Southeast Asian nations are vying to become the region’s leading AI hub

Southeast Asia’s emerging economies are competing to become a major AI hub, a race that has them coming together and quietly fighting each other.

The Association of Southeast Asian Nations (ASEAN), made up of 10 countries with a combined population of 672 million people, already has some advantages compared to Europe or the US

With more than 200 million people between 15 and 34 years oldthe region’s young and largely tech-savvy populations make the region adaptable to future technological advances. This, combined with government support to accelerate AI in the region, could offer substantial rewards for local workers.

“AI can significantly improve productivity across industries, and this increased efficiency can lead to increased incomes for all workers,” said Jun Le Koay, of consultancy Access Partnership and author of the research paper .Advantage Southeast Asia: Emerging Leader in AI” he told CNBC.

“Furthermore, as industries increasingly adopt AI technologies, new jobs are emerging that will require AI skills. This evolution creates opportunities for low-income populations to acquire new skills and transition to higher-paying positions “, he said.

Le Koay added that the AI ​​boom presents opportunities for Southeast Asia to make use of its existing infrastructure. Koay believes ASEAN countries have made “huge strides” in significantly increasing internet access over the past decade, which has “created a digitally native population ready to adopt and innovate with AI.”

With smartphone adoption ranging from 65% to 90% in ASEAN countriesadoption of AI is expected to take shape quickly.

Grace Yuehan Wang, CEO of Network Media Consulting and an academic at the London School for Economics, doesn’t foresee any of the ASEAN countries leading the AI ​​race anytime soon.

“ASEAN as a region has shown a strong GDP growth rate in recent years and is undoubtedly one of the most economically prosperous blocs in the world for the foreseeable future,” he told CNBC.

A developed digital infrastructure, education of “high-level technical talent in the technology industry, including AI, as well as world-class universities (both STEM – science, technology, economics and mathematics – and comprehensive universities), industrial collaborations and successful research are some elements that are still missing in the ASEAN AI ecosystem,” he said.

AI competition among ASEAN countries is “largely to attract foreign investment and collaborations with world-leading universities,” Wang added.

Singapore steals a march

Ten countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam, form the ASEAN club. All 10 have published national AI strategies.

Singapore was among the first to publicize his vision, in 2019. The island state updated its plans in December 2023. Ambitions include expanding its AI workforce to 15,000, triple the current amount, as well as creating research and development centers.

The AI ​​Center of Excellence for the Manufacturing Sector opened in September, with the aim of integrating artificial intelligence into supply chains.

Singapore’s AI mission is state-backedwith the government pledging to invest S$1 billion ($741 million) over the next five years.

The country seems to have stolen a march, “thanks to its R&D, economy, education system, international business position,” Wang said.

Singapore surpassed that of Salesforce Asia Pacific AI Readiness Index 2023which assessed 12 nations. Other ASEAN member states—Malaysia, Indonesia, Vietnam, the Philippines and Thailand—were further down the list, in eighth to twelfth place.

Localized AI for developing countries

Singapore’s muscle doesn’t seem to have stopped the aspirations of its near neighbours.

Vietnam is banking on developments in AI, playing to its strengths in assembly, testing and packaging capabilities as it meets global chip demand. The country’s national strategy includes ambitions to become ASEAN’s hub for research and development of AI solutions by 2030. The country, for example, has already attracted a $1 billion South Korean manufacturing investment by 2025.

In 2023, VinAI, a part of the multi-sector conglomerate Vingroup, introduced an open source language model designed specifically for Vietnamese users called PhoGPT.

The localized alternative to ChatGPT suggests that “English-dominant AI models cannot be applied to all social and cultural contexts, while at a deeper level, it demonstrates efforts to overcome fears of widening divisions and existing disparities among less technologically powerful regions,” Wang said.

German AI translation startup DeepL is already tapping into the regions’ “rich linguistic diversity,” which chief revenue officer David Parry-Jones says is an “asset, fostering a huge amount of ‘cultural exchange and deepens regional identity’.

Parry-Jones told CNBC that the European startup wants to offer ASEAN AI language models that can power manufacturing, translate legal documents or support multilingual customer service centers in the region.

“We know that businesses and governments are looking for the best context-sensitive translation tools so they can continue to grow quickly without being trapped by language barriers,” he said.

Other developing countries have their eye on harnessing AI for traditionally labor-intensive industries.

For example, that of Cambodia 60 page report details how the developing nation wants to harness AI for “social good” and agricultural technology, boosting the sector that accounted for 22% of Cambodia’s GDP and employed about 3 million people in 2018.

Developing countries in ASEAN that are not as digitally developed as Singapore have more challenges in preparing for AI, let alone achieving a comprehensive AI policy.

“There are several regulatory blocks that need to be intact and sound before we can credibly embark on AI,” Kristina Fong, senior economic affairs fellow at the Center for ASEAN Studies in the ISEAS-Yusof Ishak Institute.

He added that “AI’s adverse effects on users could be swift and severe without any institutional oversight” with a state-level conversation needed to “effectively manage these rapid developments with minimal social harm.”

Divergent from Europe

ASEAN countries collectively published a regional guide AI governance and ethics in February. A year earlier, European Union officials on a tour of Southeast Asia tried to convince them to follow EU AI regulations.

Instead of being swayed, ASEAN countries argued that the EU had been too quick to adopt regulations without fully understanding the risks of AI.

The Asian bloc has moved away from Europe in terms of AI governance, and applying a “light-touch approach seems to be the best fit for the region,” Fong said.

“This is mainly due to several factors, such as the absence of a central legislative body in ASEAN, unlike the EU, as well as the marked differences in digital capabilities and regulatory capabilities among ASEAN member states “, he said, adding that the Southeast Asian approach. The AI ​​Ethics Framework “serves more as a practical guide” than a strict policy.

Wang said ASEAN’s AI ethics divergence is not necessarily a battle between choosing a Western or Chinese approach. International cooperation, he said, is at the heart of the ASEAN AI Ethical Framework.

The fundamental challenge facing ASEAN countries is “not technological, but political”, Wang said, with the Covid-19 pandemic pushing countries to work more closely on mutual trade and diplomacy .

What will keep them on track to achieve their AI plans is retaining their young and smart population.

Perhaps, Wang argued, a national education strategy to complement AI plans might be more effective.