Harnessing Artificial Intelligence for Regional Economic Transformation Through the Johor Regional AI Hub Model

This article examines the theoretical foundations and projected economic outcomes of the Regional AI Hub (RAIH) initiative, a comprehensive artificial intelligence-driven economic transformation strategy for the state of Johor, Malaysia. Drawing on feasibility data from the Institut Dato’ Onn Research Centre (2025), supplemented by established scholarship on regional economic development, digital transformation, and special economic zones, the study analyses three interdependent strategic tracks aimed at increasing GDP from approximately RM148.2 billion to RM260 billion by 2030. The RAIH model integrates AI-driven enterprise transformation, cross-border talent retention, and capital market diversification as mutually reinforcing pillars of growth. Sector-level projections indicate that AI integration could contribute RM41.5 billion, representing 37.1 percent of the total RM111.8 billion GDP growth required. A study of approximately 10,000 Malaysian small and medium enterprises (SMEs) reveals systemic barriers to AI adoption, including limited access to capital, weak governance structures, and skills deficits. The article argues that place-based, district-specific AI deployment strategies are critical to equitable regional development and that the RAIH model offers a transferable framework for AI-led economic transformation in comparable emerging economies. Implications for policy, investment, and future research are discussed.

Artificial Intelligence, Regional Economic Development, Digital Transformation, Malaysia

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