Building a Future-Ready Public Sector with AI: Enabling an Actionable AI Framework

As ASEAN economies pursue inclusive and sustainable growth, Artificial Intelligence (AI) has emerged as a significant disruptive force in public sector transformation, reshaping decision-making and strategic planning. Despite its potential to streamline processes and enhance service delivery, AI adoption within the Malaysian public sector remains under-optimised. While the 2024 Government AI Readiness Index ranks Malaysia second in ASEAN and 23rd globally, the country has declined in the Chandler Good Government Index particularly in the innovation indicator, where it falls below the global average. In light of these trends, it is vital for the Malaysian government to understand the key factors influencing AI adoption among public sector managers, who act as pivotal change agents in implementing AI-related policies and navigating adoption challenges. This study addresses that need by employing the Unified Theory of Acceptance and Use of Technology (UTAUT), extended with AI literacy as a moderating variable. Drawing on survey data from 402 public sector managers in Putrajaya, Kuala Lumpur, and Selangor, the findings show that Performance Expectancy is the strongest predictor of AI adoption, followed by Effort Expectancy and Facilitating Conditions. Although Social Influence is statistically significant, its impact is weaker, reflecting the hierarchical and compliance-driven nature of Malaysia’s public sector. Notably, AI literacy moderates this relationship, with digitally literate managers exhibiting greater autonomy and confidence in AI-related decision-making. In response to these findings, the study proposes an actionable AI framework to support strategic and sustainable adoption. The framework offers a practical model for strengthening institutional capabilities, fostering data-driven governance, and building a future-ready public sector aligned with ASEAN’s digital transformation agenda.