Paulsen entered the plea after the charge was read out to him before judge Abdul Rashid Daud.
He was charged with posting the statement in English on his Twitter page.
The charge is under Section 4(1)(c) of the Sedition Act 1948 which is punishable under Section 4(1) of the same act, with imprisonment of up to five years.
Paulsen, who is also the executive director of Lawyers For Liberty, allegedly committed the offence at the D5 criminal investigation unit in Bukit Aman, here, on Jan 10.
Earlier, Deputy Public Prosecutor Wan Shaharuddin Wan Ladin offered bail of RM5,000 in one surety.
However, lawyer Gobind Singh Deo who represented Paulsen, asked that no extra condition be imposed on his client as there was no reason for him to flee or be absent from court on the set date.
Abdul Rashid allowed Paulsen bail of RM2,000 in one surety and fixed April 27 for case mention.
— BERNAMA