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Is Southeast Asia the next frontier for AI?
The region’s tech-savvy youth presents a key advantage in accelerating AI adoption.
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An official looks on between national flags during the 44th and 45th ASEAN Summits in Vientiane on Oct. 9, 2024. (AFP/Tang Chhin Sothy)
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n the first half of 2024, Southeast Asia attracted over US$30 billion in artificial intelligence (AI) infrastructure investments, according to the 2024 e-Conomy SEA Report from Google, Temasek and Bain & Company. The ERIA One ASEAN Startup Whitepaper highlights over $50 billion invested in AI by tech giants including Microsoft, Google, and Amazon since January 2023.
This reflects the growing recognition of the region as a burgeoning hub for AI innovation, a shift that could drive the region’s economy forward. ASEAN has projected that AI could boost the region’s gross domestic product by 10 percent to 18 percent, potentially adding $1 trillion by 2030.
With over half of ASEAN youth already digitizing a significant portion of their tasks, the region’s tech-savvy youth presents a key advantage in accelerating AI adoption. While these developments and the region's growing interest in AI present promising opportunities, significant challenges remain. What steps must Southeast Asia take to fully harness AI’s potential and position itself as the next frontier for AI?
Some Southeast Asian governments have formulated national strategies, such as Indonesia’s National Strategy for AI and Singapore’s NAIS 2.0, to integrate the tech across various sectors. Singapore has also invested $70 million to develop language models that are tailored to regional cultures, among other efforts.
At the regional level, ASEAN has launched initiatives such as the ASEAN Guideline on AI Governance and Ethics and the establishment of the ASEAN Working Group on AI (WG-AI) to promote collaborative efforts and ethical AI use across its member states. Furthermore, the Digital Economy Framework Agreement (DEFA), which is in the works, is also expected to help synergize cross-border data regulations in the region, potentially leading to more reliable and accurate AI systems.
Beyond government initiatives, the private sector has been driving AI adoption, with the 2024 e-Conomy SEA report noting that 54 percent of generative AI projects advance from ideation to production within six months, and 71 percent yield return on investment (ROI) within 12 months. With an impressive short turnaround, regional tech majors such as Gojek, Grab and Lazada leverage AI in their business operations. From demand prediction to personalized recommendations, AI is enhancing their business operations and profitability.
Despite the strong investment and adoption, significant challenges remain. The ERIA One ASEAN Startup Whitepaper and the 2024 e-Conomy SEA Report highlight digital talent scarcity as a key challenge, as 61 percent of ASEAN youth aged 10 to 24 years old were not taught formal digital education in school. This further exacerbates the digital divide and limits regional competitiveness in attracting AI investment. Furthermore, differing scores in AI preparedness among ASEAN countries, with only Singapore, Malaysia and Thailand scoring above the Asia-Pacific average, creates barriers for cross-border growth and leads to regulatory inconsistencies, particularly in data governance and cybersecurity.
