to the activity.

⚠️

Outsourcing model work

The core work must be performed by the company.


Three Scenarios

Scenario 1. A company builds computer vision for factories. It maps to AI and hires two engineers.

Scenario 2. A firm resells AI tools and advises clients on them. Both are excluded.

Scenario 3. A company builds an agentic AI assistant for banks. It can use AI and fintech areas.


How We Help

What we handle for you

Before you apply

  • Test your activity, hiring plan and cost base against MDEC's conditions.
  • Advise whether MD status, a tax incentive or both make sense for your business.
  • Prepare your business plan and financial plan based on your company idea or business model.

Application

  • Prepare and submit the application and answer MDEC's questions.

Why companies choose us

End-to-end under one roof

  • We handle company incorporation, accounting and payroll, as well as MD status and expatriate pass applications, so your structure, records and hiring plan stay aligned.
  • The company is set up correctly from day one.

We check before you invest

  • We confirm eligibility, including whether you can hire the expatriates you need, before a foreign investor decides to incorporate in Malaysia.
  • Neutral Consulting PLT is a Kuala Lumpur firm led by a Managing Partner who is a member of the Malaysian Institute of Accountants.

Frequently Asked Questions

Quick answers.

Does an AI company qualify for Malaysia Digital status?

Yes, if it carries out an AI activity as MDEC describes it and meets the entry tests and conditions.

What does MDEC count as AI?

Machines performing human-like tasks such as reasoning, learning, problem-solving, perception and decision-making, including machine learning, NLP, computer vision, generative AI and agentic AI.

Does generative AI qualify?

Yes. Generative AI is named in MDEC's description.

Does agentic AI qualify?

Yes. Agentic AI is named in MDEC's description.

Does AI consulting qualify?

No. Training and consultancy are excluded.

Does reselling AI software qualify?

No. Trading and leasing software are excluded.

Which other areas might an AI firm use?

Big data analytics, autonomous technologies, cybersecurity and fintech.

What staff does an AI company need?

At least two full-time knowledge workers at RM5,000 average base salary.

How much must an AI company spend?

At least RM50,000 a year on the MD activities.

Do I need to build models in-house?

The company must perform the approved activities itself and cannot outsource the core work.

Is the tax incentive automatic?

No. It is a separate application.

Can you assess my AI business?

Yes. We map your product to MDEC's areas and plan the application.



Sources

Official sources

This page is general information, not legal advice. Agencies change their requirements, so confirm the current rules with MDEC, or with us, before you act. Checked November 2026.


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